UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
(State or other jurisdiction of |
(I.R.S. Employer |
incorporation or organization) |
Identification No.) |
(Address of Principal Executive Offices and Zip Code)
(
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange on which Registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class A Common Stock, $0.001 par value,
Class B Common Stock, $0.001 par value,
INDEX
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Page No. |
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PART I
FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements. |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. |
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22 |
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Item 4. |
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PART II
OTHER INFORMATION |
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Item 1. |
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24 |
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Item 1A. |
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24 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
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24 |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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25 |
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26 |
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BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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December 31, |
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September 30, |
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2023 |
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2024 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowance for credit losses of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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FCC licenses |
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Goodwill |
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- |
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Other intangibles, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Due to related parties |
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Long-term debt, net of unamortized debt issuance costs |
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Operating lease liabilities |
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Deferred tax liabilities |
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Other long-term liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, $ |
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Class A Common Stock, $ |
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Class B Common Stock, $ |
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Additional paid-in capital |
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Treasury stock, Class A Common Stock; |
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( |
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( |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements
3
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)
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Three Months Ended September 30, |
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2023 |
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2024 |
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Net revenue |
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$ |
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$ |
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Operating expenses: |
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Operating expenses (including stock-based compensation of $ |
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Corporate expenses (including stock-based compensation of $ |
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Depreciation and amortization |
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FCC licenses impairment losses |
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- |
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Goodwill impairment losses |
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Total operating expenses |
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Operating income (loss) |
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( |
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Non-operating income (expense): |
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Interest expense |
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( |
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( |
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Other income (expense), net |
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( |
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Loss before income taxes |
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( |
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( |
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Income tax benefit |
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( |
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( |
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Loss before equity in earnings of unconsolidated affiliates |
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( |
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( |
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Equity in earnings of unconsolidated affiliates, net of tax |
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( |
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Net loss |
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( |
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( |
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Net loss per Class A and Class B common share(1): |
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Basic and diluted |
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$ |
( |
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$ |
( |
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Weighted-average shares outstanding(1): |
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Basic and diluted |
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See accompanying notes to condensed consolidated financial statements
4
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)
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Nine Months Ended September 30, |
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2023 |
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2024 |
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Net revenue |
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$ |
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$ |
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Operating expenses: |
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Operating expenses (including stock-based compensation of $ |
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Corporate expenses (including stock-based compensation of $ |
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Depreciation and amortization |
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FCC licenses impairment losses |
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- |
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Goodwill impairment losses |
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Total operating expenses |
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Operating income (loss) |
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( |
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Non-operating income (expense): |
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Interest expense |
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( |
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Gain on sale of investment |
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- |
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Other income, net |
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Loss before income taxes |
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( |
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( |
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Income tax benefit |
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( |
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( |
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Loss before equity in earnings of unconsolidated affiliates |
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( |
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( |
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Equity in earnings of unconsolidated affiliates, net of tax |
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( |
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Net loss |
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( |
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( |
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Net loss per Class A and Class B common share(1): |
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Basic and diluted |
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$ |
( |
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$ |
( |
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Weighted-average shares outstanding(1): |
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Basic and diluted |
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See accompanying notes to condensed consolidated financial statements
5
BEASLEY BROADCAST GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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Nine Months Ended September 30, |
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2023 |
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2024 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
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Provision for credit losses |
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Depreciation and amortization |
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FCC licenses impairment losses |
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- |
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Goodwill impairment losses |
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Amortization of loan fees |
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Gain on sale of investment |
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- |
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( |
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Gain on repurchases of long-term debt |
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( |
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- |
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Deferred income taxes |
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( |
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( |
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Equity in earnings of unconsolidated affiliates |
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( |
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Change in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses |
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( |
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( |
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Other assets |
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( |
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Accounts payable |
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( |
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Other liabilities |
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( |
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Other operating activities |
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Net cash used in operating activities |
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( |
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Cash flows from investing activities: |
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Capital expenditures |
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( |
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Proceeds from dispositions |
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- |
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Proceeds from sale of investment |
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- |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities: |
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Payments on debt |
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( |
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- |
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Purchase of treasury stock |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Net increase (decrease) in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements
6
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of Beasley Broadcast Group, Inc. and its subsidiaries (the “Company”) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented, and all such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations; therefore, the results shown on an interim basis are not necessarily indicative of results for the full year.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which requires additional disclosures primarily related to the Company's income tax rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively. The Company is currently in the process of reviewing the new guidance.
In November 2023, the FASB issued guidance which requires additional disclosures for the Company's reportable segments, primarily related to significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently in the process of reviewing the new guidance.
