Beasley Broadcast Group, Inc. (Nasdaq: BBGI), a large- and mid-size
market radio broadcaster, today announced operating results for the
three months ended March 31, 2008 as summarized below:
Summary of First Quarter Results
($ in millions, except per share data)
Three Months Ended
March 31,
2008
2007
Change
Net revenue
$
29.4
$
30.8
(4.6
)%
Station operating income (SOI - non-GAAP)
8.1
8.6
(5.7
)%
Operating income
4.8
5.1
(5.5
)%
Net income
1.2
1.1
6.3
%
Net income per diluted share
$
0.05
$
0.05
-
The $1.4 million decrease in net revenue during the three months ended
March 31, 2008, compared with the first quarter of 2007 primarily
reflects a $1.0 million decrease at the Company’s
Ft. Myers-Naples cluster and a $0.5 million decrease at its Las Vegas
market cluster. Both of these markets have been impacted by economic
weakness related to the housing industry. The net revenue declines in
Ft. Myers-Naples and Las Vegas more than offset net revenue improvements
generated at the Company’s Miami,
Philadelphia, Greenville-New Bern, and Augusta market clusters.
The $0.3 million decrease in operating income in the 2008 first quarter
primarily reflects the lower revenue levels compared to the 2007 first
quarter and slightly higher selling, general and administrative expenses
at the Company’s eleven market clusters. These
factors offset an 11% reduction in cost of services as the Company
lowered such expenses at seven of its eleven market clusters and
maintained cost of services expenses at the same level as 2007 at its
remaining four market clusters. Overall, first quarter 2008 total costs
and expenses as a percentage of net revenue remained consistent with
levels in the first quarter of 2007.
First quarter 2008 station operating income (SOI), a non-GAAP financial
measure, fell $0.5 million from the 2007 first quarter as the lower
revenue offset reductions in station operating expenses during the
period. The $0.1 million increase in 2008 first quarter net income
compared to the year ago period primarily reflects a $0.7 million
reduction in interest expense due to a decrease in borrowing costs and
voluntary repayments of borrowings under the Company’s
existing credit facility.
Please refer to the “Calculation of SOI,”
and “Reconciliation of SOI to Net Income,”
tables at the end of this announcement for a discussion regarding SOI
calculations.
Commenting on the results, George G. Beasley, Chairman and Chief
Executive Officer, said, “The radio industry
and Beasley Broadcast Group continued to face a challenging economic
climate in the first quarter of 2008. Our first quarter revenue
performance was mixed reflecting the generally soft performance of the
industry, specific challenges facing our Ft. Myers and Las Vegas market
clusters and our success in driving revenue growth in Miami,
Philadelphia, Greenville-New Bern and Augusta, though growth in Miami
was slightly less than forecasted. In addition, during the first quarter
we continued to achieve revenue growth from our interactive initiatives.
First quarter interactive revenues accounted for approximately 4.3% of
the Company’s total revenue compared with a
contribution of approximately 2.7% in the year-ago period.
“Our station personnel did a great job of
operating in a difficult environment and during the quarter our station
portfolio exceeded the revenue performance of the overall industry. With
over four decades in the radio broadcasting industry, Beasley has
weathered uncertain times before and we believe radio’s
ability to reach targeted demographic audiences while offering listeners
localism and portability without subscription fees will prove to be
advantages in overcoming the weak environment. Despite current market
conditions, we’ve made important progress in
key markets like Miami and Philadelphia and have taken actions to
address Ft. Myers and Las Vegas, all of which bodes well for the Company’s
ability to quickly rebound from the advertising downturn. While we
continue to invest in ongoing development of interactive support
services for our radio stations, we have also taken steps to cut costs
not vital to our sales and programming efforts. These actions are
positioning Beasley with the right combination of resources to recapture
momentum when radio advertising demand returns to more robust levels.”
During the March 2008 quarter, the Company repurchased 102,350 shares of
its common stock at an average price of $5.51 for a total consideration
of $0.6 million. Beasley Broadcast Group has approximately $17.4 million
remaining available under its existing share repurchase authorization.
Since the initiation of its share repurchase program in 2004, Beasley
Broadcast Group has repurchased approximately 16.8% of its Class A
common shares issued for a total of $12.5 million, at an average price
per share of approximately $8.72.
Guidance
The Company has elected to discontinue the practice of providing
specific quarterly net revenue guidance. However, the Company intends to
provide certain expense expectations during its quarterly conference
call (see details below).
Conference Call Information
The Company will host a conference call and simultaneous webcast today,
May 5, 2008, at 11:00 a.m. EDT to discuss its financial results and
operations. Both the call and webcast are open to the general public.
The dial in number for the conference call is 973/582-2717; please call
five minutes in advance to ensure that you are connected prior to the
presentation.
Interested parties may also access the live call on the Internet at the
Company’s Web site at www.bbgi.com;
allow 15 minutes to register and download and install any necessary
software. Questions and answers will be reserved for call-in analysts
and institutional investors. Following its completion, a replay of the
call can be accessed for 5 days on the Internet from the Company’s
Web site or for 24 hours via telephone at 800/642-1687 (reservation
#44333435).
Founded in 1961, Beasley Broadcast Group, Inc. is a radio broadcasting
company that owns or operates 44 stations (27 FM and 17 AM) located in
eleven large- and mid-size markets in the United States.
Definitions
Station Operating Income (SOI) consists of net revenue less station
operating expenses. We define station operating expenses as cost of
services and selling, general and administrative expenses.
