Beasley Broadcast(BBGI) - 2023 Q4 - Annual Report

Part I Business Beasley Broadcast Group operates as a multi-platform media company, primarily in radio, generating revenue from advertising and digital solutions, facing intense competition and FCC regulation - The company operates as a multi-platform media company with its core business in radio station operations across various U.S. markets, including Atlanta, Boston, Detroit, and Philadelphia[8] - The primary source of revenue is the sale of advertising time, supplemented by a growing digital advertising segment[10] - The radio broadcasting industry is highly competitive, facing rivals including other radio stations, digital audio streaming, and major technology companies[11] - The business is heavily regulated by the FCC, with all radio station licenses renewed for full eight-year terms in the last cycle[13][15] - As of February 6, 2024, the company employed 755 full-time and 372 part-time employees, and is party to collective bargaining agreements[49] Risk Factors The company faces diverse risks including potential Nasdaq delisting, economic downturns impacting advertising, intense competition, FCC license dependency, substantial debt, and Beasley family control - The company received a Nasdaq notice on October 13, 2023, for failing to meet the $1.00 minimum bid price, with a compliance deadline of April 10, 2024[56] - Economic risks include inflation's impact on costs and advertising revenue sensitivity to economic downturns, as advertising is a discretionary expense[60][63] - The company is dependent on federally issued FCC licenses, renewable every eight years, with non-renewal posing material harm risks[78] - As of December 31, 2023, the company had $267.0 million in long-term debt against $149.0 million in equity, potentially limiting financial flexibility and dividend payments[90] - FCC licenses and goodwill constituted 69% of total assets as of December 31, 2023, with future impairment potentially affecting operating results[89] - The Beasley family controls 94% of the total voting power, enabling them to direct management, policies, and control stockholder vote outcomes, including changes in control[111][112] Unresolved Staff Comments The company reports no unresolved staff comments - None Cybersecurity The company's cybersecurity program, based on NIST CSF and overseen by the Audit Committee, is integrated into enterprise risk management, with no material incidents identified to date - The company's cybersecurity program is designed based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)[118] - Oversight is provided by the Audit Committee of the Board of Directors, which receives periodic reports on cybersecurity risks[120] - The management team responsible for cybersecurity includes the Chief Technology Officer, General Counsel, and the Senior Vice President of Information Technology & Security[121] - The company has not identified any cybersecurity risks or prior incidents that have materially affected its business, operations, or financial condition[119] Properties The company owns or leases various properties for its radio station operations, with several key offices leased from entities affiliated with the Beasley family Property Locations and Ownership | Location | Description | Owned/Leased | | :--- | :--- | :--- | | Atlanta, GA | Office space for stations | Third-party lease | | Augusta, GA | Office space for stations | Owned | | Boston, MA | Office space for stations | Third-party lease | | Camden, NJ | Office space for station | Owned | | Charlotte, NC | Office space for stations | Third-party lease | | Detroit, MI | Office space for stations | Owned | | Estero, FL | Office space for stations | Related party lease | | Fayetteville, NC | Office space for stations | Related party lease | | Las Vegas, NV | Office space for stations | Related party lease | | Middlesex, NJ | Office space for stations | Owned | | Monmouth, NJ | Office space for stations | Owned | | Morristown, NJ | Office space for stations | Owned | | Philadelphia, PA | Office space for stations | Third-party lease | | Tampa, FL | Office space for stations | Third-party lease | - Several properties, including principal executive offices, are leased from related parties controlled by members of the Beasley family[124][125] Legal Proceedings The company is involved in routine litigation, with management not expecting any material adverse effects on financial condition or operations - The company is not a party to any lawsuit or proceeding likely to have a material adverse effect on its financial condition or results[126] Mine Safety Disclosures This item is not applicable to the company - Not applicable[127] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A common stock trades on NASDAQ, while Class B has no public market; quarterly dividends are suspended, and shares were repurchased in Q4 2023 for tax purposes - The company's Class A common stock trades on the NASDAQ Global Market (BBGI), while Class B common stock has no public trading market[129] - The Board of Directors has suspended future quarterly dividend payments, a decision also constrained by its Notes indenture[131] - In Q4 2023, the company purchased 15,601 shares of Class A common stock at an average price of $0.90 per share to fund withholding taxes for vesting restricted stock units[133] Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2023, net revenue decreased to $247.1 million due to audio decline, offset by digital growth, resulting in a $75.1 million net loss driven by significant impairment charges, with liquidity challenges and $267.0 million in long-term debt Key Financial Performance Metrics | Metric | 2022 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $256.4M | $247.1M | ($9.3M) | -3.6% | | Operating expenses | $213.2M | $208.2M | ($5.0M) | -2.3% | | FCC licenses impairment | $23.8M | $89.2M | $65.4M | 274.9% | | Goodwill impairment | $16.3M | $10.6M | ($5.7M) | -34.9% | | Net loss | ($42.1M) | ($75.1M) | ($33.0M) | 78.6% | Revenue by Segment | Revenue Segment | 2022 | 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Audio | $213.0M | $199.5M | ($13.5M) | -6.4% | | Digital | $40.8M | $45.4M | $4.6M | 11.4% | - The company recorded total impairment losses of $89.2 million on FCC licenses and $10.6 million on goodwill in 2023, driven by increased discount rates and decreased projected revenues[167][169] - Net cash used in operating activities was $4.7 million in 2023, a significant decrease from $11.1 million provided in 2022, due to lower cash receipts and higher payments[183] - As of December 31, 2023, the company had $267.0 million in 8.625% senior secured notes due 2026[287] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for smaller reporting companies - Not required for smaller reporting companies[191] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2022-2023, including balance sheets, income statements, equity, and cash flows, with the auditor's report highlighting FCC licenses impairment as a critical audit matter - The independent auditor, Crowe LLP, issued a fair opinion, identifying FCC Licenses Impairment Assessment as a Critical Audit Matter due to high subjectivity and judgment[197][201] Consolidated Balance Sheet Highlights (Millions USD) | Balance Sheet Item | Dec 31, 2022 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $714.9M | $574.3M | | FCC Licenses | $487.2M | $393.0M | | Goodwill | $13.3M | $0.9M | | Long-term Debt, net | $285.5M | $264.2M | | Total Stockholders' Equity | $223.5M | $149.0M | Consolidated Income Statement Highlights (Millions USD) | Income Statement Item | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net Revenue | $256.4M | $247.1M | | Operating Loss | ($34.3M) | ($82.0M) | | Net Loss | ($42.1M) | ($75.1M) | | Net Loss Per Share | ($1.43) | ($2.51) | - In 2023, the company terminated esports operations, receiving a $6.0 million payment and forgiveness of a $6.0 million franchise fee, and sold stations WJBR-FM for $5.0 million and WWWE-AM for $250,000[244][245][246][247] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None Controls and Procedures As of December 31, 2023, the CEO and CFO concluded that disclosure controls and internal control over financial reporting were effective, with no material changes reported in Q4 2023 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[338] - Management concluded that the company's internal control over financial reporting was effective as of year-end, based on the COSO 2013 framework[341] Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q4 2023 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q4 2023[343] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not Applicable[343] Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[345] Executive Compensation Information regarding executive compensation is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[346] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information concerning security ownership is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[347] Certain Relationships and Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[348] Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[349] Part IV Exhibit and Financial Statement Schedules This section lists financial statements from Item 8 and provides a detailed index of all exhibits filed with the Form 10-K, including governance documents and certifications - This item lists the financial statements and schedules filed with the report and provides an index of all exhibits, including governance documents and certifications[351][352] Form 10-K Summary The company reports no Form 10-K summary - None