If Wall Street needed proof that a publicly traded radio industry pure-play was still a great investment, Beasley Broadcast Group certainly delivered the goods with a strong Q2 earnings report.
Net revenue climbed by 1%, while net income soared by 25.6%, in the quarter.
At first, investor sentiment appeared to be poor. Beasley shares headed south yet again with a nearly 4% dip in the first half hour of Friday’s trading before attempting a rebound. It worked.
The overall picture for Beasley in April, May and June 2018 is a pleasant one.
Net revenue climbed to $61.6 million, from $61 million, as net income grew to $4.9 million (18 cents per share) from $3.9 million (14 cents).
The non-GAAP Station Operating Income (SOI) measure, which is popular among certain radio companies, looked good, too. SOI was up to $16.7 million from $16.1 million in Q2 2017. This offset a flat (actually, a 0.1% increase) in station operating expenses in Q2 ’18.
A year ago, the complexion of Beasley looked slightly different, in particular in Boston. It owned AC WMJX-FM 106.7. Today, it instead owns WBZ-FM 98.5, thanks to a trade with and $12 payment to Entercom. As such, comparisons to Q2 2017 aren’t exact. Also, the Q2 ’17 results include one month of contribution from Beasley’s former Greenville, N.C., station group.
Overall operating income was down to $10.7 million from $12.8 million, but Beasley explains that this “solely reflects the benefit in the year ago period of $2.9 million for items which did not recur in the second quarter of 2018.”
In prepared comments ahead of the company’s earnings call for Wall Street investment houses, CEO Caroline Beasley said her company’s Q2 results reflect Beasley Broadcast Group’s “ongoing execution of strategies to drive revenue, productivity and growth across our local radio broadcasting and digital platforms.”
She added that the Q2 results “again demonstrate the efficiencies we are realizing related to our expanded scale and the operating leverage in our model.”
Also of note for Beasley is the continued build-out and “enhancement” of its digital platform, and continued efforts to launch a suite of data attribution products across the company’s markets “to provide brands and advertisers the tools they need to quantify the effectiveness and strong value of radio advertising.”
Such efforts could further erase the radio industry’s tepid efforts to demonstrate its reach and frequency and advertiser ROI to those that control marketing campaigns and budgets at Fortune 500 companies as well as local and regional players opting to use digital media solutions for effective targeting of potential consumers.
What does the second half of 2018 hold for Beasley? Ahead of the investor call, Caroline Beasley noted, “We look forward to realizing the strategic benefits of our recent transactions and intend to continue our strategic priorities of reducing debt and leverage, taking advantage of political revenue opportunities, improving top- and bottom-line performance and returning capital to shareholders through our quarterly cash dividend. We also remain focused on our station clusters matching or exceeding their market’s revenue performance and pursing other initiatives that can enhance shareholder value.”
The 10:30am Eastern call, like those previously held by Beasley, was to address questions from analysts, debt holders and institutional investors submitted via e-mail; this is done by many companies that are not actively tracked by Wall Street analysts, thus resulting in few if any live questions. In the current quarter, no analysts are actively tracking Beasley shares; 1 analyst covers Beasley on an annual basis.
With a market cap of $177.4 million, Beasley saw its shares dip in early trading on Friday. But, trading volume was light at 6,232 shares; average trading volume is 47,715 shares.
As of 10:13am Eastern, BBGI was off 3.7%, to $6.45. It is a price last seen in December 2016.
However, investor sentiment turned positive following the company’s Q2 conference call at 10:30am Eastern. At the Closing Bell, Beasley shares were up 50 cents to $7.20.