Beasley Broadcast Group Inc (BBGI) 2012 Q1 法說會逐字稿

Welcome to the Beasley Broadcast Group 2012 first-quarter results webinar. Today's call is being recorded. At this time I would like to turn the conference over to Ms. Caroline Beasley, Chief Financial Officer of Beasley Broadcast Group. Please go ahead.

Thank you, Lauren, and good morning. Before beginning I would like to emphasize that this webcast will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties 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 non-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 the company's website. Investors can also find a copy of today's press release on the investors or press room sections of the site.

My remarks this morning will primarily focus on the first-quarter results and our markets. And Bruce Beasley, our President and COO, is with me today.

So, for the quarter I am pleased to report that revenue increased 1.1%, primarily reflecting strong growth in our Fayetteville, North Carolina, cluster. Overall we achieved revenue increases in six of our 11 market clusters as we saw improved local and digital advertising, which offset the impact of a mid-single-digit decline in national.

Political revenue in the quarter amounted to about 140,000, with the majority coming from Augusta, Vegas, and Miami. First-quarter station operating income increased 2.3% as the net revenue increase more than offset a 0.5% increase in station operating expenses.

Before I get to specific market data, let's talk about national a bit more. Overall, national revenue in the markets that we operate according to Miller Kaplan declined by approximately 7%, and our stations in those markets also declined around 7% on a national basis. We expect that the industry will perform better nationally than our markets, although still down, as the Philly market was the key driver in the national decline.

As far as pacings during the quarter, January and February were pretty good. March got weak as the impact of higher gas prices and the uncertainty over the election began to weigh on consumers and advertisers.

As far as Q2 goes, April is weaker than March, and as we believe the disappointing unemployment figures are now also weighing on consumer confidence. And while visibility is limited, May and June are pacing better than March and April. So we hope we've reached an inflection point as we also started hearing reports last weekend that gas prices are starting to ease up a bit.

So let's switch to category information. Our five largest categories on a combined basis increased 2.7% for the quarter and these five categories accounted for 60% of our revenue.

Individually, we saw increases in retail and restaurants, retail being our largest category. Auto, our second largest category on a combined basis, was flat as we saw increases in auto import offset by declines in domestic auto. The decline in domestic spending was primarily due to a pullback from Jeep Chrysler.

Moving now to market data, we do have six markets that report to Miller Kaplan and we outperformed our markets by about 100 basis points. These stations account for approximately 83% of our revenue. So for the quarter, combined Miller Kaplan market revenue was down 0.75% compared to our stations, which were up 0.29%.

Going into specific markets starting with Philly, the Philly market was down 4.8% compared to our stations, which were down 3.2%. After underperforming the market in fourth quarter we indicated on the last call that ratings were moving in the right direction at Wired and remain solid at XTU. So we expected our stations to outperform the market going forward, and we were able to do so in first quarter.

The Philly market is more impacted than others by national as it represents over 30% of the market's total revenue. And national for the market declined 16.6% compared to our stations, which posted a 12.8% decline. And the national decline reflects lower levels of ad spend from Comcast, Chrysler, and USAA, just to name a few.

Local and digital combined increased 2% for the market compared to our stations, which generated a 3% increase for the quarter.

Moving on to Miami for the quarter, the market increased slightly by 0.4% compared to our stations, which increased slightly by 0.1%. Our performance our performance was basically flat with the market, and we continue to see progress at our rhythmic CHR and country stations.

Now, heading out west to Las Vegas, the market increased 4.4% compared to our stations, which were up 0.4%. Our revenue underperformance in Vegas is tied to national at our Classic Hits station, where we are seeing our ratings bounce back from a dip in 2011. And as such we expect to see revenue in this cluster to perform in line with the market in the coming quarters.

As noted on the last call we did change format at one of the stations that we manage in Las Vegas. We have two that we manage out there. So we do expect a short-term drop in management fees that we received for managing those stations.

Moving along to Fort Myers, the market increased 2.8% compared to our stations which were down 2.1%. We did change format at WRXK in first quarter and as expected revenue did drop. We believe that this will be short-term in nature and it should reverse itself over the next quarter or so.

Augusta market revenue rose 4.6% while our station cluster grew 3.4%. Here again we changed format at one of our FM stations to simulcast with our AM news talk station, and we switched frequencies with our alternative rock station. And this station is not yet performing in line with the market.

Finally, in Fayetteville, North Carolina, the market increased 10.9% compared to our stations increasing 8.3%.

Moving on to station operating expenses they increased 0.5% or $73,000 and station operating income increased $173,000 or 2.3%.

Corporate G&A excluding stock-based comp was $1.9 million for the quarter and this is flat with last year.

Stock-based comp expense -- we recorded approximately $130,000, and this reflects a $24,000 decrease compared with first quarter of last year.

Interest expense for the quarter was down 43% or $1 million, and this reflects the rolloff of swaps in March and September of 2011 and continued reductions in borrowing costs due to repayments on our credit facility.

And our effective tax rate for the quarter was approximately 39.3%. And our Q1 current cash taxes were $125,000.

Turning to the balance sheet during the quarter we made repayments totaling $3.4 million against the credit facility, and that reduced bank debt to $123.4 million.

Our latest trailing 12-month consolidated operating cash flow as defined in our credit agreement was $27.6 million, resulting in a reduction in the leverage ratio to 4.46 times at the end of the quarter. And as mentioned in prior conference calls, last year our leverage covenant at March 21 stepped down to 4.75 times.

Cash on hand at the end of the quarter was $15.3 million, and we spent $369,000 in CapEx.

So, to recap we are pleased with our station clusters' performance in the first quarter ,and we are delighted to deliver a return to revenue and SOI growth.

Looking at the balance sheet, leverage was reduced to 4.46 times compared to 4.6 times at the end of last year. This marks our lowest leverage ratio in almost 6 years.

Before we conclude the call I want to quickly review the progress the industry is making in ensuring that radio remains a highly relevant medium.

Bruce and I attended the NAB Las Vegas convention last week where HD radio, particularly, and mobile devices was highlighted. This technology will provide listeners the capability to have an interactive experience with their station while enabling us to provide advertisers with 360 marketing solutions.

In addition, the NAB continues to advance the industry efforts to have FM chips embedded in mobile devices and to advocate for ownership de-reg.

Overall based on what we're seeing in our markets and our takeaways from NAB and other group heads, the industry is doing the right thing to ensure its bright future.

With that, I thank you for your time this morning. And feel free to give Bruce or myself a call with any questions. Thank you very much.

This concludes today's conference. Thank you for your participation.