Beasley Broadcast Group Inc 10-Q for FY2023 Q1
Beasley Broadcast Group Inc (BBGI)
About this 10-Q
Beasley Broadcast Group Inc filed this 10-Q on April 27, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $57.78M
- up 3.7% from $55.72M a year earlier
- Net loss
- $3.54M
- compared with a net loss of $3.74M a year earlier
- Diluted EPS
- -$0.12
- compared with -$0.13 a year earlier
Table of Contents
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| (State of or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| Title of Each Class |
Trading Symbol |
Name of Each Exchange on which Registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Table of Contents
INDEX
| Page No. |
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| PART I | ||||||
| FINANCIAL INFORMATION | ||||||
| Item 1. |
3 | |||||
| Notes to Condensed Consolidated Financial Statements | 6 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||||
| Item 3. |
15 | |||||
| Item 4. |
16 | |||||
| PART II | ||||||
| OTHER INFORMATION | ||||||
| Item 1. |
17 | |||||
| Item 1A. |
17 | |||||
| Item 2. |
17 | |||||
| Item 3. |
17 | |||||
| Item 4. |
17 | |||||
| Item 5. |
17 | |||||
| Item 6. |
18 | |||||
| 19 | ||||||
Table of Contents
December 31, |
March 31, |
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2022 |
2023 |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | $ | ||||||
| Accounts receivable, less allowance for credit losses of $ |
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| Prepaid expenses |
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| Other current assets |
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| |
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|
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| Total current assets |
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| Property and equipment, net |
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| Operating lease right-of-use |
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| Finance lease right-of-use |
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| FCC licenses |
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| Goodwill |
||||||||
| Other intangibles, net |
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| Other assets |
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| |
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| Total assets |
$ | |
$ | |
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| |
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|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | $ | ||||||
| Operating lease liabilities |
||||||||
| Other current liabilities |
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| |
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|
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| Total current liabilities |
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| Due to related parties |
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| Long-term debt, net of unamortized debt issuance costs |
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| Operating lease liabilities |
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| Deferred tax liabilities |
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| Other long-term liabilities |
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| |
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| Total liabilities |
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Preferred stock, $ |
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| Class A common stock, $ |
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| Class B common stock, $ issued and outstanding in 2022 and 2023 |
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| Additional paid-in capital |
||||||||
| Treasury stock, Class A common stock; |
( |
) | ( |
) | ||||
| Retained earnings |
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| Accumulated other comprehensive income |
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| |
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| Total stockholders’ equity |
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| |
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| Total liabilities and stockholders’ equity |
$ | $ | ||||||
| |
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Three Months Ended March 31, |
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2022 |
2023 |
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| Net revenue |
$ | $ | ||||||
| |
|
|
|
|||||
| Operating expenses: |
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| Operating expenses (including stock-based compensation of $ |
||||||||
| Corporate expenses (including stock-based compensation of $ |
||||||||
| Depreciation and amortization |
||||||||
| Impairment loss |
— | |||||||
| |
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|
|||||
| Total operating expenses |
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| |
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|
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| Operating income (loss) |
( |
) | ||||||
| Non-operating income (expense): |
||||||||
| Interest expense |
( |
) | ( |
) | ||||
| Other income, net |
||||||||
| |
|
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|
|||||
| Loss before income taxes |
( |
) | ( |
) | ||||
| Income tax benefit |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Loss before equity in earnings of unconsolidated affiliates |
( |
) | ( |
) | ||||
| Equity in earnings of unconsolidated affiliates, net of tax |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net loss |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net loss per Class A and Class B common share: |
||||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | ||
| Weighted average shares outstanding: |
||||||||
| Basic and diluted |
||||||||
