Beasley Broadcast Group today announced operating results for the three month period ended March 31, 2017.
On November 1, 2016, Beasley acquired 18 Greater Media stations. The actual results presented reflect the Beasley Broadcast Group broadcasting and digital operations and the results from the acquired Greater Media stations. On January 6, 2017 Beasley completed the sale of WFNZ-AM and three Greater Media stations in Charlotte, and as a result the first quarter does not reflect any contribution from these stations. The 2017 and 2016 first quarter and pro-forma results presented herein reflect the Company’s legacy Beasley Broadcast Group broadcasting and digital operations and the results from the Greater Media stations, excluding the aforementioned Charlotte stations, as if the transaction had been completed on January 1, 2016.
The $26.3 million, or 95.7%, year-over-year increase in net revenue during the three months ended March 31, 2017, reflects the operation of stations in Boston, Philadelphia, Detroit and New Jersey acquired from Greater Media, partially offset by the impact of the comparison with political revenue in the year ago quarter.
Station Operating Income rose 31.1% year-over-year in the first quarter of 2017. The increase in SOI reflects the operations of the Greater Media stations and comparable quarterly net revenues at Beasley’s existing stations versus the 2016 period, which does not include the Greater Media stations.
Operating income of $11.5 million in the first quarter of 2017, an increase of approximately $7.4 million over the comparable 2016 period, is primarily attributable to the increase in station operating income and an additional $7.5 million gain on the acquisition of the Greater Media stations due to an increase in the Company’s stock price which increased the fair value of certain preliminary purchase price accounting items. The Company also incurred an additional $0.5 million of pre-tax merger expenses in the first quarter, while first quarter interest expense increased approximately $3.8 million related to the financing of the Greater Media acquisition. As a result of these factors, net income per diluted share increased to $0.27 per diluted share in the three months ended March 31, 2017 compared to $0.08 per diluted share in the three months ended March 31, 2016.
Net income for the 2017 first quarter of $7.5 million compared to net income of $1.8 million a year ago, with the increase primarily attributable to the gain on acquisition and other contributions to operating income described above. The purchase price allocation which resulted in the $7.5 million gain on merger recorded in the first quarter of 2017 is preliminary and the figure is expected to be finalized the second or third quarter of 2017.
Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “Our first quarter revenue, SOI and net income growth reflect the contributions from the Greater Media stations, partially offset by the absence of political revenue and softer national revenue trends. On a reported basis, the 95.7% increase in consolidated first quarter net revenue drove SOI growth of 31.1%. Pro forma revenue was down 5.7%, or $3.3 million, of which approximately $1.0 million was attributable to the lack of political revenue, with the remainder attributable to transitional matters related to the Greater Media stations as well as lower national revenues. This was partially offset by a 5.7% reduction in pro-forma first quarter operating expenses.
“In the first quarter, we continued to execute on our integration strategy focused on strong local programming to support our goals of ratings and market leadership at the newly acquired stations, while implementing our operating disciplines and SOI margin expansion. Reflecting the early success of our cost-reduction initiatives on a stand-alone basis, operating expenses for the Greater Media stations decreased by 9.0%, resulting in a 42.4% year-over-year increase in first quarter SOI. We believe we remain on track to complete the integration and realize the significant financial and operating synergies expected from this transaction within 12 to 18 months from the acquisition date.
“On a stand-alone basis, Beasley legacy station revenue declined by $2.0 million, with approximately 35% of the decline related to the absence of political revenue and the remainder partially attributable to the reformatting of a station in Tampa-St. Petersburg market. The Greater Media properties had a first quarter revenue decline of approximately 4.0% on a stand-alone basis, which was attributable to the political spending levels, as well as certain specific integration-related issues particularly in Philadelphia and declines in national revenues.
“With the financing of the Greater Media acquisition, our total outstanding debt as of March 31, 2017, was approximately $240 million, compared to $268 million at December 31, 2016. We made voluntary debt repayments of $4.0 million in the first quarter and applied all of the $24.0 million in net proceeds from our Charlotte cluster divestiture toward debt reduction. In February, we entered into an agreement to divest our Greenville-New Bern-Jacksonville cluster for $11 million. That divestiture is expected to close shortly and we intend to further reduce debt and leverage with the majority of the net proceeds from that transaction.
“Throughout 2017, we will continue our strategic priorities of realizing the synergy targets and integration goals for the newly acquired stations, reducing debt and leverage, improving top and bottom-line performance, returning capital to shareholders through our quarterly cash dividend program, and further diversifying our revenue streams. As the number one reach medium with 93% of the U.S. population tuning in weekly, we remain highly confident in the radio industry. We look forward to realizing the strategic benefits of the Greater Media transaction in 2017 and remain confident that our ongoing initiatives to drive sales, productivity and efficiency across our platform, combined with prudent management of our capital structure, is a proven formula for sustained long term financial growth and the creation of shareholder value.”
