Beasley Broadcast Group, Inc. today announced operating results for the three month and six month periods ended June 30, 2017.
On November 1, 2016, Beasley acquired 18 radio stations (net of divestitures) (“the Greater Media stations”). The actual results presented herein reflect the Company’s legacy Beasley Broadcast Group broadcasting and digital operations and the results from the acquired Greater Media stations. On January 6, 2017 the Company completed the sale of WFNZ-AM and three Greater Media stations in Charlotte. On May 1, 2017 the Company completed the sale of six stations in Greenville-NewBern-Jacksonville, and as a result, the quarter and six months ended June 30, 2017 include one month of operations from these stations. The pro-forma results presented herein reflect the Company’s legacy Beasley Broadcast Group broadcasting and digital operations and the results from the Greater Media stations, excluding the aforementioned Charlotte and Greenville-New Bern-Jacksonville stations, as if the transaction had been completed on January 1, 2016.
The $33.2 million, or 119.7%, year-over-year increase in net revenue during the three months ended June 30, 2017, reflects the operation of stations in Boston, Philadelphia, Detroit and New Jersey acquired from Greater Media, partially offset by the disposition of the Charlotte and Greenville-New Bern-Jacksonville clusters.
Station Operating Income (SOI, a non-GAAP financial measure), rose 100% year-over-year in the second quarter of 2017. The increase in SOI reflects the operations of the Greater Media stations and comparable quarterly net revenues at Beasley’s existing stations versus the 2016 period, which did not include the Greater Media stations.
Operating income of $12.8 million in the second quarter of 2017, an increase of approximately $8.1 million, or 169%, over the comparable 2016 period, is primarily attributable to the increase in station operating income and an additional $4.0 million gain related to the disposition of our Greenville-New Bern-Jacksonville stations, partially offset by the $2.4 million change in the fair value of contingent consideration on the acquisition of the Greater Media due to fluctuations in the Company’s stock price which decreased the fair value of certain preliminary purchase price accounting items.
In addition, the Company recorded a gain of $1.8 million related to the termination of certain Greater Media medical and life insurance benefits. Second quarter interest expense increased approximately $3.9 million related to the financing of the Greater Media acquisition.
“In the second quarter, we continued to actively manage our local radio broadcasting platform while implementing our operating disciplines at the acquired Greater Media stations and extracting valuable synergies from our enhanced scale to drive SOI margin expansion. The 9.1% reduction in pro-forma second quarter operating expenses, which included $1.0 million of severance related to the Greater Media markets, was partially offset by the 3.3% decline in pro forma revenue, which was attributable to political spending levels and declines in national revenues, as well as certain specific integration-related issues. As a result, Beasley generated a 17.5% year-over-year increase in second quarter pro forma SOI with SOI margins reaching 26.6% up from 21.9% in the year-ago period.
“With the financing of the Greater Media acquisition, our total outstanding debt as of June 30, 2017, was approximately $225 million, compared to $240 million at March 31, 2017. We made voluntary debt repayments of $4.0 million in the second quarter and applied 100% of the $11.0 million in net proceeds from our Greenville-New Bern-Jacksonville cluster divestiture toward debt reduction, resulting in a total $15 million reduction in debt. In addition, with our strong operating cash flows and commitment to return capital to shareholders, we declared our sixteenth consecutive quarterly cash dividend during the second quarter