Beasley Broadcast(BBGI) - 2023 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The company's Q2 2023 financials show decreased assets, slightly lower revenue, improved net loss, and significantly reduced operating cash flow Condensed Consolidated Balance Sheets This section presents the company's financial position, highlighting changes in assets, liabilities, and equity between periods Balance Sheet Summary (as of June 30, 2023 vs. Dec 31, 2022) | Balance Sheet Items | June 30, 2023 (in millions) | Dec 31, 2022 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $35.5 | $39.5 | | Total current assets | $104.4 | $105.7 | | FCC licenses | $477.2 | $487.2 | | Total assets | $698.4 | $714.9 | | Long-term debt, net | $283.2 | $285.5 | | Total liabilities | $488.6 | $491.5 | | Total stockholders' equity | $209.8 | $223.5 | - Total assets decreased by $16.5 million, primarily driven by a $10.0 million reduction in the value of FCC licenses and a $4.0 million decrease in cash and cash equivalents[9] Condensed Consolidated Statements of Comprehensive Loss This section details the company's revenue, expenses, and net loss for the quarter and six-month periods Q2 2023 vs Q2 2022 Performance | Metric | Q2 2023 (in millions) | Q2 2022 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $63.5 | $64.8 | -2.1% | | Operating Loss | $(4.5) | $(4.5) | 0% | | Impairment Losses | $10.0 | $8.6 | +16.5% | | Net Loss | $(10.4) | $(14.5) | +27.8% | | Basic and Diluted EPS | $(0.35) | $(0.49) | +28.6% | Six Months 2023 vs Six Months 2022 Performance | Metric | Six Months 2023 (in millions) | Six Months 2022 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $121.2 | $120.5 | +0.6% | | Operating Loss | $(4.1) | $(7.3) | +44.2% | | Impairment Losses | $10.0 | $10.5 | -4.2% | | Net Loss | $(14.0) | $(18.0) | +22.6% | | Basic and Diluted EPS | $(0.47) | $(0.61) | +23.0% | Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2023 (in millions) | 2022 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $0.02 | $6.75 | | Net cash used in investing activities | $(2.02) | $(7.30) | | Net cash used in financing activities | $(2.05) | $(4.91) | | Net decrease in cash | $(4.04) | $(5.46) | - Net cash provided by operating activities plummeted from $6.8 million in the first six months of 2022 to just $23,711 in the same period of 2023, indicating significant pressure on operational cash generation[20][103] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed financial statements - In Q2 2023, the company recorded impairment losses of $10.0 million related to potential sales of certain audio assets. This follows impairments in Q2 2022 of $2.8 million on FCC licenses and $5.9 million on goodwill due to rising interest rates[30][33][36] Net Revenue by Segment (Six Months Ended June 30) | Segment | 2023 (in millions) | 2022 (in millions) | Change | | :--- | :--- | :--- | :--- | | Audio | $97.9 | $100.8 | -2.9% | | Digital | $22.3 | $18.5 | +20.2% | | Other | $1.1 | $1.2 | -10.1% | | Total | $121.2 | $120.5 | +0.6% | - The company operates two reportable segments: Audio and Digital. The Digital segment shows strong revenue growth, while the core Audio segment is experiencing a decline[59] - In Q2 2023, the company repurchased $3.0 million of its 8.625% senior secured notes for 66% of the principal amount, resulting in a gain of $1.0 million[42] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2023 revenue decline driven by Audio segment weakness offset by Digital growth, reduced operating expenses, significant impairment losses, and weakened but sufficient liquidity Results of Operations This section analyzes the company's financial performance, detailing revenue and expense trends for the quarter and six-month periods - Q2 2023 vs Q2 2022: - Net revenue decreased by $1.3 million (2.1%), driven by a $3.0 million (5.6%) decline in Audio revenue, partially offset by a $1.6 million (14.8%) increase in Digital revenue[83][85][86] - Operating expenses decreased by $2.3 million (4.3%) due to cost management in the Audio segment[86] - Six Months 2023 vs Six Months 2022: - Net revenue increased slightly by $0.7 million (0.6%), as a $3.8 million (20.2%) growth in Digital revenue outweighed a $2.9 million (2.9%) decline in Audio revenue[91][92][93] - Operating expenses decreased by $1.7 million (1.6%)[93] - Impairment losses of $10.0 million were recorded in Q2 2023 related to potential sales of audio assets. This compares to $8.6 million in impairments in Q2 2022 related to FCC licenses and goodwill due to rising interest rates[87][94] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations - Primary liquidity sources are internally generated cash flow and cash on hand. The board has suspended quarterly dividend payments[96][97] - The company has $300.0 million in 8.625% senior secured notes due in 2026, with restrictive covenants limiting activities like paying dividends and incurring additional debt. As of June 30, 2023, $287.0 million principal amount was outstanding[98][41] - Cash flow from operations for the first six months of 2023 was only $24,000, a sharp decline from $6.8 million in the same period of 2022, primarily due to lower cash receipts from revenue and higher cash paid for expenses[103] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide this disclosure[105] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[106] - There were no changes in internal controls over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[106] PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in routine litigation, none of which is expected to materially impact its financial condition or operations - The company is not a party to any lawsuit or proceeding that management believes is likely to have a material adverse effect on its financial condition or operations[108] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the last annual report on Form 10-K - No material changes to the company's risk factors have occurred since the last annual report[109] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased Class A common stock in Q2 2023 to fund withholding taxes related to restricted stock unit vesting under its equity incentive plan Repurchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2023 | 5,930 | $0.79 | | May 2023 | 6,977 | $1.05 | | June 2023 | 29,887 | $1.01 | - All share purchases were made to fund withholding taxes in connection with the vesting of restricted stock units under the company's equity incentive plan[110] Item 3. Defaults Upon Senior Securities The company reported no defaults on its senior securities during the current reporting period - None[111] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL interactive data files[114]