☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 65-0960915 | |
(State of Incorporation) | (I.R.S. Employer Identification Number) |
Title of Each Class | Trading Symbol | Name of Each Exchange on which Registered | ||
Class A Common Stock, par value $0.001 per share | BBGI | Nasdaq Global Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
INDEX
Page No. | ||||||
PART I | ||||||
FINANCIAL INFORMATION | ||||||
Item 1. | Condensed Consolidated Financial Statements. | |||||
Notes to Condensed Consolidated Financial Statements. | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | |||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | |||||
Item 4. | Controls and Procedures. | |||||
Item 1. | Legal Proceedings. | |||||
Item 1A. | Risk Factors. | |||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | |||||
Item 3. | Defaults Upon Senior Securities. | |||||
Item 4. | Mine Safety Disclosures. | |||||
Item 5. | Other Information. | |||||
Item 6. | Exhibits. | |||||
December 31, | June 30, | December 31, | September 30, | |||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 51,378,642 | $ | 45,918,446 | $ | 51,378,642 | $ | 32,848,868 | ||||||||
Accounts receivable, less allowance for doubtful accounts of $1,720,477 in 2021 and $1,648,342 in 2022 | 53,378,437 | 45,628,769 | ||||||||||||||
Accounts receivable, less allowance for doubtful accounts of $1,720,477 in 2021 and $1,638,970 in 2022 | 53,378,437 | 46,696,748 | ||||||||||||||
Prepaid expenses | 4,044,056 | 6,330,503 | 4,044,056 | 9,969,112 | ||||||||||||
Other current assets | 3,397,418 | 3,983,998 | 3,397,418 | 3,903,381 | ||||||||||||
Total current assets | 112,198,553 | 101,861,716 | 112,198,553 | 93,418,109 | ||||||||||||
Property and equipment, net | 49,843,166 | 52,658,061 | 49,843,166 | 55,712,057 | ||||||||||||
Operating lease right-of-use | 34,155,175 | 36,970,653 | 34,155,175 | 39,539,899 | ||||||||||||
Finance lease right-of-use | 320,000 | 313,333 | 320,000 | 310,000 | ||||||||||||
FCC licenses | 508,413,913 | 503,003,909 | 508,413,913 | 503,003,909 | ||||||||||||
Goodwill | 28,596,547 | 22,739,996 | 28,596,547 | 23,661,996 | ||||||||||||
Other intangibles, net | 22,697,207 | 23,373,197 | 22,697,207 | 21,743,423 | ||||||||||||
Other assets | 5,863,501 | 7,688,682 | 5,863,501 | 7,593,606 | ||||||||||||
Total assets | $ | 762,088,062 | $ | 748,609,547 | $ | 762,088,062 | $ | 744,982,999 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current installments of long-term debt | $ | — | $ | 2,000,000 | ||||||||||||
Accounts payable | 6,995,081 | 9,637,062 | $ | 6,995,081 | $ | 12,817,393 | ||||||||||
Operating lease liabilities | 7,693,831 | 7,385,483 | 7,693,831 | 8,105,416 | ||||||||||||
Finance lease liabilities | 1,945 | — | 1,945 | — | ||||||||||||
Other current liabilities | 29,811,226 | 30,842,734 | 29,811,226 | 26,510,182 | ||||||||||||
Total current liabilities | 44,502,083 | 49,865,279 | 44,502,083 | 47,432,991 | ||||||||||||
Due to related parties | 372,193 | 101,087 | 372,193 | 93,409 | ||||||||||||
Long-term debt, net of current installments and unamortized debt issuance costs | 293,789,892 | 287,641,142 | 293,789,892 | 285,104,981 | ||||||||||||
Operating lease liabilities | 28,747,450 | 36,635,544 | 28,747,450 | 38,707,218 | ||||||||||||
Deferred tax liabilities | 115,689,317 | 112,930,112 | 115,689,317 | 111,463,989 | ||||||||||||
Other long-term liabilities | 15,904,829 | 15,899,359 | 15,904,829 | 15,896,624 | ||||||||||||
Total liabilities | 499,005,764 | 503,072,523 | 499,005,764 | 498,699,212 | ||||||||||||
Commitments and contingencies | 0 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0ne issued | 0— | 0— | ||||||||||||||
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 16,249,312 issued and 12,696,857 outstanding in 2021; 16,503,979 issued and 12,880,701 outstanding in 2022 | 16,248 | 16,502 | ||||||||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued | — | — | ||||||||||||||
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 16,249,312 issued and 12,696,857 outstanding in 2021; 16,512,312 issued and 12,887,080 outstanding in 2022 | 16,248 | 16,510 | ||||||||||||||
Class B common stock, $0.001 par value; 75,000,000 shares authorized; 16,662,743 issued and outstanding in 2021 and 2022 | 16,662 | 16,662 | 16,662 | 16,662 | ||||||||||||
Additional paid-in capital | 150,896,611 | 151,502,437 | 150,896,611 | 151,765,950 | ||||||||||||
Treasury stock, Class A common stock; 3,552,455 shares in 2021; 3,623,278 shares in 2022 | (29,021,360 | ) | (29,127,067 | ) | ||||||||||||
Treasury stock, Class A common stock; 3,552,455 shares in 2021; 3,625,232 shares in 2022 | (29,021,360 | ) | (29,129,451 | ) | ||||||||||||
Retained earnings | 142,220,494 | 124,174,847 | 142,220,494 | 124,672,915 | ||||||||||||
Accumulated other comprehensive loss | (1,046,357 | ) | (1,046,357 | ) | (1,046,357 | ) | (1,058,799 | ) | ||||||||
Total stockholders’ equity | 263,082,298 | 245,537,024 | 263,082,298 | 246,283,787 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 762,088,062 | $ | 748,609,547 | $ | 762,088,062 | $ | 744,982,999 | ||||||||
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Net revenue | $ | 59,574,705 | $ | 64,810,450 | $ | 62,902,935 | $ | 63,823,288 | ||||||||
Operating expenses: | ||||||||||||||||
Operating expenses (including stock-based compensation of $176,349 in 2021 and $75,368 in 2022 and excluding depreciation and amortization shown separately below) | 48,494,420 | 53,626,592 | ||||||||||||||
Corporate expenses (including stock-based compensation of $225,850 in 2021 and $303,462 in 2022) | 3,957,854 | 4,567,470 | ||||||||||||||
Operating expenses (including stock-based compensation of $100,688 in 2021 and $60,892 in 2022 and excluding depreciation and amortization shown separately below) | 51,186,064 | 51,511,699 | ||||||||||||||
Corporate expenses (including stock-based compensation of $150,650 in 2021 and $209,202 in 2022) | 3,980,815 | 5,132,362 | ||||||||||||||