On March 8, 2024, the Company received $
On September 11, 2023, the Company completed the sale of substantially all of the assets used in the operations of WWWE-AM
in Atlanta, GA to a third party for $
Federal Communications Commission ("FCC") licenses are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the FCC licenses might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that its FCC licenses are impaired. If the Company determines it is more likely than not that its FCC licenses are impaired, then the Company is required to perform the quantitative impairment test. The quantitative impairment test compares the fair value of the FCC licenses with the carrying amounts of such licenses. If the carrying amounts of the FCC licenses exceed the fair value, an impairment loss is recognized in an amount equal to that excess. For the purpose of testing FCC licenses for impairment, the Company combines its licenses into reporting units based on its market clusters. The FCC license valuations are Level 3 non-recurring fair value measurements.
Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, the Company tested its FCC
licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests performed as of September
30, 2023, the Company recorded impairment losses of $
impairment losses were primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a
decrease in the projected revenues in each market cluster used in the discounted cash flow analyses to estimate the fair values of the
FCC licenses.
7
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The fair values of the FCC licenses in each of the market clusters were estimated using an income approach. The income
approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected
growth rate for radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a
discount rate appropriate for the radio broadcasting industry.
follows:
Revenue growth rates |
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Market revenue shares at maturity |
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Operating income margins at maturity |
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Discount rate |
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During the second quarter of 2023, due to the potential sale of substantially all of the assets used in the operations of WJBR-FM
in Wilmington, DE, the Company recorded an impairment loss of $
Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the
Company’s goodwill might be impaired. The Company assesses qualitative factors to determine whether it is necessary to perform a
quantitative assessment for each reporting unit. If the quantitative assessment is necessary, the Company will determine the fair value
of each reporting unit. If the fair value of any reporting unit is less than the carrying amount, the Company will recognize an
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized will not
exceed the total amount of goodwill allocated to the reporting unit. For the purpose of testing goodwill for impairment, the Company
has identified its radio market clusters and esports as its reporting units. The goodwill valuation is a Level 3 non-recurring fair value
measurement.
Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, the Company tested its goodwill for
impairment during the third quarter of 2023. As a result of the quantitative impairment test performed as of September 30, 2023, the
Company recorded an impairment loss of $
loss was primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the
projected revenues used in the discounted cash flow analysis to estimate the fair value of the goodwill.
The fair value of the goodwill in the Philadelphia, PA market cluster was estimated using an income approach. The income
approach is based upon a discounted cash flow analysis incorporating variables such as projected radio market revenues, projected
growth rate for radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a
discount rate appropriate for the radio broadcasting industry.
follows:
Revenue growth rates |
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Operating income margin |
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Discount rate |
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Long-term debt is comprised of the following:
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December 31, |
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September 30, |
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2023 |
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2024 |
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Secured notes |
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$ |
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$ |
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Less unamortized debt issuance costs |
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( |
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( |
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$ |
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$ |
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On February 2, 2021, the Company issued $
8
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
year. The Existing 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. Prior to February 1, 2025, the Company will be subject to certain premiums, as defined in the Existing Notes Indenture, for optional or mandatory (upon certain contingent events) redemption of some or all of the Existing Notes.
In the second quarter of 2023, the Company repurchased $
Subsequent to quarter end, on October 8, 2024, the Company completed certain refinancing transactions related to the Existing Notes. See Note 16 for additional information.
The changes in stockholders’ equity are as follows:
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Three months ended September 30, |
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Nine months ended September 30, |
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2023 |
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2024 |
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2023 |
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2024 |
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Beginning balance |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation |
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Purchase of treasury stock |
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( |
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( |
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( |
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( |
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Net loss |
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( |
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( |
) |
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( |
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( |
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Ending balance |
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$ |
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$ |
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$ |
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$ |
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Net revenue is comprised of the following:
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Three months ended September 30, |
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Nine months ended September 30, |
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2023 |
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2024 |
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2023 |
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2024 |
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Audio |
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$ |
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$ |
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$ |
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$ |
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Digital |
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Other |
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- |
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- |
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$ |
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$ |
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$ |
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$ |
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The Company recognizes revenue when it satisfies a performance obligation under a contract with an advertiser. The transaction price is allocated to performance obligations based on executed contracts, which represent relative standalone selling prices. Payment is generally due within 30 days, although certain advertisers are required to pay in advance. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. The Company has elected to use the practical expedient to expense sales commissions as incurred. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue in the balance sheets. Substantially all deferred revenue is recognized within 12 months of the payment date.
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December 31, |
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September 30, |
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2023 |
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2024 |
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Deferred revenue |
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$ |
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$ |
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Audio revenue includes revenue from the sale or trade of aired commercial spots to advertisers directly or through national, regional or local advertising agencies. Each commercial spot is considered a performance obligation. Revenue is recognized when the commercial spots have aired. Trade sales are recorded at the estimated fair value of the goods or services received. If commercial spots are aired before the goods or services are received, then a trade sales receivable is recorded. If goods or services are received before the commercial spots are aired, then a trade sales payable is recorded. Other revenue includes revenue from concerts, promotional events, talent fees and other miscellaneous items. Such revenue is generally recognized when the concert, promotional event, or talent services are completed.
