Beasley Broadcast(BBGI) - 2020 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Beasley Broadcast Group reported an $8.9 million net loss in Q1 2020, driven by a $6.8 million FCC license impairment Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2020 ($) | December 31, 2019 ($) | | :--- | :--- | :--- | | Total current assets | $73,854,333 | $79,658,043 | | Total assets | $748,658,554 | $760,060,229 | | Total current liabilities | $45,963,738 | $53,192,459 | | Total liabilities | $474,280,516 | $475,588,271 | | Total equity | $274,378,038 | $284,471,958 | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | Account | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Net revenue | $57,650,426 | $57,687,554 | | Operating income (loss) | ($7,144,030) | $6,809,578 | | Impairment losses | $6,804,412 | $0 | | Net income (loss) | ($8,946,163) | $1,353,263 | | Basic and diluted EPS ($) | ($0.32) | $0.05 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Account | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,953,723 | $7,410,986 | | Net cash used in investing activities | ($4,193,430) | ($541,132) | | Net cash provided by (used in) financing activities | $2,070,737 | ($3,910,113) | | Net increase (decrease) in cash | ($168,970) | $2,959,741 | Notes to Condensed Consolidated Financial Statements Notes detail COVID-19's impact, including a $6.8 million FCC license impairment and credit agreement amendments - The COVID-19 pandemic caused a rapid increase in advertising cancellations and reduced new sales, negatively impacting net revenue starting mid-March 2020[10] - In response to COVID-19, the company implemented expense controls, including compensation reductions and furloughs, and suspended future quarterly dividend payments[13][15] - Due to COVID-19's economic impact, the company recorded a $6.8 million impairment loss on its FCC licenses in several market clusters[19][20] - On June 30, 2020, the company amended its credit agreement to modify financial covenants, increase interest rates, and add fees, projecting compliance through June 30, 2021[42][43] - A promissory note was amended on June 30, 2020, changing interest to include a 10% payment-in-kind component and modifying principal repayment terms, including partial payment via stock issuance[45] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses COVID-19's impact on Q1 2020, leading to an $8.8 million net loss from a $6.8 million FCC license impairment Results of Operations Comparison (Q1 2020 vs Q1 2019) | Financial Metric | Q1 2020 ($) | Q1 2019 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $57,650,426 | $57,687,554 | ($37,128) | (0.1)% | | Operating expenses | $50,900,477 | $47,451,182 | $3,449,295 | 7.3% | | Impairment losses | $6,804,412 | $0 | $6,804,412 | N/A | | Net income (loss) | ($8,836,561) | $1,353,263 | ($10,189,824) | (753.0)% | - Net revenue remained flat as a decrease in non-political commercial advertising due to COVID-19 was offset by increases in political, digital, and esports revenue[78] - Operating expenses increased by $3.4 million (7.3%) due to higher digital advertising and esports expenses, and WDMK-FM acquisition costs[79] - Due to COVID-19's projected impact, the company amended its credit agreement on June 30, 2020, to avoid a breach of the First Lien Leverage Ratio covenant[51][93] - The Board of Directors suspended future quarterly dividend payments in response to the COVID-19 pandemic to preserve liquidity[52][88] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[111] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2020, with no material changes to internal control - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of the reporting period end[112] - There were no material changes in internal control over financial reporting during Q1 2020[113] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in incidental litigation, but management believes no proceedings will materially affect its financials - The company is not a party to any lawsuit or proceeding likely to have a material adverse effect on its financial condition or operations[113] Item 1A. Risk Factors Updated risk factors address COVID-19's material adverse effects, including potential for further impairment and covenant breaches - The COVID-19 pandemic has materially and adversely affected the company's operations, liquidity, and financial condition due to an advertising industry downturn[115][116] - A $6.8 million impairment loss on FCC licenses was recorded in Q1 2020 due to COVID-19's impact, with increased risk of future impairments, especially in Boston and Charlotte[117][118] - Decreased revenue from the pandemic increases the risk of failing to meet financial covenants under the credit facility, potentially leading to an event of default and debt acceleration[121][122][123] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2020, the company repurchased 7,581 shares to fund withholding taxes for RSU vesting Share Repurchases in Q1 2020 | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | January 1 – 31, 2020 | 1,250 | $3.28 | | February 1 – 29, 2020 | 187 | $3.35 | | March 1 – 31, 2020 | 6,144 | $1.81 | - All shares purchased during the quarter were to fund withholding taxes for the vesting of restricted stock units and shares[126] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - No defaults upon senior securities were reported[127] Item 4. Mine Safety Disclosures This section is not applicable to the company's operations - This section is not applicable to the company's operations[127] Item 5. Other Information No other material information is reported in this section - No other material information is reported in this section[127] Item 6. Exhibits This section lists exhibits filed with the report, including CEO and CFO certifications and XBRL data