Depreciation and amortization | 2,850,923 | 2,451,102 | 2,843,350 | 2,456,646 | ||||||||||||
Impairment losses | — | 8,619,097 | ||||||||||||||
Other operating income, net | (1,500,000 | ) | — | |||||||||||||
Total operating expenses | 53,803,197 | 69,264,261 | 58,010,229 | 59,100,707 | ||||||||||||
Operating income (loss) | 5,771,508 | (4,453,811 | ) | |||||||||||||
Operating income | 4,892,706 | 4,722,581 | ||||||||||||||
Non-operating income (expense): | ||||||||||||||||
Interest expense | (6,865,369 | ) | (6,823,217 | ) | (7,021,577 | ) | (6,621,540 | ) | ||||||||
Other income, net | 8,080 | 190,210 | 12,186 | 1,166,430 | ||||||||||||
Loss before income taxes | (1,085,781 | ) | (11,086,818 | ) | (2,116,685 | ) | (732,529 | ) | ||||||||
Income tax expense (benefit) | (1,299,394 | ) | 3,554,469 | |||||||||||||
Income tax benefit | (515,380 | ) | (1,252,669 | ) | ||||||||||||
Income (loss) before equity in earnings of unconsolidated affiliates | 213,613 | (14,641,287 | ) | (1,601,305 | ) | 520,140 | ||||||||||
Equity in earnings of unconsolidated affiliates, net of tax | (25,919 | ) | 186,570 | (19,018 | ) | (22,072 | ) | |||||||||
Net income (loss) | 187,694 | (14,454,717 | ) | (1,620,323 | ) | 498,068 | ||||||||||
Net income (loss) per Class A and Class B common share: | ||||||||||||||||
Basic and diluted | $ | 0.01 | $ | (0.49 | ) | $ | (0.06 | ) | $ | 0.02 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 29,235,009 | 29,418,951 | 29,254,609 | 29,546,324 | ||||||||||||
Diluted | 29,324,614 | 29,418,951 | 29,254,609 | 29,715,361 |
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Net revenue | $ | 107,786,745 | $ | 120,530,718 | $ | 170,689,680 | $ | 184,354,006 | ||||||||
Operating expenses: | ||||||||||||||||
Operating expenses (including stock-based compensation of $247,280 in 2021 and $153,591 in 2022 and excluding depreciation and amortization shown separately below) | 91,462,291 | 103,636,141 | ||||||||||||||
Corporate expenses (including stock-based compensation of $675,720 in 2021 and $452,489 in 2022) | 7,863,143 | 8,800,930 | ||||||||||||||
Operating expenses (including stock-based compensation of $347,968 in 2021 and $214,483 in 2022 and excluding depreciation and amortization shown separately below) | 142,648,355 | 155,147,840 | ||||||||||||||
Corporate expenses (including stock-based compensation of $826,370 in 2021 and $661,691 in 2022) | 11,843,958 | 13,933,292 | ||||||||||||||
Depreciation and amortization | 5,802,824 | 4,967,002 | 8,646,174 | 7,423,648 | ||||||||||||
Impairment losses | — | 10,476,323 | — | 10,476,323 | ||||||||||||
Gain on disposition | (191,988 | ) | — | (191,988 | ) | — | ||||||||||
Other operating income, net | (400,000 | ) | — | (400,000 | ) | — | ||||||||||
Total operating expenses | 104,536,270 | 127,880,396 | 162,546,499 | 186,981,103 | ||||||||||||
Operating income (loss) | 3,250,475 | (7,349,678 | ) | 8,143,181 | (2,627,097 | ) | ||||||||||
Non-operating income (expense): | ||||||||||||||||
Interest expense | (12,643,440 | ) | (13,672,254 | ) | (19,665,017 | ) | (20,293,794 | ) | ||||||||
Loss on extinguishment of long-term debt | (4,996,731 | ) | — | (4,996,731 | ) | — | ||||||||||
Other income, net | 46,493 | 191,082 | 58,679 | 1,357,512 | ||||||||||||
Loss before income taxes | (14,343,203 | ) | (20,830,850 | ) | (16,459,888 | ) | (21,563,379 | ) | ||||||||
Income tax benefit | (3,902,280 | ) | (2,621,977 | ) | (4,417,660 | ) | (3,874,646 | ) | ||||||||
Loss before equity in earnings of unconsolidated affiliates | (10,440,923 | ) | (18,208,873 | ) | (12,042,228 | ) | (17,688,733 | ) | ||||||||
Equity in earnings of unconsolidated affiliates, net of tax | (56,024 | ) | 163,226 | (75,042 | ) | 141,154 | ||||||||||
Net loss | (10,496,947 | ) | (18,045,647 | ) | (12,117,270 | ) | (17,547,579 | ) | ||||||||
Earnings attributable to noncontrolling interest | 129,249 | — | 129,249 | — | ||||||||||||
Net loss attributable to BBGI stockholders | (10,367,698 | ) | (18,045,647 | ) | (11,988,021 | ) | (17,547,579 | ) | ||||||||
Net loss attributable to BBGI stockholders per Class A and Class B common share: | ||||||||||||||||
Basic and diluted | $ | (0.35 | ) | $ | (0.61 | ) | $ | (0.41 | ) | $ | (0.60 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 29,268,717 | 29,395,003 | 29,263,963 | 29,445,998 |
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (10,496,947 | ) | $ | (18,045,647 | ) | $ | (12,117,270 | ) | $ | (17,547,579 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Stock-based compensation | 923,000 | 606,080 | 1,174,338 | 876,174 | ||||||||||||
Provision for bad debts | (1,779,188 | ) | 588,751 | (1,487,150 | ) | 853,938 | ||||||||||
Depreciation and amortization | 5,802,824 | 4,967,002 | 8,646,174 | 7,423,648 | ||||||||||||
Impairment losses | — | 10,476,323 | — | 10,476,323 | ||||||||||||
Gain on disposition | (191,988 | ) | — | (191,988 | ) | — | ||||||||||
Amortization of loan fees | 791,574 | 754,085 | 1,171,785 | 1,123,935 | ||||||||||||
Loss on extinguishment of long-term debt | 4,996,731 | — | 4,996,731 | — | ||||||||||||
Deferred income taxes | (3,902,280 | ) | (2,747,810 | ) | (4,417,660 | ) | (4,232,949 | ) | ||||||||
Equity in earnings of unconsolidated affiliates | 56,024 | (163,226 | ) | 75,042 | (141,154 | ) | ||||||||||
Change in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 4,835,493 | 7,160,917 | 1,685,007 | 5,827,751 | ||||||||||||
Prepaid expenses | (2,320,101 | ) | (2,286,447 | ) | (6,254,604 | ) | (5,925,056 | ) | ||||||||
Other assets | (1,684,017 | ) | (2,176,152 | ) | (1,656,170 | ) | (1,890,763 | ) | ||||||||
Accounts payable | (5,837,685 | ) | 2,641,981 | (5,567,791 | ) | 5,822,312 | ||||||||||
Other liabilities | 13,446,861 | 5,003,953 | 7,796,383 | 808,125 | ||||||||||||
Other operating activities | 208,725 | (28,264 | ) | 170,172 | (1,183,318 | ) | ||||||||||
