Beasley Broadcast Group’s Q1 revenue was $24.2 million, down 2.4% from $24.8 million in Q1 2013. The decline largely reflected lower ad revenue at the company’s Miami-Fort Lauderdale and Philadelphia market clusters and an increase in station operating expenses from operating KVGS-FM in Las Vegas which was acquired in September 2013.
Q1 station operating income was also down by $1.0 million, or 12.2%, to $7.1 million, as compared to Q1 2013.
A $0.8 million, or 40.2% YOY reduction in Q1 interest expense related to lower borrowing costs and reduced amounts outstanding, was more than offset by a $1.3 million, or 128.8%, rise in income tax expense primarily due to a change to the company’s federal income tax rate. In addition, the tax rate in the comparable year ago period benefited from a change to Beasley’s effective state tax rate. As a result, net income and net income per diluted share for Q1 was $0.7 million and $0.03, respectively, compared with $2.4 million, and $0.11, respectively, in the comparable year ago period.
Said George Beasley, Beasley CEO: “The first quarter decline in net revenue reflects several factors that primarily impacted our three largest markets, including the severe winter weather which had a negative effect on our operations in the northeast. Overall, for our five markets that report to Miller Kaplan – which represent approximately 77% of total first quarter revenue – Beasley station cluster revenue declined by 4.3%, while the total revenue for all reporting radio stations in these markets decreased by 0.3% for the quarter. In Philadelphia, our cluster underperformed the market for the first time since mid-2012 as business was significantly impacted by the severe winter weather that pressured billings, particularly among our local customers, and caused our stations to close for the equivalent of approximately three business weeks during the first quarter. In Miami, the first quarter underperformance largely relates to the revenue decline at our AM Sports Talk station following the departure of a popular afternoon host. On April 1, we addressed this situation directly by re-launching our afternoon drive programming with the addition of another highly rated Miami sports talk show host from a direct competitor in the market. Notwithstanding the challenges endured in the first quarter, our ratings and market position in both Philadelphia and Miami remain strong.”
He added, “A final factor which negatively impacted first quarter revenue results was the completion of comprehensive training for our sales team regarding our new digital and NTR initiatives. While this training took our sales teams away from customers for several days, we believe it was essential to drive growth in these areas of our business going forward. Our planned investments in sales and programming and the expansion of our digital offerings, combined with the revenue decline, led to a 12.2% decline in first quarter 2014 SOI compared to year-ago levels. During the first quarter, we continued to allocate operating cash flow to debt reduction and made credit facility repayments totaling $3.4 million, reducing borrowings to $103.5 million at March 31, 2014. Our debt and leverage reduction initiatives over the last few years are benefiting our bottom line, as first quarter interest expense declined year-over-year by over 40%, or over $0.8 million, while our leverage ratio remains at its lowest level in over 10 years. We intend to continue our use of cash from operations to further reduce debt, pay quarterly cash dividends and to pursue other opportunities to enhance shareholder value.”