Three Months Ended March 31, |
||||||||
2022 |
2023 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Stock-based compensation |
||||||||
| Provision for credit losses |
||||||||
| Depreciation and amortization |
||||||||
| Impairment loss |
— | |||||||
| Amortization of loan fees |
||||||||
| Deferred income taxes |
( |
) | ( |
) | ||||
| Equity in earnings of unconsolidated affiliates |
||||||||
| Change in operating assets and liabilities: |
||||||||
| Accounts receivable |
||||||||
| Prepaid expenses |
( |
) | ||||||
| Other assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Other liabilities |
( |
) | ( |
) | ||||
| Other operating activities |
( |
) | ||||||
| |
|
|
|
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| Net cash provided by (used in) operating activities |
( |
) | ||||||
| |
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| Cash flows from investing activities: |
||||||||
| Capital expenditures |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| |
|
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| Cash flows from financing activities: |
||||||||
| Reduction of finance lease liabilities |
( |
) | — | |||||
| Purchase of treasury stock |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| |
|
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|
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| Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents at beginning of period |
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| |
|
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|
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| Cash and cash equivalents at end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Cash paid for interest |
$ | $ | ||||||
| |
|
|
|
|||||
| Cash paid for income taxes |
$ | $ | ||||||
| |
|
|
|
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(1) |
Interim Financial Statements |
(2) |
Summary of Significant Accounting Policies |
Three months ended March 31, |
||||||||
2022 |
2023 |
|||||||
Beginning balance |
$ |
$ |
||||||
Provision for credit losses |
||||||||
Deductions |
( |
) |
( |
) | ||||
Ending balance |
$ |
$ |
||||||
(3) |
Disposition |
(4) |
Long-Term Debt |
December 31, |
March 31, |
|||||||
2022 |
2023 |
|||||||
Secured notes |
$ | $ | ||||||
Less unamortized debt issuance costs |
( |
) | ( |
) | ||||
| $ | $ | |||||||
(5) |
Stockholders’ Equity |
Three months ended March 31, |
||||||||
2022 |
2023 |
|||||||
Beginning balance |
$ | $ | ||||||
Stock-based compensation |
||||||||
Purchase of treasury stock |
( |
) | ( |
) | ||||
Net loss |
( |
) | ( |
) | ||||
Ending balance |
$ | $ | ||||||
(6) |
Net Revenue |
Three months ended March 31, |
||||||||
2022 |
2023 |
|||||||
Audio |
$ | $ | ||||||
Digital |
||||||||
Other |
||||||||
| $ | $ | |||||||
December 31, |
March 31, |
|||||||
2022 |
2023 |
|||||||
Deferred revenue |
$ | $ | ||||||
December 31, |
March 31, |
|||||||
2022 |
2023 |
|||||||
Trade sales receivable |
$ | $ | ||||||
Trade sales payable |
||||||||
Three months ended March 31, |
||||||||
2022 |
2023 |
|||||||
Trade sales revenue |
$ | $ | ||||||
(7) |
Stock-Based Compensation |
Units |
Weighted- Average Grant-Date Fair Value |
|||||||
Unvested as of January 1, 2023 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) | ||||||
Forfeited |
( |
) | ||||||
Unvested as of March 31, 2023 |
$ | |||||||
(8) |
Income Taxes |
(9) |
Earnings Per Share |
Three months ended March 31, |
||||||||
2022 |
2023 |
|||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Weighted-average shares outstanding: |
||||||||
Basic |
||||||||
Effect of dilutive restricted stock units and restricted stock |
||||||||
Diluted |
||||||||
Net loss per Class A and Class B common share – basic and diluted |
$ | ( |
) | $ | ( |
) | ||
(10) |
Financial Instruments |
(11) |
Segment Information |
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Net revenue |
$ | $ | $ | $ | — | $ | ||||||||||||||
Operating expenses |
— | |||||||||||||||||||
Corporate expenses |
— | — | — | |||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||
Operating income (loss) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Capital expenditures |
$ | $ | $ | $ | $ | |||||||||||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Net revenue |
$ | $ | $ | $ | — | $ | ||||||||||||||
Operating expenses |
— | |||||||||||||||||||
Corporate expenses |
— | — | — | |||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||
Impairment loss |
— | — | — | |||||||||||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Capital expenditures |
$ | $ | $ | $ | $ | |||||||||||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
Property and equipment, net |
$ | $ | $ | $ | $ | |||||||||||||||
FCC licenses |
— | — | — | |||||||||||||||||
Goodwill |
— | |||||||||||||||||||
Other intangibles, net |
||||||||||||||||||||
Audio |
Digital |
Other |
Corporate |
Total |
||||||||||||||||
| Property and equipment, net |
$ | $ | $ | $ | $ | |||||||||||||||
| FCC licenses |
— | — | — | |||||||||||||||||
| Goodwill |
— | |||||||||||||||||||
| Other intangibles, net |
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Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
General
We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. We own and operate stations in the following markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, and Wilmington, DE. We refer to each group of stations in each market as a market cluster. Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc. and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements” about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based on the current beliefs and expectations of the Company’s management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, contain words such as: “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “plans,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions.
Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:
| • | the effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s Federal Communications Commission (“FCC”) licenses and/or goodwill; |
| • | external economic forces and conditions that could have a material adverse impact on the Company’s advertising revenues and results of operations; |
| • | the ability of the Company’s stations to compete effectively in their respective markets for advertising revenues; |
| • | the ability of the Company to develop compelling and differentiated digital content, products and services; |
| • | audience acceptance of the Company’s content, particularly its audio programs; |
| • | the ability of the Company to respond to changes in technology, standards and services that affect the audio industry; |
| • | the Company’s dependence on federally issued licenses subject to extensive federal regulation; |
| • | actions by the FCC or new legislation affecting the audio industry; |
| • | increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists; |
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| • | the Company’s dependence on selected market clusters of stations for a material portion of its net revenue; |
| • | credit risk on the Company’s accounts receivable; |
| • | the risk that the Company’s FCC licenses and/or goodwill could become impaired; |
| • | the Company’s substantial debt levels and the potential effect of restrictive debt covenants on the Company’s operational flexibility and ability to pay dividends; |
| • | the potential effects of hurricanes on the Company’s corporate offices and stations; |
| • | the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming; |
| • | disruptions or security breaches of the Company’s information technology infrastructure and information systems; |
| • | the loss of key personnel; |
| • | the Company’s ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on the Company’s financial condition and results of operations; |
| • | the fact that the Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of the Company; and |
| • | other economic, business, competitive, and regulatory factors affecting the businesses of the Company, including those set forth in the Company’s filings with the SEC. |
Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. We do not intend, and undertake no obligation, to update any forward-looking statement.
Financial Statement Presentation
The following discussion provides a brief description of certain key items that appear in our financial statements and general factors that impact these items.
Net Revenue. Our net revenue is primarily derived from the sale of commercial spots to advertisers directly or through national, regional or local advertising agencies. Revenues are reported at the amount we expect to be entitled to receive under the contract. Local revenue generally consists of commercial advertising sales, digital advertising sales and other sales to advertisers in a station’s local market, either directly to the advertiser or through the advertiser’s agency. National revenue generally consists of commercial advertising sales through advertiser agencies. National advertiser agencies generally purchase advertising for multiple markets. National sales are generally facilitated by our national representation firm, which serves as our agent in these transactions.
Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors:
| • | a station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio; |
| • | the number of stations, as well as other forms of media, in the market competing for the attention of the same demographic groups; |
| • | the supply of, and demand for, radio advertising time; and |
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| • | the size of the market. |
Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our radio market clusters. Seasonal revenue fluctuations are also common in the radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues typically are lowest in the first calendar quarter of the year. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups. This political spending typically is heaviest during the fourth quarter of such years.
We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime.
We also continue to invest in digital support services to develop and promote our station websites, applications, and other distribution platforms. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our stations over the internet. We also generate revenue from selling third-party digital products and services.
Operating Expenses. Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:
| • | it involves a significant level of estimation uncertainty; and |
| • | changes in the estimate or different estimates that could have been selected have had or are reasonably likely to have a material impact on our results of operations or financial condition. |
Our critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no additional material changes to our critical accounting estimates during the three months ended March 31, 2023.
Recent Accounting Pronouncements
There were no recent accounting pronouncements that have or will have a material effect on our financial condition or results of operations.
Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022
The following summary table presents a comparison of our results of operations for the three months ended March 31, 2022 and 2023, with respect to certain of our key financial measures. These changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in Item 1 of this report.
Results of Operations - Consolidated
| Three Months ended March 31, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| Net revenue |
$ | 55,720,268 | $ | 57,779,120 | $ | 2,058,852 | 3.7 | % | ||||||||
| Operating expenses |
49,830,436 | 50,653,655 | 823,219 | 1.7 | ||||||||||||
| Corporate expenses |
4,233,460 | 4,483,095 | 249,635 | 5.9 | ||||||||||||
| Impairment loss |
1,857,226 | — | (1,857,226 | ) | (100.0 | ) | ||||||||||
| Income tax benefit |
5,849,318 | 2,163,983 | (3,685,335 | ) | (63.0 | ) | ||||||||||
| Net loss |
3,738,945 | 3,536,566 | (202,379 | ) | (5.4 | ) | ||||||||||
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Results of Operations - Segments
| Three Months ended March 31, | Change | |||||||||||||||
| 2022 | 2023 | $ | % | |||||||||||||
| Net revenue |
||||||||||||||||
| Audio |
$ | 47,365,145 | $ | 47,417,966 | $ | 52,821 | 0.1 | % | ||||||||
| Digital |
7,808,250 | 9,976,785 | 2,168,535 | 27.8 | ||||||||||||
| Other |
546,873 | 384,369 | (162,504 | ) | (29.7 | ) | ||||||||||
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| $55,720,268 | $57,779,120 | $2,058,852 | 3.7 | |||||||||||||
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| Operating expenses |
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| Audio |
$ | 40,683,812 | $ | 39,899,594 | $ | (784,218 | ) | (1.9 | )% | |||||||
| Digital |
8,401,763 | 9,907,597 | 1,505,834 | 17.9 | ||||||||||||
| Other |
744,861 | 846,464 | 101,603 | 13.6 | ||||||||||||
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| $49,830,436 | $50,653,655 | $ 823,219 | 1.7 | |||||||||||||
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Net Revenue. Net revenue increased $2.1 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. Digital revenue increased $2.2 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to continued growth in the digital segment.
Operating Expenses. Operating expenses increased $0.8 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. Digital operating expenses increased $1.5 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to continued investment in the digital segment.
Corporate Expenses. Corporate expenses increased $0.2 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, primarily due to an increase in contract services.
Impairment Loss. On April 1, 2022, we completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, we recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.
Income Tax Benefit. Our effective tax rate was approximately (61)% and (38)% for the three months ended March 31, 2022 and 2023, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain non-taxable income, and certain expenses that are not deductible for tax purposes.
Net Loss. Net loss for the three months ended March 31, 2023 was $3.5 million compared to a net loss of $3.7 million for the three months ended March 31, 2022, as a result of the factors described above.
Liquidity and Capital Resources
Overview. Our primary sources of liquidity is internally generated cash flow and cash on hand. Our primary liquidity needs have been, and for the next 12 months and thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our office and studio space, the maintenance of our towers and equipment, and digital products and information technology. We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our operations.
Our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. In addition, as discussed in “Secured Notes” below, the Indenture governing our Notes limits our ability to pay dividends.
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Secured Notes. On February 2, 2021, we issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year. The Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority owned subsidiaries and are guaranteed jointly and severally by the Company and its majority owned subsidiaries. The Indenture contains restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of our subsidiaries.
From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock. We paid approximately $26,000 to repurchase 27,524 shares during the three months ended March 31, 2023. From time to time, we may seek to repurchase, redeem or otherwise retire our Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.
We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:
| • | internally generated cash flow; |
| • | additional borrowings or notes offerings, to the extent permitted under the Indenture governing our Notes; and |
| • | additional equity offerings. |
We believe we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next twelve months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Notes, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect, and we may not secure financing when needed or on acceptable terms.
Off-Balance Sheet Arrangements. We did not have any off-balance sheet arrangements as of March 31, 2023.