Net cash provided by operating activities | 4,849,026 | 6,751,546 | ||||||||||||||
Net cash provided by (used in) operating activities | (5,977,001 | ) | 2,291,387 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Payment for acquisition | — | (2,000,000 | ) | — | (2,000,000 | ) | ||||||||||
Capital expenditures | (2,553,787 | ) | (6,486,902 | ) | (3,704,750 | ) | (11,218,937 | ) | ||||||||
Proceeds from dispositions | 362,500 | 1,185,312 | 362,500 | 1,185,312 | ||||||||||||
Proceeds from life insurance | 3,000,000 | — | ||||||||||||||
Net cash used in investing activities | (2,191,287 | ) | (7,301,590 | ) | (342,250 | ) | (12,033,625 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Issuance of debt | 310,000,000 | — | 310,000,000 | — | ||||||||||||
Payments on debt | (268,500,000 | ) | (4,802,500 | ) | (268,500,000 | ) | (8,677,500 | ) | ||||||||
Payment of debt issuance costs | (7,604,215 | ) | — | (7,604,215 | ) | — | ||||||||||
Reduction of finance lease liabilities | (35,086 | ) | (1,945 | ) | (52,629 | ) | (1,945 | ) | ||||||||
Purchase of treasury stock | (136,779 | ) | (105,707 | ) | (141,579 | ) | (108,091 | ) | ||||||||
Net cash provided by (used in) financing activities | 33,723,920 | (4,910,152 | ) | 33,701,577 | (8,787,536 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 36,381,659 | (5,460,196 | ) | 27,382,326 | (18,529,774 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 20,759,432 | 51,378,642 | 20,759,432 | 51,378,642 | ||||||||||||
Cash and cash equivalents at end of period | $ | 57,141,091 | $ | 45,918,446 | $ | 48,141,758 | $ | 32,848,868 | ||||||||
Cash paid for interest | $ | 1,837,493 | $ | 12,921,869 | $ | 14,703,825 | $ | 25,564,611 | ||||||||
Cash paid for income taxes | $ | 1,526,303 | $ | 1,546,500 | $ | 1,526,303 | $ | 1,547,500 | ||||||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||||||
Acquisition of noncontrolling interest | $ | 4,490,130 | $ | — | $ | 4,490,130 | $ | — | ||||||||
Extinguishment of trade sales payable | $ | 934,500 | $ | — | $ | 934,500 | $ | — | ||||||||
Class A common stock returned to treasury stock | $ | 670,594 | $ | — | $ | 670,594 | $ | — | ||||||||
(1) Interim Financial Statements |
November 14, 2022. The LMA will end on the closing date of the asset exchange. The asset exchange, which is expected to close in the fourth quarter of 2022, is subject to approval by the Federal Communications Commission (“FCC”) and other customary closing conditions. The Company expects to record a gain on exchange upon closing of the asset exchange. |
Property and equipment | $ | 3,000 | ||
Goodwill | 922,000 | |||
Other intangibles | 1,075,000 | |||
$ | 2,000,000 | |||
(3) FCC Licenses |
Balance as of January 1, 2022 | $ | 508,413,913 | $ | 508,413,913 | ||||
Radio station disposition (see Note 2) | (790,232 | ) | ||||||
Station disposition (see Note 2) | (790,232 | ) | ||||||
Impairment losses (see below and also Note 2) | (4,619,772 | ) | (4,619,772 | ) | ||||
Balance as of June 30, 2022 | $ | 503,003,909 | ||||||
Balance as of September 30, 2022 | $ | 503,003,909 | ||||||
Revenue growth rates | (1.9) % - 15.9% | |
Market revenue shares at maturity | 0.6% - 44.0% | |
Operating income margins at maturity | ||
Discount rate | 9.5% |
Balance as of January 1, 2022 | $ | 28,596,547 | $ | 28,596,547 | ||||
Acquisition (see Note 2) | 922,000 | |||||||
Impairment losses | (5,856,551 | ) | (5,856,551 | ) | ||||
Balance as of June 30, 2022 | $ | 22,739,996 | ||||||
Balance as of September 30, 2022 | $ | 23,661,996 | ||||||
Revenue growth rates | (1.9)% - 11.1% | |
Operating income margins | 5.4% - 29.8% | |
Discount rate | 9.5% |
6 BEASLEY BROADCAST GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Interest rates in the U.S. economy continued to increase during the third quarter of 2022; however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill. Therefore, the Company did not record any impairment losses related to goodwill during the third quarter of 2022. (5) Long-Term Debt |
December 31, | September 30, | |||||||||||||||
2021 | 2022 | |||||||||||||||
December 31, 2021 | June 30, 2022 | |||||||||||||||
Secured notes | $ | 300,000,000 | $ | 295,000,000 | $ | 300,000,000 | $ | 290,000,000 | ||||||||
Less unamortized debt issuance costs | (6,210,108 | ) | (5,358,858 | ) | (6,210,108 | ) | (4,895,019 | ) | ||||||||
293,789,892 | 289,641,142 | $ | 293,789,892 | $ | 285,104,981 | |||||||||||
Less current installments | — | (2,000,000 | ) | |||||||||||||
$ | 293,789,892 | $ | 287,641,142 | |||||||||||||
(6) Stockholders’ Equity |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||||
Beginning balance | $ | 252,739,797 | $ | 259,689,019 | $ | 267,101,820 | $ | 263,082,298 | $ | 253,307,219 | $ | 245,537,024 | $ | 267,101,820 | $ | 263,082,298 | ||||||||||||||||
Stock-based compensation | 402,199 | 378,830 | 923,000 | 606,080 | 251,338 | 270,094 | 1,174,338 | 876,174 | ||||||||||||||||||||||||
Adjustment from related party acquisition | — | (6,573 | ) | — | (6,573 | ) | ||||||||||||||||||||||||||
Acquisition of noncontrolling interest | — | — | (4,490,130 | ) | — | — | — | (4,490,130 | ) | — | ||||||||||||||||||||||
Purchase of treasury stock | (22,471 | ) | (76,108 | ) | (807,373 | ) | (105,707 | ) | (4,800 | ) | (2,384 | ) | (812,173 | ) | (108,091 | ) | ||||||||||||||||
Net income (loss) | 187,694 | (14,454,717 | ) | (10,496,947 | ) | (18,045,647 | ) | (1,620,323 | ) | 498,068 | (12,117,270 | ) | (17,547,579 | ) | ||||||||||||||||||
Other comprehensive loss | — | (12,442 | ) | — | (12,442 | ) | ||||||||||||||||||||||||||
Elimination of noncontrolling interest | — | — | 1,076,849 | — | — | — | 1,076,849 | — | ||||||||||||||||||||||||
Ending balance | $ | 253,307,219 | $ | 245,537,024 | $ | 253,307,219 | $ | 245,537,024 | $ | 251,933,434 | $ | 246,283,787 | $ | 251,933,434 | $ | 246,283,787 | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||||