9
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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December 31, |
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September 30, |
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2023 |
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2024 |
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Trade sales receivable |
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$ |
|
|
$ |
|
||
Trade sales payable |
|
|
|
|
|
|
||
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
||||
Trade sales revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Digital revenue includes revenue from the sale of streamed commercial spots, station-owned assets and third-party products. Each streamed commercial spot, station-owned asset and third-party product is considered a performance obligation. Revenue is recognized when the commercial spots have streamed. Station-owned assets are generally scheduled over a period of time and revenue is recognized over time as the digital items are used for advertising content, except for streamed commercial spots. Third-party products are generally scheduled over a period of time with an impression target each month. Revenue from the sale of third-party products is recognized over time as the digital items are used for advertising content and impression targets are met each month. The Company assesses each digital sales order to determine if the Company is operating as the principal or an agent. The Company currently operates as the principal for digital revenue.
As a result of the Reverse Stock Split effected on September 23, 2024, consistent with the terms of the 2007 Plan and outstanding awards granted under the 2007 Plan, the total number of shares of Class A Common Stock issuable upon exercise, vesting or settlement of such awards and the total number of shares of Class A Common Stock remaining available for future awards under the 2007 Plan, as well as any share-based limits in the 2007 Plan, were proportionately reduced, and any fractional shares resulting therefrom were rounded down to the nearest whole share. Furthermore, the exercise prices of any outstanding options under the 2007 Plan were proportionately increased based on the Reverse Stock Split ratio, and the resulting exercise prices were rounded up to the nearest whole cent. All share and share-related information presented in the condensed consolidated financial statements, for all periods presented, has been retroactively adjusted to reflect the Reverse Stock Split.
The 2007 Plan permits the Company to issue up to
A summary of restricted stock unit activity is presented below:
|
|
Units |
|
|
Weighted-Average Grant-Date Fair Value |
|
||
Unvested as of July 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested as of September 30, 2024 |
|
|
|
|
$ |
|
||
As of September 30, 2024, there was $
The Company’s effective tax rate was (
10
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Earnings per share calculation information is as follows:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
||||
Net loss attributable to BBGI stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average shares outstanding(1): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to BBGI stockholders per Class A and Class B common share – basic and diluted(1) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The Company excluded the effect of restrictive stock units and restricted stock under the treasury stock method when reporting a net loss as the addition of shares was anti-dilutive. As a result, the Company excluded
The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximates fair value due to the short-term nature of these financial instruments.
The estimated fair value of the Existing Notes, based on available market information, was $
The Company currently operates two operating and reportable segments (Audio and Digital). The Company also operated an
esports segment until December 13, 2023. The identification of segments is consistent with how the segments report to and are
managed by the Company’s Chief Executive Officer (the Company’s Chief Operating Decision Maker). The Audio segment generates
revenue primarily from the sale of commercial advertising to customers of the Company’s stations in the following markets: 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, and Tampa-Saint Petersburg, FL. The Digital segment generates revenue primarily
from the sale of digital advertising to customers of the Company’s stations and other advertisers throughout the United States.
Corporate expenses includes general and administrative expenses and certain other income and expense items not allocated to the
operating segments. Non-operating corporate items, including interest expense and income taxes, are reported in the accompanying
condensed consolidated statements of net loss.