Cash Flows. The following summary table presents a comparison of our cash flows for the three months ended March 31, 2022 and 2023 with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed in greater detail below. This section should be read in conjunction with the condensed consolidated financial statements and notes to the condensed consolidated financial statements included in Item 1 of this report.
| Three Months ended March 31, | ||||||||
| 2022 | 2023 | |||||||
| Net cash provided by (used in) operating activities |
$ | 735,374 | $ | (2,445,165 | ) | |||
| Net cash used in investing activities |
(1,375,775 | ) | (1,169,280 | ) | ||||
| Net cash used in financing activities |
(31,544 | ) | (25,545 | ) | ||||
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| Net decrease in cash and cash equivalents |
$ | (671,945 | ) | $ | (3,639,990 | ) | ||
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Net Cash Provided By (Used In) Operating Activities. Net cash used in operating activities was $2.4 million during the three months ended March 31, 2023, as compared to net cash provided by operating activities of $0.7 million during the three months ended March 31, 2022. The $3.2 million change in net cash provided by (used in) operating activities was primarily due to a $3.8 million increase in cash paid for operating expenses, partially offset by a $0.4 million decrease in interest payments.
Net Cash Used In Investing Activities. Net cash used in investing activities during the three months ended March 31, 2023 included payments of $1.2 million for capital expenditures. Net cash used in investing activities for the same period in 2022 included payments of $1.4 million for capital expenditures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
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ITEM 4. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report.
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We currently and from time to time are involved in ordinary routine litigation and are the subject of threats of litigation that are incidental to the conduct of our business. These include indecency claims and related proceedings at the FCC, as well as claims and threatened claims by private third parties. However, we are not a party to any lawsuit or other proceedings, or the subject of any threatened lawsuit or other proceedings, which, in the opinion of management, is likely to have a material adverse effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS.
There have been no material changes to the risks affecting our Company as previously disclosed in Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Repurchases of Equity Securities
The following table presents information with respect to purchases we made of our Class A common stock during the three months ended March 31, 2023.
| Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program |
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| January 1 – 31, 2023 |
7,677 | $ | 1.13 | — | — | |||||||||||
| February 1 – 28, 2023 |
— | — | — | — | ||||||||||||
| March 1 – 31, 2023 |
19,847 | $ | 0.85 | — | — | |||||||||||
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| Total |
27,524 | |||||||||||||||
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On March 27, 2007, our board of directors approved the Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”). The original ten-year term of the 2007 Plan ended on March 27, 2017. Our stockholders approved an amendment to the 2007 Plan at the Annual Meeting of Stockholders on June 8, 2017 to, among other things, extend the term of the 2007 Plan until March 27, 2027. The 2007 Plan permits us to purchase sufficient shares to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock. All shares purchased during the three months ended March 31, 2023 were purchased to fund withholding taxes in connection with the vesting of restricted stock units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
| Exhibit Number |
Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)). | |
| 32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
| 32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350. | |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BEASLEY BROADCAST GROUP, INC. | ||||
| Dated: April 27, 2023 | /s/ Caroline Beasley | |||
| Name: Caroline Beasley | ||||
| Title: Chief Executive Officer (principal executive officer) | ||||
| Dated: April 27, 2023 | /s/ Marie Tedesco | |||
| Name: Marie Tedesco | ||||
| Title: Chief Financial Officer (principal financial and accounting officer) | ||||
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Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Caroline Beasley, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Beasley Broadcast Group, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: April 27, 2023 | /s/ Caroline Beasley | |||||
| Title: | Chief Executive Officer | |||||
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Marie Tedesco, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Beasley Broadcast Group, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: April 27, 2023 | /s/ Marie Tedesco | |||||
| Title: | Chief Financial Officer | |||||
Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Beasley Broadcast Group, Inc. (the “Company”) hereby certifies to such officer’s knowledge that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: April 27, 2023 |
/s/ Caroline Beasley | |||||
| Caroline Beasley | ||||||
| Chief Executive Officer |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Beasley Broadcast Group, Inc. (the “Company”) hereby certifies to such officer’s knowledge that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: April 27, 2023 |
/s/ Marie Tedesco | |||||
| Marie Tedesco | ||||||
| Chief Financial Officer |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.