Audio | $ | 51,215,234 | $ | 53,417,896 | $ | 92,944,836 | $ | 100,783,041 | $ | 54,043,650 | $ | 52,995,670 | $ | 146,988,486 | $ | 153,778,711 | ||||||||||||||||
Digital | 7,983,343 | 10,719,410 | 13,747,071 | 18,527,660 | 8,318,112 | 10,241,671 | 22,065,183 | 28,769,331 | ||||||||||||||||||||||||
Other | 376,128 | 673,144 | 1,094,838 | 1,220,017 | 541,173 | 585,947 | 1,636,011 | 1,805,964 | ||||||||||||||||||||||||
$ | 59,574,705 | $ | 64,810,450 | $ | 107,786,745 | $ | 120,530,718 | $ | 62,902,935 | $ | 63,823,288 | $ | 170,689,680 | $ | 184,354,006 | |||||||||||||||||
December 31, 2021 | June 30, 2022 | |||||||
Deferred revenue | $ | 3,085,370 | $ | 5,112,294 |
December 31, | September 30, | |||||||
2021 | 2022 | |||||||
Deferred revenue | $ | 3,085,370 | $ | 5,693,239 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Losses on receivables | $ | 602,253 | $ | 373,333 | $ | 1,697,566 | $ | 660,886 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Losses on receivables | $ | 99,836 | $ | 274,559 | $ | 1,797,402 | $ | 935,445 |
December 31, | September 30, | |||||||||||||||
2021 | 2022 | |||||||||||||||
December 31, 2021 | June 30, 2022 | |||||||||||||||
Trade sales receivable | $ | 881,885 | $ | 1,087,601 | $ | 881,885 | $ | 1,293,442 | ||||||||
Trade sales payable | 614,467 | 723,239 | 614,467 | 805,037 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Trade sales revenue | $ | 1,075,325 | $ | 1,504,105 | $ | 2,004,922 | $ | 2,876,678 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Trade sales revenue | $ | 1,781,124 | $ | 1,481,948 | $ | 3,786,046 | $ | 4,358,626 |
8 BEASLEY BROADCAST GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (8) Stock-Based Compensation |
Units | Weighted- Average Grant-Date Fair Value | Units | Weighted- Average Grant-Date Fair Value | |||||||||||||
Unvested as of April 1, 2022 | 918,816 | $ | 2.75 | |||||||||||||
Unvested as of July 1, 2022 | 1,209,065 | $ | 2.07 | |||||||||||||
Granted | 531,582 | 1.49 | — | — | ||||||||||||
Vested | (211,333 | ) | 3.51 | (8,333 | ) | 1.22 | ||||||||||
Forfeited | (30,000 | ) | 2.47 | (10,000 | ) | 3.03 | ||||||||||
Unvested as of June 30, 2022 | 1,209,065 | $ | 2.07 | |||||||||||||
Unvested as of September 30, 2022 | 1,190,732 | $ | 2.06 | |||||||||||||
(9) Income Taxes |
(10) Earnings Per Share |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Net income (loss) attributable to BBGI stockholders | $ | 187,694 | $ | (14,454,717 | ) | $ | (10,367,698 | ) | $ | (18,045,647 | ) | |||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 29,235,009 | 29,418,951 | 29,268,717 | 29,395,003 | ||||||||||||
Effect of dilutive restricted stock units and restricted stock | 89,605 | — | — | — | ||||||||||||
Diluted | 29,324,614 | 29,418,951 | 29,268,717 | 29,395,003 | ||||||||||||
Net income (loss) attributable to BBGI stockholders per Class A and Class B common share – basic and diluted | $ | 0.01 | $ | (0.49 | ) | $ | (0.35 | ) | $ | (0.61 | ) | |||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Net income (loss) attributable to BBGI stockholders | $ | (1,620,323 | ) | $ | 498,068 | $ | (11,988,021 | ) | $ | (17,547,579 | ) | |||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 29,254,609 | 29,546,324 | 29,263,963 | 29,445,998 | ||||||||||||
Effect of dilutive restricted stock units and restricted stock | — | 169,037 | — | — | ||||||||||||
Diluted | 29,254,609 | 29,715,361 | 29,263,963 | 29,445,998 | ||||||||||||
Net income (loss) attributable to BBGI stockholders per Class A and Class B common share – basic and diluted | $ | (0.06 | ) | $ | 0.02 | $ | (0.41 | ) | $ | (0.60 | ) | |||||
Loan to Interactive Life, Inc. In May 2022, the Company provided a $250,000 loan to Interactive Life, Inc. that accrues interest at 8.625% per annum with no cash payments due until the loan’s maturity in May 2024. Interactive Life, Inc. is controlled by Mr. Joseph Harb. The Company currently holds an investment in Quu, Inc., a company that is controlled by Mr. Harb. Repayment of the loan to Interactive Life, Inc. is guaranteed by Mr. Harb with 3,333,334 shares of Class A common stock of Quu, Inc. 9 BEASLEY BROADCAST GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (12) Financial Instruments |
(13) Segment Information |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 53,417,896 | $ | 10,719,410 | $ | 673,144 | $ | — | $ | 64,810,450 | ||||||||||
Operating expenses | 43,187,604 | 9,171,535 | 1,267,453 | — | 53,626,592 | |||||||||||||||
Corporate expenses | — | — | — | 4,567,470 | 4,567,470 | |||||||||||||||
Depreciation and amortization | 1,564,338 | 4,613 | 700,953 | 181,198 | 2,451,102 | |||||||||||||||
Impairment losses | 8,619,097 | — | — | — | 8,619,097 | |||||||||||||||
Operating income (loss) | $ | 46,857 | $ | 1,543,262 | $ | (1,295,262 | ) | $ | (4,748,668 | ) | $ | (4,453,811 | ) | |||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 5,039,229 | $ | 8,982 | $ | (1,598 | ) | $ | 64,514 | $ | 5,111,127 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 52,995,670 | $ | 10,241,671 | $ | 585,947 | $ | — | $ | 63,823,288 | ||||||||||
Operating expenses | 42,456,844 | 8,237,262 | 817,593 | — | 51,511,699 | |||||||||||||||
Corporate expenses | — | — | — | 5,132,362 | 5,132,362 | |||||||||||||||
Depreciation and amortization | 1,520,168 | 47,882 | 699,969 | 188,627 | 2,456,646 | |||||||||||||||
Operating income (loss) | $ | 9,018,658 | $ | 1,956,527 | $ | (931,615 | ) | $ | (5,320,989 | ) | $ | 4,722,581 | ||||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 4,517,127 | $ | 25,959 | $ | — | $ | 191,949 | $ | 4,735,035 |
Audio | Digital | Other | Corporate | Total | Audio | Digital | Other | Corporate | Total | |||||||||||||||||||||||||||||||
Net revenue | $ | 51,215,234 | $ | 7,983,343 | $ | 376,128 | $ | — | $ | 59,574,705 | $ | 54,043,650 | $ | 8,318,112 | $ | 541,173 | $ | — | $ | 62,902,935 | ||||||||||||||||||||