Reportable segment information for the three months ended September 30, 2024 is as follows:
|
|
Audio |
|
|
Digital |
|
|
Corporate |
|
|
Total |
|
||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Corporate expenses |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment losses |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
11
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Audio |
|
|
Digital |
|
|
Corporate |
|
|
Total |
|
||||
Capital expenditures |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Reportable segment information for the three months ended September 30, 2023 is as follows:
|
|
Audio |
|
|
Digital |
|
|
Other |
|
|
Corporate |
|
|
Total |
|
|||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Corporate expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
FCC licenses impairment losses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Goodwill impairment losses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Operating income (loss) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Audio |
|
|
Digital |
|
|
Other |
|
|
Corporate |
|
|
Total |
|
|||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||||
Reportable segment information for the nine months ended September 30, 2024 is as follows:
|
|
Audio |
|
|
Digital |
|
|
Corporate |
|
|
Total |
|
||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||
Operating expenses |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Corporate expenses |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Goodwill impairment losses |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Operating income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
Audio |
|
|
Digital |
|
|
Corporate |
|
|
Total |
|
||||
Capital expenditures |
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
|||
Reportable segment information for the nine months ended September 30, 2023 is as follows:
|
|
Audio |
|
|
Digital |
|
|
Other |
|
|
Corporate |
|
|
Total |
|
|||||
Net revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Corporate expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
FCC licenses impairment losses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Goodwill impairment losses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Operating income (loss) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Audio |
|
|
Digital |
|
|
Other |
|
|
Corporate |
|
|
Total |
|
|||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Reportable segment information as of September 30, 2024 is as follows:
|
|
Audio |
|
|
Digital |
|
|
Corporate |
|
|
Total |
|
||||
Property and equipment, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
FCC licenses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other intangibles, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reportable segment information as of December 31, 2023 is as follows:
12
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
|
Audio |
|
|
Digital |
|
|
Other |
|
|
Corporate |
|
|
Total |
|
|||||
Property and equipment, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
FCC licenses |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Goodwill |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other intangibles, net |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
||||
On September 23, 2024, the Company effected the Reverse Stock Split. As a result of the Reverse Stock Split, every shares of the Company’s Class A Common Stock issued and outstanding were automatically converted into one share of Class A Common Stock, and every shares of the Company’s Class B Common Stock issued and outstanding were automatically converted into one share of Class B Common Stock. No fractional shares of Class A Common Stock or Class B Common Stock were issued in connection with the Reverse Stock Split. Holders of Class A Common Stock or Class B Common Stock received cash in lieu of fractional shares. The Reverse Stock Split had no effect on the par value of the Company’s Class A Common Stock or Class B Common Stock, which remained $
In addition, consistent with the terms of the 2007 Plan and outstanding awards granted under the 2007 Plan, the total number of shares of Class A Common Stock issuable upon exercise, vesting or settlement of such awards and the total number of shares of Class A Common Stock remaining available for future awards under the 2007 Plan, as well as any share-based limits in the 2007 Plan, were proportionately reduced, and any fractional shares resulting therefrom were rounded down to the nearest whole share. Furthermore, the exercise prices of any outstanding options under the 2007 Plan were proportionately increased based on the Reverse Stock Split ratio, and the resulting exercise prices were rounded up to the nearest whole cent. All share and share-related information presented in the condensed consolidated financial statements, for all periods presented, has been retroactively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Split.
On October 8, 2024 (the “Settlement Date”), Beasley Mezzanine Holdings, LLC (the “Issuer”), a wholly owned subsidiary of the Company, and certain other of the Company’s subsidiaries, completed: (i) the exchange (the “Exchange Offer”) of $
On the Settlement Date, the Issuer entered into (i) a new indenture (the “New Notes Indenture”) governing its New Notes, which are fully and unconditionally secured by substantially all of the assets, other than certain excluded property, of the Issuer and the guarantors (the “Collateral”) on a senior secured first-priority lien basis, subject to certain exceptions, limitations and permitted liens and (ii) a new indenture (the “Exchange Notes Indenture”) governing its Exchange Notes, which are fully and unconditionally secured by liens on the Collateral on a senior secured second-priority lien basis, subject to certain exceptions, limitations and permitted liens, in each case with the guarantors thereto and Wilmington Trust, National Association, as trustee and collateral agent, with respect to both the Exchange Notes Indenture and New Notes Indenture. The New Notes Indenture and the Exchange Notes Indenture contain 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
13
BEASLEY BROADCAST GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 its assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of its subsidiaries.
On the Settlement Date, the Issuer also entered into the Supplemental Indenture with Wilmington Trust, National Association, as trustee and collateral agent, supplementing the Existing Notes Indenture. On the Settlement Date, the Company entered into a common stock purchase agreement for the issuance and sale of
As of September 30, 2024, the Company has incurred approximately $
14
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 stations in the following markets: 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, and Tampa-Saint Petersburg, FL. We refer to each group of stations in each 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.
Reverse Stock Split
On September 23, 2024, the Company effected a 1-for-20 reverse stock split of the Company’s Class A Common Stock and Class B Common Stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every 20 shares of the Company’s Class A Common Stock issued and outstanding were automatically converted into one share of Class A Common Stock, and every 20 shares of the Company’s Class B Common Stock issued and outstanding were automatically converted into one share of Class B Common Stock. No fractional shares of Class A Common Stock or Class B Common Stock were issued in connection with the Reverse Stock Split. Holders of Class A Common Stock or Class B Common Stock received cash in lieu of fractional shares. The Reverse Stock Split had no effect on the par value of the Company’s Class A Common Stock or Class B Common Stock, which remained $0.001 per share, and had no effect on the number of authorized shares of the Company’s Class A Common Stock or Class B Common Stock. Following the Reverse Stock Split, the Class A Common Stock continued to be traded on the Nasdaq Capital Market under the symbol “BBGI” on a split-adjusted basis beginning on September 24, 2024.
In addition, consistent with the terms of the Company's 2007 Equity Incentive Award Plan (the "2007 Plan") and outstanding awards granted under the 2007 Plan, the total number of shares of Class A Common Stock issuable upon exercise, vesting or settlement of such awards and the total number of shares of Class A Common Stock remaining available for future awards under the 2007 Plan, as well as any share-based limits in the 2007 Plan, were proportionately reduced, and any fractional shares resulting therefrom were rounded down to the nearest whole share. Furthermore, the exercise prices of any outstanding options under the 2007 Plan were proportionately increased based on the Reverse Stock Split ratio, and the resulting exercise prices were rounded up to the nearest whole cent. All share and share-related information presented in the condensed consolidated financial statements, for all periods presented, has been retroactively adjusted to reflect the Reverse Stock Split.
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:
15
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 station’s local market, either directly to the advertiser or through the advertiser’s agency. National revenue generally consists of commercial
16
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:
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 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 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 stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect
reported amounts and related disclosures. We consider an accounting estimate to be critical if:
Our critical accounting estimates are described in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no additional material changes to our critical accounting estimates during the nine months ended September 30, 2024.
Recent Accounting Pronouncements
Recent accounting pronouncements are described in Note 2 to the accompanying condensed consolidated financial statements.
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
The following summary table presents a comparison of our results of operations for the three months ended September 30, 2023 and 2024, 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 condensed consolidated financial statements and notes to condensed
17
consolidated financial statements included in Part I, Item 1 of this report.
Results of Operations - Consolidated
|
|
Three Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Net revenue |
|
$ |
60,119,757 |
|
|
$ |
58,190,116 |
|
|
$ |
(1,929,641 |
) |
|
|
(3.2 |
)% |
Operating expenses |
|
|
50,117,044 |
|
|
|
49,946,133 |
|
|
|
(170,911 |
) |
|
|
(0.3 |
)% |
Corporate expenses |
|
|
4,493,277 |
|
|
|
4,296,615 |
|
|
|
(196,662 |
) |
|
|
(4.4 |
)% |
FCC licenses impairment losses |
|
|
78,204,065 |
|
|
|
- |
|
|
|
(78,204,065 |
) |
|
|
(100.0 |
)% |
Goodwill impairment losses |
|
|
10,582,360 |
|
|
|
922,000 |
|
|
|
(9,660,360 |
) |
|
|
(91.3 |
)% |
Interest expense |
|
|
6,445,746 |
|
|
|
6,092,820 |
|
|
|
(352,926 |
) |
|
|
(5.5 |
)% |
Income tax benefit |
|
|
23,299,388 |
|
|
|
1,309,803 |
|
|
|
(21,989,585 |
) |
|
|
(94.4 |
)% |
Net loss |
|
|
67,536,837 |
|
|
|
3,560,575 |
|
|
|
(63,976,262 |
) |
|
|
(94.7 |
)% |
Results of Operations - Segments
|
|
Three Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audio |
|
$ |
48,332,715 |
|
|
$ |
46,889,920 |
|
|
$ |
(1,442,795 |
) |
|
|
(3.0 |
)% |
Digital |
|
|
11,177,881 |
|
|
|
11,300,196 |
|
|
|
122,315 |
|
|
|
1.1 |
% |
Other |
|
|
609,161 |
|
|
|
- |
|
|
|
(609,161 |
) |
|
|
(100.0 |
)% |
|
|
$ |
60,119,757 |
|
|
$ |
58,190,116 |
|
|
$ |
(1,929,641 |
) |
|
|
(3.2 |
)% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audio |
|
$ |
38,932,340 |
|
|
$ |
39,516,786 |
|
|
$ |
584,446 |
|
|
|
1.5 |
% |
Digital |
|
|
10,110,593 |
|
|
|
10,429,347 |
|
|
|
318,754 |
|
|
|
3.2 |
% |
Other |
|
|
1,074,111 |
|
|
|
- |
|
|
|
(1,074,111 |
) |
|
|
(100.0 |
)% |
|
|
$ |
50,117,044 |
|
|
$ |
49,946,133 |
|
|
$ |
(170,911 |
) |
|
|
(0.3 |
)% |
Net Revenue. Net revenue decreased $1.9 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Audio revenue decreased $1.4 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to a decrease in local agency revenue and the disposition of WJBR-FM in Wilmington, DE in October 2023 partially offset by an increase in political advertising for the 2024 elections. Digital revenue during the three months ended September 30, 2024 was comparable to the three months ended September 30, 2023. Other revenue decreased $0.6 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, due to the termination of our esports operations in December 2023.
Operating Expenses. Operating expenses decreased $0.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Audio operating expenses increased $0.6 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in compensation expense related to workforce reductions, partially offset by the disposition of WJBR-FM in Wilmington, DE in October 2023. Digital operating expenses during the three months ended September 30, 2024 were comparable to the three months ended September 30, 2023. Other operating expenses decreased $1.1 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, due to the termination of our esports operations in December 2023.
