Beasley Broadcast Group Inc (BBGI) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your Beasley Broadcast Group 2011 first quarter results conference call. At this time, I would like to introduce your host for today's conference call, Ms. Caroline Beasley. You may begin, ma'am.

Thank you, Kevin, and good morning. Welcome to the Beasley Broadcast Group first-quarter 2011 webcast.

Before beginning, I'd like to emphasize that this webcast will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factors section of our most recent form 10-K.

Today's webcast will also contain a discussion of certain non GAAP financial measures within the meaning of item 10 of Reg S-K. A reconciliation of these GAAP measures with their most directly comparable financial measures calculated and presented in accordance with GAAP can be found in this morning's news announcement and on our website.

I'd also remind listeners that following its completion, a replay of today's webcast can be accessed for five days on our website, BBGI.com. Investors can also find a copy of today's press release on the investors or press room section of this site.

My remarks this morning will primarily focus on our first-quarter results and our markets. Afterwards, Bruce Beasley, our President and COO, and I will address any questions that were e mailed earlier.

I am pleased to report that first-quarter 2011 actual net revenue increased 5.5%, reflecting increases in 9 of our 11 market clusters. With our focus on profitable revenue and the Company's streamlined operating and cost structure, we continue to generate significant flowthrough from this revenue growth. As a result, quarterly SOI increased 25.8% while SOI margins rose to 33%, up from 28% in the first quarter of last year. And we continue to report same-station revenue, expense, and SOI for the quarter which excludes the final quarter of the Dolphins' contract in last year's first quarter. And on a same-station basis, revenue increased 6%, while SOI rose 24.8%, and margins were the same at 33% compared to 28% in Q1 of last year.

As those of you who closely follow BBGI know, in addition to our focus on generating profitable revenue while exercising disciplined cost management, we closely monitor our cluster revenue performance compared with its markets. And I'm pleased to report that on this front, we began the year on a strong note.

In our five markets that report to Miller Kaplan, our clusters outperformed on a combined basis as total revenue in these markets increased 2.14% compared to our clusters where revenue grew 9%, and this is on a same-station basis. These five clusters accounted for 74% of our revenue, and this is consistent with prior periods.

Now, we're going to take a look at some of our key markets and the factors that drove this revenue growth. According to Miller Kaplan, our Philadelphia market revenue increased 5.4% compared to our clusters revenue which increased 16.8%, again according to Miller Kaplan, for the quarter.

Local digital NTR and network revenue growth was good, and we generated very strong national revenue growth in the quarter. Overall, we believe our Philadelphia's cluster outperformance reflects the strength of our stations and their ratings in the market.

Wired, our CHR rhythmic station, maintains a leading position in the 18-34 demo while XTU, our country station, continues to turn in solid ratings in its demo.

In Miami, total market revenue declined 1.2% while our total Miami cluster revenue increased 6.8%, per Miller Kaplan. And this is on a same-station basis, so we excluded the Dolphins' revenue from last year in first quarter.

Our outperformance in the market reflects the strength of our Miami ratings and the fact that we had the appropriate management and sales structures in place at our cluster.

Power 96 ratings remain strong, and the station holds a leading spot in its target demo, and we also remain competitive in terms of PPM at WQAM, our sport's station, and WKIS, our country station.

We achieved significant growth in Las Vegas over the last year, and during Q1 we continued to make positive strides in the market. On the whole, the Las Vegas market posted only slight revenue growth for the quarter as it was up 1.9% compared to our station cluster which again outpaced the market with a 5.6% increase, per Miller Kaplan.

Our revenue results are benefitting from the improved competitive position of our stations as well as our agreement last year to provide services to two FMs in the market. Now going forward, we believe we are well positioned in Las Vegas.

I am pleased to report that we also continued to generate improvements in our Fort Myers market cluster which allowed us to meaningfully outperform the market in Q1. Total Fort Myers market revenue increased 3.4% in the quarter while our station cluster grew 12.1%, per Miller Kaplan.

Finally in Augusta, total market revenue grew 3.6% while our station cluster revenue grew 1.2%, per Miller Kaplan.

Now let me run through a quick overview of the Q1 ad category results. Beasley's first-quarter net sales reflect year-over-year improvements in four of our top five categories with retail posting a decline of 4%, auto increasing 40%, and health increasing 17%.

The top five categories accounted for approximately 57% of our net ad sales revenue for the quarter, and we grew revenue from these sources by 11.5%.