Operating expenses | 39,715,005 | 7,910,418 | 868,997 | — | 48,494,420 | 42,287,054 | 8,047,207 | 851,803 | — | 51,186,064 | ||||||||||||||||||||||||||||||
Corporate expenses | — | — | — | 3,957,854 | 3,957,854 | — | — | — | 3,980,815 | 3,980,815 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 1,911,236 | 4,142 | 796,019 | 139,526 | 2,850,923 | 1,896,729 | 4,371 | 796,018 | 146,232 | 2,843,350 | ||||||||||||||||||||||||||||||
Other operating income, net | — | — | — | (1,500,000 | ) | (1,500,000 | ) | |||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 9,588,993 | $ | 68,783 | $ | (1,288,888 | ) | $ | (2,597,380 | ) | $ | 5,771,508 | $ | 9,859,867 | $ | 266,534 | $ | (1,106,648 | ) | $ | (4,127,047 | ) | $ | 4,892,706 | ||||||||||||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 1,276,776 | $ | 87,432 | $ | — | $ | 160,311 | $ | 1,524,519 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 1,108,934 | $ | — | $ | — | $ | 42,029 | $ | 1,150,963 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 100,783,041 | $ | 18,527,660 | $ | 1,220,017 | $ | — | $ | 120,530,718 | ||||||||||
Operating expenses | 84,050,529 | 17,573,298 | 2,012,314 | — | 103,636,141 | |||||||||||||||
Corporate expenses | — | — | — | 8,800,930 | 8,800,930 | |||||||||||||||
Depreciation and amortization | 3,186,165 | 9,077 | 1,396,301 | 375,459 | 4,967,002 | |||||||||||||||
Impairment losses | 10,476,323 | — | — | — | 10,476,323 | |||||||||||||||
Operating income (loss) | $ | 3,070,024 | $ | 945,285 | $ | (2,188,598 | ) | $ | (9,176,389 | ) | $ | (7,349,678 | ) | |||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 6,221,223 | $ | 10,826 | $ | 59,084 | $ | 206,744 | $ | 6,497,877 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 92,944,836 | $ | 13,747,071 | $ | 1,094,838 | $ | — | $ | 107,786,745 | ||||||||||
Operating expenses | 74,450,474 | 15,168,333 | 1,843,484 | — | 91,462,291 | |||||||||||||||
Corporate expenses | — | — | — | 7,863,143 | 7,863,143 | |||||||||||||||
Depreciation and amortization | 3,915,613 | 4,142 | 1,607,922 | 275,147 | 5,802,824 | |||||||||||||||
Gain on disposition | (191,988 | ) | — | — | — | (191,988 | ) | |||||||||||||
Other operating (income) expense, net | 500,000 | — | — | (900,000 | ) | (400,000 | ) | |||||||||||||
Operating income (loss) | $ | 14,270,737 | $ | (1,425,404 | ) | $ | (2,356,568 | ) | $ | (7,238,290 | ) | $ | 3,250,475 | |||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 1,989,721 | $ | 87,432 | $ | 2,852 | $ | 473,782 | $ | 2,553,787 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Property and equipment, net | $ | 48,624,289 | $ | 76,296 | $ | 75,224 | $ | 3,882,252 | $ | 52,658,061 | ||||||||||
FCC licenses | 503,003,909 | — | — | — | 503,003,909 | |||||||||||||||
Goodwill | 19,520,896 | — | 3,219,100 | — | 22,739,996 | |||||||||||||||
Other intangibles, net | 1,907,547 | 2,000,000 | 19,285,987 | 179,663 | 23,373,197 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 153,778,711 | $ | 28,769,331 | $ | 1,805,964 | $ | — | $ | 184,354,006 | ||||||||||
Operating expenses | 126,507,373 | 25,810,560 | 2,829,907 | — | 155,147,840 | |||||||||||||||
Corporate expenses | — | — | — | 13,933,292 | 13,933,292 | |||||||||||||||
Depreciation and amortization | 4,706,333 | 56,959 | 2,096,270 | 564,086 | 7,423,648 | |||||||||||||||
Impairment losses | 10,476,323 | — | — | — | 10,476,323 | |||||||||||||||
Operating income (loss) | $ | 12,088,682 | $ | 2,901,812 | $ | (3,120,213 | ) | $ | (14,497,378 | ) | $ | (2,627,097 | ) | |||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 10,738,350 | $ | 36,785 | $ | 59,084 | $ | 398,693 | $ | 11,232,912 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Net revenue | $ | 146,988,486 | $ | 22,065,183 | $ | 1,636,011 | $ | — | $ | 170,689,680 | ||||||||||
Operating expenses | 116,737,528 | 23,215,540 | 2,695,287 | — | 142,648,355 | |||||||||||||||
Corporate expenses | — | — | — | 11,843,958 | 11,843,958 | |||||||||||||||
Depreciation and amortization | 5,812,342 | 8,513 | 2,403,940 | 421,379 | 8,646,174 | |||||||||||||||
Gain on disposition | (191,988 | ) | — | — | — | (191,988 | ) | |||||||||||||
Other operating (income) expense, net | 500,000 | — | — | (900,000 | ) | (400,000 | ) | |||||||||||||
Operating income (loss) | $ | 24,130,604 | $ | (1,158,870 | ) | $ | (3,463,216 | ) | $ | (11,365,337 | ) | $ | 8,143,181 | |||||||
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Capital expenditures | $ | 3,098,655 | $ | 87,432 | $ | 2,852 | $ | 515,811 | $ | 3,704,750 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Property and equipment, net | $ | 51,657,853 | $ | 97,142 | $ | 71,488 | $ | 3,885,574 | $ | 55,712,057 | ||||||||||
FCC licenses | 503,003,909 | — | — | — | 503,003,909 | |||||||||||||||
Goodwill | 19,520,896 | 922,000 | 3,219,100 | — | 23,661,996 | |||||||||||||||
Other intangibles, net | 1,874,274 | 1,032,231 | 18,657,255 | 179,663 | 21,743,423 |
Audio | Digital | Other | Corporate | Total | ||||||||||||||||
Property and equipment, net | $ | 45,696,008 | $ | 74,547 | $ | 21,644 | $ | 4,050,967 | $ | 49,843,166 | ||||||||||
FCC licenses | 508,413,913 | — | — | — | 508,413,913 | |||||||||||||||
Goodwill | 25,377,447 | — | 3,219,100 | — | 28,596,547 | |||||||||||||||
Other intangibles, net | 1,974,093 | — | 20,543,451 | 179,663 | 22,697,207 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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 radioaudio programs;
the ability of the Company to respond to changes in technology, standards and services that affect the radioaudio industry;
the Company’s dependence on federally issued licenses subject to extensive federal regulation;
actions by the FCC or new legislation affecting the radioaudio 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;
12
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 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, radioaudio advertising time; and
the size of the market.