SOI is a financial measure of performance that is not calculated in
accordance with U.S. generally accepted accounting principles, which we
refer to as GAAP. We use this non-GAAP financial measure for internal
budgeting purposes. We also use SOI to make decisions regarding the
possible acquisition or disposition of radio stations. SOI excludes
corporate-level costs and expenses and depreciation and amortization,
which may be material to an assessment of the Company’s
overall operating performance. Management compensates for this
limitation by separately considering the impact of these excluded items
to the extent they are material to operating decisions or assessments of
the Company’s operating performance.
Moreover, the corresponding amounts of the non-cash and corporate-level
costs and expenses excluded from the calculation are available to
investors as they are presented on our statements of operations
contained in our periodic reports filed with the Securities and Exchange
Commission (SEC).
SOI is a measure widely used in the radio broadcast industry. While the
Company recognizes that because SOI is not calculated in accordance with
GAAP, it is not necessarily comparable to similarly titled measures
employed by other companies. Management believes that SOI provides
meaningful information to investors because it is an important measure
of how effectively we operate our business (i.e., operate radio
stations) and assists investors in comparing our operating performance
with that of other radio companies.
Note Regarding Forward-Looking
Statements:
Statements in this release that are “forward-looking
statements” are based upon current
expectations and assumptions, and involve certain risks and
uncertainties within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Words or expressions such as “intends,”
“expects,” “expected,”
“anticipates” or
variations of such words and similar expressions are intended to
identify such forward-looking statements. Key risks are described in our
reports filed with the SEC including in our Annual Report on Form 10-K
for the year ended December 31, 2007. Readers should note that
forward-looking statements are subject to change and to inherent risks
and uncertainties and may be impacted by several factors, including:
economic and regulatory changes, the effect of radio station
acquisitions or dispositions that we may make, the loss of key
personnel, a downturn in the performance of our radio stations, our
substantial debt levels and changes in the radio broadcast industry
generally. Our actual performance and results could differ materially
because of these factors and other factors discussed in the “Management’s
Discussion and Analysis of Results of Operations and Financial Condition”
of our SEC filings, including but not limited to annual reports on Form
10-K or quarterly reports on Form 10-Q, copies of which can be obtained
from the SEC, www.sec.gov, or our
website, www.bbgi.com. All information
in this release is as of May 5, 2008, and we undertake no obligation to
update the information contained herein to actual results or changes to
our expectations.
BEASLEY BROADCAST GROUP, INC.
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31,
2008
2007
Net revenue
$
29,367,381
$
30,775,887
Costs and expenses:
Cost of services (excluding depreciation and
amortization shown separately below) (1)(2)
9,338,074
10,496,369
Selling, general and administrative (1)(3)
11,964,503
11,727,987
LMA fees (4)
-
159,084
Corporate general and administrative (5)
2,521,262
2,569,902
Depreciation and amortization
715,948
714,272
Total costs and expenses
24,539,787
25,667,614
Operating income
4,827,594
5,108,273
Interest expense
(2,674,605
)
(3,377,178
)
Other non-operating expense
(222,000
)
(13,388
)
Interest income
103,922
109,457
Other non-operating income
39,894
3,380
Income before income taxes
2,074,805
1,830,544
Income tax expense
888,017
713,912
Net income
$
1,186,788
$
1,116,632
Basic and diluted net income per share
$
0.05
$
0.05
Dividends declared per common share
$
0.06
$
0.06
Basic common shares outstanding
23,241,923
23,411,126
Diluted common shares outstanding
23,337,228
23,583,300
(1)
We refer to "Cost of services," and "Selling, general and
administrative" together as "station operating expenses" for the
"Calculation of SOI" and "Reconciliation of SOI to Net Income" below.
(2)
Includes stock-based compensation of $1,082 and $302 for the three
months ended March 31, 2008 and March 31, 2007, respectively.
(3)
Includes stock-based compensation of $62,585 and $96,847 for the
three months ended March 31, 2008 and March 31, 2007, respectively.
(4)
We operated WJBR-FM in Wilmington under a local marketing agreement
which expired upon completion of the acquisition of WJBR-FM on
February 1, 2007. We incurred the LMA fees under the local marketing
agreement with WJBR-FM.
(5)
Includes stock-based compensation of $435,091 and $569,234 for the
three months ended March 31, 2008 and March 31, 2007, respectively.
Selected Balance
Sheet Data - Unaudited
(in thousands)
March 31,
December 31,
2008
2007
Cash and cash equivalents
$
5,028
$
6,551
Working capital
19,939
21,954
Total assets
334,480
337,152
Long term debt, less current installments
187,306
191,056
Total stockholders’ equity
84,912
85,186
Selected Statement of Cash Flows
Data - Unaudited
(in thousands)
Three Months Ended
March 31,
2008
2007
Net cash provided by operating activities
$
4,704
$
4,833
Net cash used in investing activities
(460
)
(45,332
)
Net cash provided by (used in) financing activities
(5,767
)
39,025
Net decrease in cash and cash equivalents
(1,523
)
(1,474
)
Calculation of SOI (Unaudited):
Three Months Ended
March 31,
2008
2007
Net revenue
$
29,367,381
$
30,775,887
Station operating expenses
(21,302,577
)
(22,224,356
)
SOI
$
8,064,804
$
8,551,531
Reconciliation of SOI to Net
Income (Unaudited):
Three Months Ended
March 31,
2008
2007
SOI
$
8,064,804
$
8,551,531
LMA fees
-
(159,084
)
Corporate general and administrative
(2,521,262
)
(2,569,902
)
Depreciation and amortization
(715,948
)
(714,272
)
Interest expense
(2,674,605
)
(3,377,178
)
Other non-operating expenses
(222,000
)
(13,388
)
Interest income
103,922
109,457
Other non-operating income
39,894
3,380
Income tax expense
(888,017
)
(713,912
)
Net income
$
1,186,788
$
1,116,632
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