The $0.8 million, or 2.8%, year-over-year increase in net revenue during the three months ended June 30, 2016, primarily reflects higher revenue from the Company’s Tampa-St. Petersburg and Charlotte market clusters.
Station Operating Income (SOI, a non-GAAP financial measure), declined 2.8% in the second quarter of 2016, compared to the second quarter of 2015. The decline reflects a $1.0 million, or 5.3%, increase in station operating expenses at the Company’s Tampa-St. Petersburg and Charlotte market clusters, partially as a result of higher bonuses earned, cash promotions, event/concert expenses and third party costs associated with digital services, which more than offset the increase in 2016 second quarter revenue.
The $0.3 million, or 6.3%, year-over-year reduction in 2016 second quarter operating income is primarily attributable to the 4.9% increase in total operating expenses in the second quarter of 2016 compared with the same period in 2015.
Net income for the 2016 second quarter declined 2.5% to $2.5 million while net income per diluted share was flat with the comparable year ago period at $0.11.
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| Caroline Beasley |
"However, net income and diluted EPS were essentially flat year-over-year as station level promotion and other expenses, increased SG&A partially related to recently announced transaction activity, and investments to strengthen the Company’s infrastructure for the anticipated expansion of our operating base outpaced the quarterly revenue growth.
“Last week we announced an agreement to acquire Greater Media, Inc. in a cash and stock transaction that squarely meets our criteria for prudently expanding Beasley’s footprint while adhering to our core long-term strategic focus on localism. Upon closing, which is expected later this year subject to regulatory and other customary approvals, the Greater Media assets will significantly broaden our local radio broadcasting and digital platform, footprint and revenue base by adding stations that are geographically complementary to our existing operating base while presenting the opportunity for synergies with the Company’s existing operations.
“Specifically, the transaction is expected to increase our broadcast portfolio by approximately 40% and more than double our revenue and audience reach, giving us market leading stations, great brands and an opportunity to engage with brand new markets. We expect the transaction to be accretive to Beasley’s operating results immediately upon closing when taking into account expected synergies, one-time transaction costs and the planned divestiture of certain stations in Charlotte to secure FCC approval.
"As has been our practice, we expect to allocate free cash flow from our expanded base of operations to debt reduction while continuing to return capital to shareholders through our quarterly cash dividend. “In this regard, during the second quarter, we made credit facility repayments totaling $3.0 million, reducing borrowings to $83.0 million at June 30, 2016, and declared our eleventh consecutive quarterly cash dividend.
“Looking forward, our keen focus on strong core programming and targeted localism will remain the foundation of our post-transaction operating philosophy. Throughout Beasley’s 55 year history, this approach has supported strong ratings and market leadership, and we believe it will continue to support our commitment to enhancing long-term shareholder value.”
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