Corporate Expenses. Corporate expenses decreased $0.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in digital expenses allocated to operating expenses, partially offset by an increase in contract services.
FCC Licenses Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our FCC licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests, we recorded impairment losses of $78.2 million related to the FCC licenses in each of our market clusters. The impairment losses were primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the projected revenues in each market cluster used in the discounted cash flow analyses to estimate the fair value of FCC licenses.
18
Goodwill Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we
tested our goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test, we recorded an
impairment loss of $10.6 million related to the goodwill in our Philadelphia, PA market cluster. The impairment loss was primarily
due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the projected revenues
used in the discounted cash flow analysis to estimate the fair value of the goodwill.
Interest Expense. Interest expense decreased $0.4 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 due to repurchases of the Existing Notes throughout 2023.
Income Tax Benefit. Our effective tax rate was approximately (26)% and (27)% for the three months ended September 30, 2023 and 2024, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes.
Net Loss. Net loss for the three months ended September 30, 2024 was $3.6 million compared to a net loss of $67.5 million for the three months ended September 30, 2023, as a result of the factors described above.
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
The following summary table presents a comparison of our results of operations for the nine months ended September 30, 2023 and 2024, 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 condensed consolidated financial statements and notes to condensed consolidated financial statements included in Item 1 of this report.
Results of Operations - Consolidated
|
|
Nine Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Net revenue |
|
$ |
181,360,600 |
|
|
$ |
173,006,119 |
|
|
$ |
(8,354,481 |
) |
|
|
(4.6 |
)% |
Operating expenses |
|
|
152,098,261 |
|
|
|
148,534,924 |
|
|
|
(3,563,337 |
) |
|
|
(2.3 |
)% |
Corporate expenses |
|
|
13,381,403 |
|
|
|
12,584,218 |
|
|
|
(797,185 |
) |
|
|
(6.0 |
)% |
FCC licenses impairment losses |
|
|
88,245,065 |
|
|
|
- |
|
|
|
(88,245,065 |
) |
|
|
(100.0 |
)% |
Goodwill impairment losses |
|
|
10,582,360 |
|
|
|
922,000 |
|
|
|
(9,660,360 |
) |
|
|
(91.3 |
)% |
Interest expense |
|
|
19,764,067 |
|
|
|
17,772,957 |
|
|
|
(1,991,110 |
) |
|
|
(10.1 |
)% |
Gain on sale of investment |
|
|
— |
|
|
|
6,026,776 |
|
|
|
6,026,776 |
|
|
|
— |
|
Income tax benefit |
|
|
26,285,207 |
|
|
|
1,796,019 |
|
|
|
(24,489,188 |
) |
|
|
(93.2 |
)% |
Net loss |
|
|
81,504,032 |
|
|
|
3,828,626 |
|
|
|
(77,675,406 |
) |
|
|
(95.3 |
)% |
Results of Operations - Segments
|
|
Nine Months Ended September 30, |
|
|
Change |
|
||||||||||
|
|
2023 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audio |
|
$ |
146,198,774 |
|
|
$ |
137,748,127 |
|
|
$ |
(8,450,647 |
) |
|
|
(5.8 |
)% |
Digital |
|
|
33,455,935 |
|
|
|
35,257,992 |
|
|
|
1,802,057 |
|
|
|
5.4 |
% |
Other |
|
|
1,705,891 |
|
|
|
- |
|
|
|
(1,705,891 |
) |
|
|
(100.0 |
)% |
|
|
$ |
181,360,600 |
|
|
$ |
173,006,119 |
|
|
$ |
(8,354,481 |
) |
|
|
(4.6 |
)% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audio |
|
$ |
118,200,967 |
|
|
$ |
117,418,596 |
|
|
$ |
(782,371 |
) |
|
|
(0.7 |
)% |
Digital |
|
|
30,804,774 |
|
|
|
31,116,328 |
|
|
|
311,554 |
|
|
|
1.0 |
% |
Other |
|
|
3,092,520 |
|
|
|
- |
|
|
|
(3,092,520 |
) |
|
|
(100.0 |
)% |
|
|
$ |
152,098,261 |
|
|
$ |
148,534,924 |
|
|
$ |
(3,563,337 |
) |
|
|
(2.3 |
)% |
Net Revenue. Net revenue decreased $8.4 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Audio revenue decreased $8.5 million during the nine months ended September 30, 2024 as
19
compared to the nine months ended September 30, 2023, primarily due to a decrease in local agency revenue and the disposition of WJBR-FM in Wilmington, DE in October 2023 partially offset by an increase in political advertising for the 2024 elections. Digital revenue increased $1.8 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to continued growth in the digital segment. Other revenue decreased $1.7 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, due to the termination of our esports operations in December 2023.
