Beasley Broadcast Group has announced operating results for the three-month month period ended March 31, 2019.
The $2.5 million, or 4.6%, year-over-year increase in net revenue during the three months ended March 31, 2019 reflects growth in the Company’s Philadelphia cluster primarily related to the September 2018 acquisition of WXTU-FM, growth in the Company’s Tampa cluster primarily related to the 2018 acquisition of an event company, and revenue growth in three of the Company’s other radio markets, partially offset by declines in the remaining markets where the company operates.
Beasley reported operating income of $6.8 million in the first quarter of 2019 compared to operating income of $0.4 million in the first quarter of 2018. The year-over-year increase in operating income reflects the higher revenue and a 2019 first quarter gain of $3.5 million on dispositions while the year ago period was impacted by a $4.4 million charge due to the change in fair value of contingent consideration.
The $1.4 million, or $0.05 per diluted share, in 2019 first quarter net income primarily reflects the higher operating income during the period which more than offset a $1.0 million year-over-year increase in interest expense.
Station Operating Income rose $0.6 million or 6.2% year-over-year in the first quarter of 2019 to $10.2 million. The year-over-year increase reflects the net revenue growth during the period which more than offset a 4.3% year-over-year rise in station operating expenses related to the Company’s expanded platform.
Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “The ongoing execution of our strategies to expand our scale, diversify our revenue mix and leverage the value of our premium local brands and content continued to serve Beasley well in the first quarter of 2019. The strength of our station clusters in three of our top five largest revenue markets as well as contributions from recent acquisitions and station swaps resulted in a 4.6% revenue increase and more than offset the $0.8 million year-over-year decline in revenue from our prior relationship with United States Traffic Network, which was discontinued in the third quarter of 2018. As a result, Beasley’s first quarter net income rose to $1.4 million, we generated a 6.2% year-over-year increase in SOI and generated an overall margin improvement.
The $2.9 million year-over-year decline in first quarter free cash flow was due to a $1.0 million gain due to a pension plan termination in the prior year period, as well as an approximate $1.0 million increase in interest expense related to the WXTU-FM acquisition and an approximate $0.7 million increase in capital expenses. As we move through the remainder of 2019, we expect the operating and financial benefits of our disciplined approach to building Beasley’s broadcast and digital platform to become more visible.
During the first quarter, we continued to advance our initiatives focused on premium local programming to support ratings and market leadership, while aggressively rolling out our digital offerings and distribution capabilities to create new value for consumers and advertisers. In this regard, we made significant progress in expanding our local and national digital content production to reinforce and grow Beasley’s leadership position and distribution across all audio platforms in our markets, including the development of new podcasts featuring our biggest local franchises. We also launched Beasley XP, our new Esports Division that creates original multi-platform content featuring some of the country’s most competitive Esports teams and targets the booming audience of fans and gamers. In addition, we invested in an e-commerce platform which enables us to leverage the extensive reach and listener engagement of our local content, particularly around our marquee sports brands, to generate incremental revenue from the rapidly expanding direct-to-consumer marketplace for apparel and merchandise.
In addition to our growth and diversity initiatives, we remain committed to enhancing shareholder value through capital returns and leverage reduction. In the first quarter, we used cash from operations to pay our twenty-second consecutive quarterly cash dividend and made voluntary debt repayments of approximately $2.5 million, ending March 31, 2019 with total outstanding debt of $249.5 million. In the second quarter to date, we have reduced our total outstanding debt by an additional $1.5 million, and we intend to use our free cash flow to continue to make voluntary prepayments throughout the remainder of the second quarter and the balance of 2019.
Looking ahead, we remain confident in our prospects going forward and continue to believe that Beasley’s ongoing initiatives to diversify and drive revenue, productivity and efficiency across our platforms, combined with prudent management of our capital structure, is a proven formula for sustained long term financial growth and enhanced shareholder returns. Our platform, market position, ratings and content are strong, and as the number one reach medium, we remain confident in the radio industry’s future. We look forward to realizing the full value of our recent investments and intend to continue our strategic priorities of reducing debt and leverage, improving top- and bottom-line performance and taking advantage of opportunities that will create new value for our shareholders.”
