The parade of third quarter earnings presentations continued at sunrise on Monday, as Naples, Fla.-based Beasley Media Group released a financial health report that was largely full of good news for investors.
The audio content creation and distribution company that’s also an ESports player, thanks to its ownership of an Overwatch League team, swung to net income from a Q3 2021 net loss.
But, did Beasley beat the Street in the quarter?
Two analysts cover the company and based on their projections, revenue was expected to come in between $63.05 million-$64 million as a net loss between -$0.03 and -$0.04 per share was forecast.
The actual results? Revenue was right on the money, rising to $63.8 million from $62.9 million one year ago. This exceeded Beasley’s guidance, as over-the-air spot increased by $275,000.
The bigger news? Net income of $500,000 ($0.02 per diluted share) was seen, moving from a Q3 ’21 net loss of $1.6 million (-$0.06).
Caveat: in 2021 the extinguishment of long-term debt impacted the year-ago results.
And, even though operating income slipped to $4.7 million from $4.9 million, the favored non-GAAP measure of Station Operating Income (SOI) rose to $12.3 million from $11.7 million.
Speaking ahead of her company’s 10am Eastern earnings call on Monday (11/7), CEO Caroline Beasley said Beasley Media Group delivered “another strong period of operating and financial performance,” reflecting “the ongoing success of our digital transformation and revenue diversification strategies.”
Top-line growth was driven in part by “continued strength in local audio advertising and impressive growth in our digital business.”
That’s noteworthy, as the strength Beasley is experiencing may not be seen among all of its peers in Q3.
Of course, Beasley isn’t blind to the current economic environment, and it has done what it needed to do to keep the quarterly numbers as robust as possible. “We are also taking actions on the expense side,” Caroline Beasley said, noting that $5 million in expense reductions was seen by reducing its employee roster in two waves, beginning in July. A $600,000 severance expense was seen, CFO Marie Tedesco noted at the end of the company’s Q3 earnings call. An additional $5 million in expenses was also seen in Q3 2022.
Caroline Beasley commented, “Like many companies, we are managing through some challenging market conditions with a focus on what we can control. We continue to experience increased volatility in national spot advertising, which accounted for approximately 15% of our third quarter net revenues.”
Thanks to “the ongoing strength” of Digital and Local advertising, partially offsetting that national spot dip is being achieved. In fact, Digital revenue increased 23.1% year-over-year, representing 16.0% of total third quarter revenues.
Yes, Digital is now a higher contributor to the total revenues than National.
“Our digital performance benefitted from a first full quarter contribution from the white label digital agency we acquired in late June, which we believe will continue to accelerate our digital revenue growth and provide meaningful synergies with our growing digital platform,” Ms. Beasley said. “In both the second and third quarters, digital revenue accounted for a larger share of our revenue than national advertising, and we expect this revenue source to continue offsetting national spot weakness in the coming quarters.”
National, excluding political, was down 20%, Ms. Beasley added while speaking on the Beasley Media Group earnings call.
CFO Tedescooffered further details of Beasley’s Q3 2022 performance during the call. All but two markets saw revenue gains during the quarter; she did not reveal which markets were down. Meanwhile, total 2018 political revenue has been exceeded by 40% so far in 2022; Tedesco did not note what this would be on a same-station basis.
Meanwhile, it appears the worst of national’s woes may be over. July revenue was down 3%, with Local flat and National down 28%. But, in September, total revenue was up 2.8%, with local up 3% and national up 5% — thanks to political activity.
By ad category, Consumer Services was No. 1, comprising 28% of total revenue.
Entertainment rose to No. 2 from No. 3 and was flat, comprising 15.8% of total revenue.
Retail dipped from second to third despite growth.
Meanwhile, the all-important Automotive category was down 5.5% year over year and comprises 8.3% of total revenue in Q3. Detroit and Fayetteville, N.C., were the biggest markets for the category.
With Monday’s Opening Bell on the Nasdaq, BBGI was up 6.9% to $1.0899 but on very light trading. As of 10:15am, BBGI was trading at $1.07.
For Q4, “political crowd-out” is leading to flat to slightly up revenue, with November and December are pacing down “just north” of three percent, Ms. Beasley said.
At the end of the call, questions submitted via email ahead of the call were answered by Caroline Beasley. What is the minimum cash balance that she believes Beasley should maintain? About $25 million, she replied.
What about the buying back of bonds? “We’re very conscious now given the very uncertain economic environment on that cash balance,” she said, alluding to the fact that keeping cash on hand over the next several months is a priority.