13
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 broadcastingaudio 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.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.
FCC Licenses.
Due to an increase in interest rates in the U.S. economy, we tested our FCC licenses for impairment during the second quarter of 2022. As a result of the quantitative impairment test performed as of June 30, 2022, we recorded impairment losses of $2.8 million related to the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters. The impairment losses were due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks associated with the U.S. economy.
The fair values of the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters were estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected radioaudio market revenues, projected growth rate for radioaudio market revenues, projected radioaudio market revenue shares, projected radio stationaudio operating income margins, and a discount rate appropriate for the radio broadcastingaudio industry. The key assumptions used in the discounted cash flow analyses are as follows:
Revenue growth rates | (1.9)% - 15.9% | |
Market revenue shares at maturity | 0.6% - 44.0% | |
Operating income margins at maturity | 19.2% - 32.6% | |
Discount rate | 9.5% |
14
The carrying amount of our FCC licenses for each reporting unit and the percentage by which fair value exceeded the carrying amount are as follows:
Market cluster | FCC broadcasting licenses | Excess | ||||||
Atlanta, GA | $ | 832,300 | 13.1 | % | ||||
Augusta, GA | 6,113,075 | 57.1 | ||||||
Boston, MA | 137,856,160 | 0.2 | ||||||
Charlotte, NC | 56,418,151 | 9.4 | ||||||
Detroit, MI | 29,978,201 | 8.2 | ||||||
Fayetteville, NC | 8,974,679 | 9.3 | ||||||
Fort Myers-Naples, FL | 9,131,300 | — | ||||||
Las Vegas, NV | 33,655,100 | — | ||||||
Middlesex, Monmouth, Morristown, NJ | 21,896,900 | 1.6 | ||||||
Philadelphia, PA | 119,674,192 | 11.2 | ||||||
Tampa-Saint Petersburg, FL | 61,787,351 | 16.7 | ||||||
Wilmington, DE | 16,686,500 | — |
Market cluster | FCC licenses | Excess | ||||||
Atlanta, GA | $ | 832,300 | 13.1 | % | ||||
Augusta, GA | 6,113,075 | 57.1 | ||||||
Boston, MA | 137,856,160 | 0.2 | ||||||
Charlotte, NC | 56,418,151 | 9.4 | ||||||
Detroit, MI | 29,978,201 | 8.2 | ||||||
Fayetteville, NC | 8,974,679 | 9.3 | ||||||
Fort Myers-Naples, FL | 9,131,300 | — | ||||||
Las Vegas, NV | 33,655,100 | — | ||||||
Middlesex, Monmouth, Morristown, NJ | 21,896,900 | 1.6 | ||||||
Philadelphia, PA | 119,674,192 | 11.2 | ||||||
Tampa-Saint Petersburg, FL | 61,787,351 | 16.7 | ||||||
Wilmington, DE | 16,686,500 | — |
Goodwill.
Due to an increase in interest rates in the U.S. economy, we tested our goodwill for impairment during the second quarter of 2022. As a result of the quantitative impairment test performed as of June 30, 2022, we recorded impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL and Tampa-Saint Petersburg, FL market clusters. The impairment losses were due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our goodwill due to certain risks associated with the U.S. economy.
The fair values of the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL and Tampa-Saint Petersburg, FL market clusters were estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected radioaudio market revenues, projected growth rate for radioaudio market revenues, projected radioaudio market revenue shares, projected radio stationaudio operating income margins, and a discount rate appropriate for the radio broadcastingaudio industry. The key assumptions used in the discounted cash flow analyses are as follows:
Revenue growth rates | (1.9)% - 11.1% | |
Operating income margins | 5.4% - 29.8% | |
Discount rate | 9.5% |
Interest rates in the U.S. economy continued to increase during the third quarter of 2022, however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill. Therefore, we did not record any impairment losses related to goodwill during the third quarter of 2022.
We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our FCC licenses and goodwill, however, these estimates and assumptions are highly judgmental in nature. Actual results can be materially different from estimates and assumptions. If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the amounts reflected on our balance sheet, we may recognize future impairment charges, the amount of which may be material.