Now moving down the income statement, actual station operating expenses decreased 2.2%, and this reflects cost savings related to not renewing the Dolphins' rights agreement and other contract services. And on a same-station basis, expenses declined 1%.

And as I mentioned before, station operating income increased 25.8% or by $1.6 million while same station operating income increased 24.8%.

Corporate G&A for the quarter excluding stock-based comp totaled $1.9 million, and this reflects an increase of just $100,000 for the quarter compared to last year.

Now, turning to the balance sheet, during the quarter we made repayments totalling $3.2 million against the credit facility, and we reduced total bank debt to $138.8 million. The latest trailing 12-months operating cash flow, as defined in the credit agreement, was $28.5 million, and this resulted in a reduction in the leverage to 4.87 times at the end of the quarter. This compares to our leverage covenant of 7.25 times at the end of the quarter and marks a reduction in the leverage ratio from 5.24 times at the end of 2010.

Cash on hand at the end of the quarter was $10.7 million, and we spent $245,000 in CapEx during the quarter.

First quarter results mark our fourth consecutive quarter of same-station revenue growth which combined with ongoing expense management lead to our fifth consecutive quarter of solid SOI and margin gains.

With the growing consistency of our results, we believe it is evident that our strategy of the last few years is the right path for us to continue to compete well and succeed in our markets.

Our financial focus extends to the management of our capital structure, where quarter by quarter, we make further progress in reducing debt, interest expense, and leverage ratios.

We ended Q1 with our lowest leverage since mid 2006 and expect to continue using cash from operations to further lower debt.

2011 marked Beasley Broadcast Group's 50th year in radio broadcasting. Our success over this half century has been defined by our vast range of industry experience and confidence in the future of radio. Radio is an evolving medium with a strong, diverse, and loyal group of local listeners. And the Beasley management team is a strong advocate of the changes occurring in the radio industry.

Technology has always been a driver of new revenue opportunities. We are quickly adapting to and developing strategies to benefit from changes in media and advertising as we participate in new and emerging online, mobile and HD radio revenue models.

In this regard, we recently entered into an agreement to use the services of Q Interactive. Q is a radio content provider that enables listeners to immediately interact with on-air and online content. We are very impressed with the comprehensiveness of this technology and its offerings, and even made a minority investment in the company as we believe it is complementary to our current services provided by our digital initiative.

By maintaining our long-term focus on our core product and building our digital extension, we are confident we can further develop our platform as a high value media buy for advertisers, a primary source of on-air and online entertainment for consumers, and generate new value for shareholders.

Now with that, Bruce and I will address some of the questions that were e-mailed earlier this morning.

Bruce, the first question comes from Jim Boyle. And he is asking about the management of inventory and spot loads within the industry and our company.

Okay, good morning, Jim. BBGI has not increased nor will we increase our inventory throughout our radio stations.

You did ask about price increases. We are seeing advertisers come back into the radio industry that haven't been in the space for awhile, and the new advertisers are driving our rates. Caroline?

Okay, thank you. Mike Kupinski e mailed several questions, one being, was there any particular region that accounted for the majority of our revenue growth this quarter?

Yes, Mike. We saw good revenue growth across all our markets, particularly in Philadelphia. So we were very happy with our performance across all of our markets.

And he also asked about the cycling of the sports contract -- the Dolphins sports contract.

Yes, and as Caroline mentioned in her comments, the first quarter of 2010 was the last Dolphins revenue we saw in our company.

Okay, Mike asked about corporate G&A and, Mike, yes, this is a good run rate for corporate G&A that you are seeing now. He also wanted us to review the terms of our current debt. And our current debt structure matures in June of 2015. We do have significant amortization beginning in mid 2013. And as many of you are aware, there is a covenant step down in March of 2012 to 4.75 times.

He also asked what is the target debt level whereby the Company would feel comfortable with us considering other uses of free cash flow. And while everyone knows that debt reduction has been a focus for our company and will continue to be, we do feel more comfortable with our debt level, especially given the fact that our cash flow continues to grow and our leverage continues to decrease. With that, we would consider looking at opportunities to grow our business, just as announced today with our small investment with Q. And then also we would look at possibly taking other actions to return value to our shareholders.

With that, I'd like to thank everyone for attending the call today. And, as always, should you have any questions, feel free to give Bruce or myself a call. And thank you very much.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect.