Beasley Broadcast(US:BBGI)2019-08-05 19:42Financial Data and Key Metrics Changes - The company reported record second quarter revenue of $65.7 million, a 6.5% increase year-over-year, primarily driven by clusters in Boston, New Jersey, and Philadelphia [4][9] - Excluding non-recurring revenues from the previous year, the revenue increase would have been 8.7% [4] - Free cash flow declined to $5.5 million from $8.4 million, attributed to higher capital expenditures and increased corporate overhead [7][15] - Net income decreased by 13% to $4.3 million, primarily due to higher interest expenses [13] Business Line Data and Key Metrics Changes - Same station revenue increased by 2.7%, with national spot revenue increasing almost 10% for the quarter [5] - Digital revenues accounted for 7.4% of total revenue, up from 6.5% in the previous year [5][19] - Consumer services, the largest revenue category, saw a 17% year-over-year increase, while retail and auto categories experienced growth of 5% and a decline of 1%, respectively [10][11] Market Data and Key Metrics Changes - The Philadelphia cluster achieved a 30% revenue share in the market, with a 2.5% revenue increase on a pro forma basis [6] - The Boston cluster benefited from playoff games, contributing to revenue growth [6] Company Strategy and Development Direction - The company is focused on digital expansion and transformation, launching 62 new websites and developing digital support teams [18][19] - An acquisition of WDMK-FM and three translators in Detroit is expected to be deleveraging and strategically beneficial [8][23] - The company aims to achieve a 30% revenue share in key markets, with ongoing investments in digital initiatives [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the third quarter revenue is pacing flat, with expectations for political revenue to impact quarterly comparisons [23] - The company aims to reduce leverage ratios and expects the acquisition of DMK to contribute positively to financials [23] Other Important Information - Corporate G&A expenses increased due to investments in digital initiatives, with ongoing expenses expected to stabilize once the digital build-out is complete [12] - The company made voluntary debt repayments totaling $4 million in the quarter [14] Q&A Session Summary Question: Update on revenue share in Top 5 markets - Management stated that the goal is a 30% revenue share, with Boston, Charlotte, and Philadelphia around that mark, while Detroit, Tampa, and Vegas are in the 20% range [25][26] Question: Update on ownership rules - Management indicated that a decision is not expected until the first half of next year due to ongoing litigation [27] Question: CapEx normalization expectations - Maintenance CapEx is typically around $4 million to $5 million per year, with investment CapEx expected to normalize towards maintenance levels by 2021 [28] Question: Political revenue growth in the second half of 2019 - Political revenue in the second half of 2018 was approximately $4 million, with limited expectations for growth until closer to 2020 [28] Question: Expected leverage at year-end - Management aims to achieve a leverage ratio around four times by year-end [29]