15
Our remaining critical accounting estimates are described in Item 7 of our Annual Report on Form
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 JuneSeptember 30, 2022 Compared to the Three Months Ended JuneSeptember 30, 2021
The following summary table presents a comparison of our results of operations for the three months ended JuneSeptember 30, 2021 and 2022, with respect to certain of our key financial measures. The 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 June 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | $ | 59,574,705 | $ | 64,810,450 | $ | 5,235,745 | 8.8 | % | ||||||||
Operating expenses | 48,494,420 | 53,626,592 | 5,132,172 | 10.6 | ||||||||||||
Corporate expenses | 3,957,854 | 4,567,470 | 609,616 | 15.4 | ||||||||||||
Impairment losses | — | 8,619,097 | 8,619,097 | — | ||||||||||||
Other operating income, net | 1,500,000 | — | (1,500,000 | ) | (100.0 | ) | ||||||||||
Income tax expense (benefit) | (1,299,394 | ) | 3,554,469 | 4,853,863 | 373.5 | |||||||||||
Net income (loss) | 187,694 | (14,454,717 | ) | (14,642,411 | ) | (7801.2 | ) |
Three Months Ended September 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | $ | 62,902,935 | $ | 63,823,288 | $ | 920,353 | 1.5 | % | ||||||||
Operating expenses | 51,186,064 | 51,511,699 | 325,635 | 0.6 | ||||||||||||
Corporate expenses | 3,980,815 | 5,132,362 | 1,151,547 | 28.9 | ||||||||||||
Other income, net | 12,186 | 1,166,430 | 1,154,244 | 9471.9 | ||||||||||||
Income tax benefit | 515,380 | 1,252,669 | 737,289 | 143.1 | ||||||||||||
Net income (loss) | (1,620,323 | ) | 498,068 | 2,118,391 | 130.7 |
Results of Operations - Segments
Three Months ended June 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | ||||||||||||||||
Audio | $ | 51,215,234 | $ | 53,417,896 | $ | 2,202,662 | 4.3 | % | ||||||||
Digital | 7,983,343 | 10,719,410 | 2,736,067 | 34.3 | ||||||||||||
Other | 376,128 | 673,144 | 297,016 | 79.0 | ||||||||||||
$ | 59,574,705 | $ | 64,810,450 | $ | 5,235,745 | 8.8 | ||||||||||
Operating expenses | ||||||||||||||||
Audio | $ | 39,715,005 | $ | 43,187,604 | $ | 3,472,599 | 8.7 | % | ||||||||
Digital | 7,910,418 | 9,171,535 | 1,261,117 | 15.9 | ||||||||||||
Other | 868,997 | 1,267,453 | 398,456 | 45.9 | ||||||||||||
$ | 48,494,420 | $ | 53,626,592 | $ | 5,132,172 | 10.6 | ||||||||||
Three Months Ended September 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | ||||||||||||||||
Audio | $ | 54,043,650 | $ | 52,995,670 | $ | (1,047,980 | ) | (1.9 | )% | |||||||
Digital | 8,318,112 | 10,241,671 | 1,923,559 | 23.1 | ||||||||||||
Other | 541,173 | 585,947 | 44,774 | 8.3 | ||||||||||||
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|
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| |||||||||||
$ | 62,902,935 | $ | 63,823,288 | $ | 920,353 | 1.5 | ||||||||||
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|
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|
| |||||||||||
Operating expenses | ||||||||||||||||
Audio | $ | 42,287,054 | $ | 42,456,844 | $ | 169,790 | 0.4 | % | ||||||||
Digital | 8,047,207 | 8,237,262 | 190,055 | 2.4 | ||||||||||||
Other | 851,803 | 817,593 | (34,210 | ) | (4.0 | ) | ||||||||||
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|
|
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| |||||||||||
$ | 51,186,064 | $ | 51,511,699 | $ | 325,635 | 0.6 | ||||||||||
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|
|
|
|
Net Revenue.
Operating Expenses.
Corporate Expenses. Corporate expenses increased $5.1$1.2 million during the three months ended JuneSeptember 30, 2022 as compared to the three months ended June 30, 2021. Audio operating expenses increased $3.5 million during the three months ended June 30, 2022 as compared to the three months ended JuneSeptember 30, 2021, primarily due to continued recovery from the
16
Other Income, Net. We repurchased $5.0 million aggregate principal amount of our 8.625% senior secured notes due on February 1, 2026 (the “Notes”) for an aggregate price equal to 77% of the principal amount and recorded an increase in interest rates in the U.S. economy, we tested our FCC licenses and goodwill for impairment during the second quarteraggregate gain of 2022. As$1.0 million as a result of the quantitative impairment tests, we recorded impairment losses of $2.8 million related to the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters and impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL and Tampa-Saint Petersburg, FL market clusters. The impairment losses were primarily due to an increaserepurchases in the discount rate used in the discounted cash flow analyses to estimate the fair valuethird quarter of FCC licenses and goodwill due to certain risks associated with the U.S. economy.
Income Tax Expense (Benefit).
Net Income (Loss).
Nine Months Ended JuneSeptember 30, 2022 Compared to the SixNine Months Ended JuneSeptember 30, 2021
The following summary table presents a comparison of our results of operations for the sixnine months ended JuneSeptember 30, 2021 and 2022, with respect to certain of our key financial measures. The 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
Six Months ended June 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | $ | 107,786,745 | $ | 120,530,718 | $ | 12,743,973 | 11.8 | % | ||||||||
Operating expenses | 91,462,291 | 103,636,141 | 12,173,850 | 13.3 | ||||||||||||
Corporate expenses | 7,863,143 | 8,800,930 | 937,787 | 11.9 | ||||||||||||
Impairment losses | — | 10,476,323 | 10,476,323 | — | ||||||||||||
Other operating income, net | 400,000 | — | (400,000 | ) | (100.0 | ) | ||||||||||
Interest expense | 12,643,440 | 13,672,254 | 1,028,814 | 8.1 | ||||||||||||
Loss on extinguishment of long-term debt | 4,996,731 | — | (4,996,731 | ) | (100.0 | ) | ||||||||||
Income tax benefit | 3,902,280 | 2,621,977 | (1,280,303 | ) | (32.8 | ) | ||||||||||
Net loss | 10,496,947 | 18,045,647 | 7,548,700 | 71.9 |
Nine Months Ended September 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | $ | 170,689,680 | $ | 184,354,006 | $ | 13,664,326 | 8.0 | % | ||||||||
Operating expenses | 142,648,355 | 155,147,840 | 12,499,485 | 8.8 | ||||||||||||
Corporate expenses | 11,843,958 | 13,933,292 | 2,089,334 | 17.6 | ||||||||||||
Impairment losses | — | 10,476,323 | 10,476,323 | — | ||||||||||||
Other operating income, net | 400,000 | — | (400,000 | ) | (100.0 | ) | ||||||||||
Loss on extinguishment of long-term debt | 4,996,731 | — | (4,996,731 | ) | (100.0 | ) | ||||||||||
Other income, net | 58,679 | 1,357,512 | 1,298,833 | 2213.5 | ||||||||||||
Income tax benefit | 4,417,660 | 3,874,646 | (543,014 | ) | (12.3 | ) | ||||||||||
Net loss | 12,117,270 | 17,547,579 | 5,430,309 | 44.8 |
Results of Operations - Segments
Six Months ended June 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | ||||||||||||||||
Audio | $ | 92,944,836 | $ | 100,783,041 | $ | 7,838,205 | 8.4 | % | ||||||||
Digital | 13,747,071 | 18,527,660 | 4,780,589 | 34.8 | ||||||||||||
Other | 1,094,838 | 1,220,017 | 125,179 | 11.4 | ||||||||||||
