BBGI

Beasley Broadcast Group, Inc. (BBGI)

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Industry: Consumer Services
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Beasley Broadcast Group, Inc. (BBGI)

Q2 2008 Earnings Call

July 31, 2008 11:00 am ET

Executives

Caroline Beasley - Chief Financial Officer

Bruce Beasley - President & Chief Operating Officer

Analysts

Tracy Young - JPMorgan

Leland Westerfield - BMO Capital Markets

Presentation

Operator

Welcome everyone for the Beasley Broadcast Group second quarter 2008 results conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host CFO, Caroline Beasley.

Caroline Beasley

Welcome to the Beasley Broadcast Group second quarter conference call. Before beginning, I would like to emphasize that this call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factors section of our most recent Form 10-K.

This call will also contain a discussion of certain non-GAAP financial measures within the meaning of Item 10 of Reg S-K. A reconciliation of these non-GAAP measures with their most directly comparable financial measures, calculated and presented in accordance with GAAP can be found on the company's website.

I would also remind listeners, this call is being webcast live over the Internet and that a replay of the call will be available on our corporate website, BBGI.com, for five days after the call ends. Investors can also find a copy of today's press release on the investors or pressroom sections of the site. Bruce Beasley, our President and COO, is with me this morning as always to keep our remarks focus on the second quarter and operations outlook after which we will open the floor to Q&A.

So, moving on for the quarter, our revenue decreased 10.9%. In summary, the quarter-over-quarter revenue decline is attributable to four primary areas, 25% of the 10.9% decline was related to the Las Vegas cluster. Another 25% is related to the Fort Myers cluster, other 25% is related from not having revenue from the Florida Marlins in Q2 and then the final 25% is related to the reduction in revenue at our stations in Coastal Carolina and in Miami. In the six markets that reports to Miller Kaplan, our clusters did not perform in line with our markets on a combined basis.

As total revenue in these markets decline 9.4% compared to our clusters which declined 12.5%. However, in the first quarter conference call, we noted that we expected to incur an additional 3% impact to our net revenue from our decision not to renew the Florida Marlins and this factor accounts for the majority of the variance between BBGI and our market. So, if you will exclude the negative impact of the Marlins, we would have performed in line with our market. According to Miller, Kaplan our affiliate stations outperform the market as our total cluster revenue increased to 0.4% or market revenue decline 4.5%. In Miami our stations under perform the market as total market revenue declined 11.4%.

Our Miami cluster’s total revenue declined 15%. However, if you exclude the impact of not carrying the Marlins, then our cluster revenue decline is approximately 5% compared with the market decline of 11.4%. The Las Vegas market continues to be economically challenged and during the quarter, total market revenues decreased 13% while our cluster revenue declined 23%. Also, the Fort Myers market sold quarterly market revenue 20% behind last year with our cluster revenue’s decline in about 26% and our clustered base station continues to place greater than market decline and this is related to its rating's drop.

The cluster Carolina market also declined for Q2 placing an 11% decrease and our cluster was down almost 11% but absolutely, only BBGI market placing year-over-year gain with revenue increasing 2% or our cluster increase approximately 1%. We have another quarter of significant growth related to our interactive initiative with revenue from these sources rising 33% and accounting for 4.6% of the Company's total revenue. We recorded about $1.4 million in quarterly interactive revenue and generated net margins in excess of 60%.

Our station operating expenses declined 11% for the quarter, the decrease is primarily related to savings from not renewing the Florida Marlins sports contract and lower sales expense related to the decline in revenue and our SLI [ph] declined 10%. Corporate G&A excluding stock base compensation is $2 million for the quarter. This reflects an increase of approximately $100,000 which represents the Company's investment in interactive. Stock base compensation expense for the quarter was approximately $400,000 and this represents the decline of 38%.

Interest expense for the quarter decreased 40% which primarily reflects lower borrowing cost and voluntary repayment under our credit facility. During the period which totaled $5.75 million and year-to-date with voluntary repayment of $9.5 million. Our effective tax rate for the quarter was approximately 43% and there were no current cash taxes and turning to the balance sheet, total senior debt was 181.6 and [548] operating cash flow was 29.2 for an average of 6.2 one time. Cash on hand was $43.2 million, CapEx for the quarter was spent $323,000 and year-to-date is $827,000.

Now moving on to third quarter, effects of second quarter of '08 we continue the practice of providing specific quarterly revenue guidance and indicated that going forward, we expect our stations to generate quarterly net revenue growth or declines in line with the industry with a possible following exceptions. just as in the second quarter, we will incur an additional 30% intact to total revenue based on our decision not to renew the Florida Marlins broadcast right. Office to consider and as mentioned last quarter, the Fort Myers and Las Vegas market continue to have the biggest impact on the Company's revenue because of the housing and real estate environment.

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