Operating Expenses. Operating expenses decreased $3.6 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Audio operating expenses decreased $0.8 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the disposition of WJBR-FM in Wilmington, DE in October 2023, partially offset by an increase in compensation expense related to workforce reductions. Digital operating expenses during the nine months ended September 30, 2024 were comparable to the nine months ended September 30, 2023. Other operating expenses decreased $3.1 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, due to the termination of our esports operations in December 2023.
Corporate Expenses. Corporate expenses decreased $0.8 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in digital expenses allocated to operating expenses, partially offset by an increase in compensation and contract services.
FCC Licenses Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues,
we tested our FCC licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests, we
recorded impairment losses of $78.2 million related to the FCC licenses in each of our market clusters. The impairment losses were
primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the projected
revenues in each market cluster used in the discounted cash flow analyses to estimate the fair value of FCC licenses. On August 11,
2023, we entered into an agreement to sell substantially all of the assets used in the operations of WJBR-FM in Wilmington, DE to a
third party for $5.0 million in cash. As a result of entering the agreement, we recorded an impairment loss of $10.0 million related to
the FCC license during the second quarter of 2023.
Goodwill Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we
tested our goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test we recorded an
impairment loss of $10.6 million related to the goodwill in our Philadelphia, PA market cluster. The impairment loss was primarily
due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the projected revenues
used in the discounted cash flow analysis to estimate the fair value of the goodwill.
Interest Expense. Interest expense decreased $2.0 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 due to repurchases of the Existing Notes throughout 2023.
Gain on Sale of Investment. On March 8, 2024, we received $6.0 million related to the sale of an investment in Broadcast Music,
Inc. and recorded a gain of $6.0 million.
Income Tax Benefit. Our effective tax rate was approximately (24)% and (32)% for the nine months ended September 30, 2023 and 2024, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes.
Net Loss. Net loss for the nine months ended September 30, 2024 was $3.8 million compared to a net loss of $81.5 million for the nine months ended September 30, 2023, as a result of the factors described above.
Liquidity and Capital Resources
Overview. Our primary sources of liquidity are internally generated cash flow and cash on hand. Our primary liquidity needs have been, and for the next 12 months and thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with 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 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.
20
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 New Notes Indenture and Exchange Notes Indenture limit 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 “Existing Notes”) under an indenture dated February 2, 2021 (the “Existing Notes Indenture”). Interest on the Existing 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 Existing 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.
In the second quarter of 2023, we repurchased $3.0 million principal amount of the Existing Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the repurchase.
On October 8, 2024 (the “Settlement Date”), Beasley Mezzanine Holdings, LLC (the “Issuer”), a wholly owned subsidiary of the Company, and certain other of the Company’s subsidiaries, completed: (i) the exchange (the “Exchange Offer”) of $194.7 million aggregate principal amount of the Existing Notes (representing 72.9% of the aggregate principal amount outstanding of the Existing Notes) for (a) $184.9 million aggregate principal amount of the Issuer’s newly issued 9.200% Senior Secured Second Lien Notes due August 1, 2028 (the “Exchange Notes”) at an exchange ratio of 95.0% of the aggregate principal amount of the Existing Notes tendered for exchange, (b) 179,384 shares of Class A Common Stock of the Company, based upon pro rata ownership of the Exchange Notes issued by the Issuer, and (c) certain cash payments aggregating approximately $1.0 million, (ii) the purchase of $68.0 million aggregate principal amount of the Existing Notes at a purchase price of 62.5% plus accrued and unpaid interest (such offer, the “Tender Offer”) and (iii) the issuance by the Issuer of $30.9 million aggregate principal amount of 11.000% Senior Secured First Lien notes due 2028 (the “New Notes,” and such offering, the “New Notes Offer”) to holders of Existing Notes or their designees who participated in the Exchange Offer, including to certain backstop commitment parties who committed to purchase the New Notes not otherwise subscribed for. The Company received requisite consents from holders of Existing Notes to (a) adopt certain amendments (the “Proposed Amendments”) to the Existing Notes Indenture and the related security documents and (b) execute a supplemental indenture (the “Supplemental Indenture”) to the Existing Notes Indenture and each relevant ancillary document effecting the Proposed Amendments. The Company used the proceeds from the New Notes Offer of &30.0 million to fund, in part, the purchase of Existing Notes tendered in the Tender Offer.