$ | 107,786,745 | $ | 120,530,718 | $ | 12,743,973 | 11.8 | ||||||||||
Operating expenses | ||||||||||||||||
Audio | $ | 74,450,474 | $ | 84,050,529 | $ | 9,600,055 | 12.9 | % | ||||||||
Digital | 15,168,333 | 17,573,298 | 2,404,965 | 15.9 | ||||||||||||
Other | 1,843,484 | 2,012,314 | 168,830 | 9.2 | ||||||||||||
$ | 91,462,291 | $ | 103,636,141 | $ | 12,173,850 | 13.3 | ||||||||||
Nine Months Ended September 30, | Change | |||||||||||||||
2021 | 2022 | $ | % | |||||||||||||
Net revenue | ||||||||||||||||
Audio | $ | 146,988,486 | $ | 153,778,711 | $ | 6,790,225 | 4.6 | % | ||||||||
Digital | 22,065,183 | 28,769,331 | 6,704,148 | 30.4 | ||||||||||||
Other | 1,636,011 | 1,805,964 | 169,953 | 10.4 | ||||||||||||
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$ | 170,689,680 | $ | 184,354,006 | $ | 13,664,326 | 8.0 | ||||||||||
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| |||||||||||
Operating expenses | ||||||||||||||||
Audio | $ | 116,737,528 | $ | 126,507,373 | $ | 9,769,845 | 8.4 | % | ||||||||
Digital | 23,215,540 | 25,810,560 | 2,595,020 | 11.2 | ||||||||||||
Other | 2,695,287 | 2,829,907 | 134,620 | 5.0 | ||||||||||||
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$ | 142,648,355 | $ | 155,147,840 | $ | 12,499,485 | 8.8 | ||||||||||
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Net Revenue.
17
Operating Expenses.
Corporate Expenses.
Impairment Losses.
Other Operating Income, Net.
Loss on Extinguishment of Long-Term Debt.
Other Income, Net. In the third quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 77% of the principal amount and recorded an aggregate gain of $1.0 million as a result of the repurchases. In the third quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 96% of the principal amount and recorded an aggregate gain of $0.1 million as a result of the repurchases.
Income Tax Benefit.
Net Loss.
Liquidity and Capital Resources
Overview.
In response to the
18
Secured Notes.
In Aprilthe third quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 77% of the principal amount and recorded an aggregate gain of $1.0 million as a result of the repurchases. In the second quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 96% of the principal amount. Asamount and recorded an aggregate gain of $0.1 million as a result of the repurchase, we recorded an aggregate gain on repurchase of long-term debt of $0.1 million during the second quarter of 2022. In July 2022, we repurchased $2.0 million principal amount of the Notes for a price equal to 75% of the principal amount. As a result of the repurchase, we recorded a gain on repurchase of long-term debt of $0.5 million during the third quarter of 2022.
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 $0.1 million to repurchase 70,82372,777 shares during the sixnine months ended JuneSeptember 30, 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 twelve12 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
Cash Flows
Six Months ended June 30, | ||||||||
2021 | 2022 | |||||||
Net cash provided by operating activities | $ | 4,849,026 | $ | 6,751,546 | ||||
Net cash used in investing activities | (2,191,287 | ) | (7,301,590 | ) | ||||
Net cash provided by (used in) financing activities | 33,723,920 | (4,910,152 | ) | |||||
Net increase (decrease) in cash and cash equivalents | $ | 36,381,659 | $ | (5,460,196 | ) | |||
Nine Months Ended September 30, | ||||||||
2021 | 2022 | |||||||
Net cash provided by (used in) operating activities | $ | (5,977,001 | ) | $ | 2,291,387 | |||
Net cash used in investing activities | (342,250 | ) | (12,033,625 | ) | ||||
Net cash provided by (used in) financing activities | 33,701,577 | (8,787,536 | ) | |||||
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| |||||
Net increase (decrease) in cash and cash equivalents | $ | 27,382,326 | $ | (18,529,774 | ) | |||
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Net Cash Provided By (Used In) Operating Activities.
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Net Cash Used In Investing Activities.
Net Cash Provided By (Used In) Financing Activities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES.
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
There were no changes in our internal control over financial reporting during the quarter ended JuneSeptember 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We currently and from time to time are involved in ordinary routine litigation and are the subject of threats of litigation that are incidental to the conduct of our business. These include indecency claims and related proceedings at the FCC, as well as claims and threatened claims by private third parties. However, we are not a party to any lawsuit or other proceedings, or the subject of any threatened lawsuit or other proceedings, which, in the opinion of management, is likely to have a material adverse effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS.
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
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Repurchases of Equity Securities
The following table presents information with respect to purchases we made of our Class A common stock during the three months ended JuneSeptember 30, 2022.
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program | ||||||||||||
April 1 – 30, 2022 | 2,965 | $ | 1.70 | — | — | |||||||||||
May 1 – 31, 2022 | 22,430 | 1.50 | — | — | ||||||||||||
June 1 – 30, 2022 | 29,221 | 1.28 | — | — | ||||||||||||
Total | 54,616 | |||||||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program | ||||||||||||
July 1 – 31, 2022 | — | — | — | — | ||||||||||||
August 1 – 31, 2022 | 1,954 | $ | 1.22 | — | — | |||||||||||
September 1 – 30, 2022 | — | — | — | — | ||||||||||||
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Total | 1,954 | |||||||||||||||
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On March 27, 2007, our board of directors approved the Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”). The original ten year term of the 2007 Plan ended on March 27, 2017. Our stockholders approved an amendment to the 2007 Plan at the Annual Meeting of Stockholders on June 8, 2017 to, among other things, extend the term of the 2007 Plan until March 27, 2027. The 2007 Plan permits us to purchase sufficient shares to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock. All shares purchased during the three months ended JuneSeptember 30, 2022 were purchased to fund withholding taxes in connection with the vesting of restricted stock units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
21
ITEM 6. EXHIBITS.
Exhibit Number | Description | |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BEASLEY BROADCAST GROUP, INC. | ||||||||
Dated: | /s/ Caroline Beasley | |||||||
Name: | ||||||||
Chief Executive Officer (principal executive officer) | ||||||||
Dated: November 7, 2022 | /s/ Marie Tedesco | |||||||
Name: | Marie Tedesco | |||||||
Title: | Chief Financial Officer (principal financial and accounting officer) |
23