On the Settlement Date, the Issuer entered into (i) a new indenture (the “New Notes Indenture”) governing its New Notes, which are fully and unconditionally secured by substantially all of the assets, other than certain excluded property, of the Issuer and the guarantors (the “Collateral”) on a senior secured first-priority lien basis, subject to certain exceptions, limitations and permitted liens and (ii) a new indenture (the “Exchange Notes Indenture”) governing its Exchange Notes, which are fully and unconditionally secured by liens on the Collateral on a senior secured second-priority lien basis, subject to certain exceptions, limitations and permitted liens, in each case with the guarantors thereto and Wilmington Trust, National Association, as trustee and collateral agent, with respect to both the Exchange Notes Indenture and New Notes Indenture. On the Settlement Date, the Issuer also entered into the Supplemental Indenture with Wilmington Trust, National Association, as trustee and collateral agent, supplementing the Existing Notes Indenture. The New Notes Indenture and the Exchange Notes Indenture contain 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.
On the Settlement Date, the Company entered into a common stock purchase agreement for the issuance and sale of 56,864 shares of Class A Common Stock of the Company to Beasley Family Towers, LLC at an offering price of approximately $12.31 per share, for gross proceeds of $700,000. The Company used the net proceeds to fund a portion of the cash payment made to the exchanging holders in the Exchange Offer and for other corporate purposes.
From time to time, we repurchase sufficient shares of our Class A Common Stock to fund withholding taxes in connection with the vesting of restricted stock units. We paid approximately $90,000 to repurchase 6,684 shares during the nine months ended September 30, 2024. From time to time, we may seek to repurchase, redeem or otherwise retire our Existing 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.
21
We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:
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 12 months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Existing 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 September 30, 2024.
Cash Flows. The following summary table presents a comparison of our cash flows for the nine months ended September 30, 2023 and 2024 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 condensed consolidated financial statements and notes to condensed consolidated financial statements included in Part I, Item 1 of this report.
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(5,004,885 |
) |
|
$ |
(2,241,342 |
) |
Net cash provided by (used in) investing activities |
|
|
(2,810,716 |
) |
|
|
3,399,736 |
|
Net cash used in financing activities |
|
|
(2,053,588 |
) |
|
|
(90,136 |
) |
Net increase (decrease) in cash and cash equivalents |
|
$ |
(9,869,189 |
) |
|
$ |
1,068,258 |
|
Net Cash Used In Operating Activities. Net cash used in operating activities was $2.2 million during the nine months ended September 30, 2024, as compared to net cash used in operating activities of $5.0 million during the nine months ended September 30, 2023. The $2.8 million decrease in net cash used in operating activities was primarily due to an $11.5 million decrease in net cash paid for operating expenses, a $2.0 million decrease in interest payments, a $1.1 million decrease in cash paid for corporate expenses, and a $1.0 million decrease in income tax payments, partially offset by a $12.6 decrease in cash receipts from revenue.
Net Cash Provided By (Used In) Investing Activities. Net cash provided by investing activities was $3.4 million during the nine months ended September 30, 2024, as compared to net cash used in investing activities of $2.8 million during the nine months ended September 30, 2023. Net cash provided by investing activities during the nine months ended September 30, 2024 included proceeds of $6.0 million from the sale of an investment, partially offset by payments of $2.6 million for capital expenditures. Net cash used in investing activities for the same period in 2023 included payments of $3.1 million for capital expenditures.
Net Cash Used In Financing Activities. Net cash used in financing activities was approximately $90,000 during the nine months ended September 30, 2024, as compared to net cash used in financing activities of $2.1 million during the nine months ended September 30, 2023. Net cash used in financing activities during the nine months ended September 30, 2023 included payments on debt of $2.0 million.
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 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.
22
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
23
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 Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2023.
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 Common Stock during the three months ended September 30, 2024.
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 |
|
||||
July 1 – 31, 2024 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
August 1 – 31, 2024 |
|
|
4,055 |
|
|
$ |
12.99 |
|
|
|
- |
|
|
|
- |
|
September 1 – 30, 2024 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
Total |
|
|
4,055 |
|
|
|
|
|
|
|
|
|
|
|||
On March 27, 2007, our board of directors approved the Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”). The original 10-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. All shares purchased during the three months ended September 30, 2024 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.
During the three months ended September 30, 2024,
trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
24
ITEM 6. EXHIBITS.
Exhibit Number |
|
Description |
3.1 |
|
|
10.1* |
|
|
10.2* |
|
|
10.3* |
|
|
10.4 |
|
|
10.5* |
|
|
31.1 |
|
|
31.2 |
|
|
32.1** |
|
|
32.2** |
|
|
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 With Embedded Linkbase Document. |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
** This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is
not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
25
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: November 8, 2024 |
|
/s/ Caroline Beasley |
|
|
Name: Caroline Beasley |
|
|
Title: Chief Executive Officer (principal executive officer) |
|
|
|
Dated: November 8, 2024 |
|
/s/ Lauren Burrows Coleman |
|
|
Name: Lauren Burrows Coleman |
|
|
Title: Chief Financial Officer (principal financial and accounting officer) |
26