Beasley Broadcasting Group Inc 2026 Q2 Earnings Call

Good morning, and welcome to Beasley Media Group's second quarter 2026 earnings call. Before proceeding, I would like to emphasize that today's conference call and webcast will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties described in the Risk Factors section of our most recent annual report on Form 10-K, as supplemented by our subsequent filings with the Securities and Exchange Commission. Today's webcast will also include a discussion of certain non-GAAP financial measures within the meaning of Item 10 of Regulation S-K. Reconciliations of these non-GAAP measures to their most directly comparable financial measures calculated and presented in accordance with GAAP can be found in this morning's news announcement on the company's website. I would also remind listeners that following its completion, a replay of today's call can be accessed for 5 days on the company's website at www.bbgi.com.

A copy of today's press release is also available in the Investors and Press Room section of the site. At this time, I would like to turn the conference over to Beasley Media Group Chief Executive Officer, Caroline Beasley.

Thank you, Ilana, and good evening, everyone. Thank you for joining us. My apologies for the delay in our earnings release, but we still had an outstanding item regarding the tax accounting treatment resulting from the restructure that has since been resolved. When we spoke with you last quarter, we described Beasley as a company in transition with three priorities: stabilizing and rebuilding our core revenue base, scaling a higher margin and more controllable digital business, and strengthening our balance sheet through disciplined deleveraging. During the second quarter, we made meaningful progress against two of those priorities, materially improving our cost structure and transforming our balance sheet. At the same time, the advertising environment remained challenging, and our revenue performance makes clear that we still have work ahead of us.

Ilana will cover the detailed revenue and EBITDA results shortly, but at a high level, the quarter showed year-over-year adjusted EBITDA improvement, reflecting the early impact of our cost actions, even as revenue remains below where it needs to be. in May, we executed an expense reduction program spanning voluntary retirements, market-level operating changes, digital restructuring, technology costs, and vendor expenses. We currently expect these actions to generate approximately $10.5 million of annualized run rate savings with an estimated benefit of approximately $5 million during 2026. Because the majority of these actions were implemented during May, the second quarter includes only a partial benefit. We expect the impact to become more visible during the second half of the year and to be fully reflected in our ongoing cost structure as we move into 2027. Our objective is not simply to reduce expenses.

It's to establish a more efficient operating model that can convert revenue into EBITDA and free cash flow at a higher rate. As a result of this, we are protecting investment in the areas where we see the greatest opportunity for growth, particularly local direct advertising, owned and operated digital products, integrated client solutions, and the tools and talent required to support those priorities. The most consequential financial event of the quarter was the completion of our balance sheet restructuring on May 1. The transaction meaningfully reduced our debt burden and lowered near-term cash interest, creating a stronger financial foundation while we continue to pursue additional deleveraging actions. While the restructuring represents a significant step forward, it does not complete our deleveraging strategy. We remain focused on refinancing or retiring the remaining obligations well ahead of their maturity.

Our operating plan, portfolio strategy, liquidity management, and capital allocation decisions are all being managed with that objective in mind. We continue to evaluate deleveraging sales of non-core assets while focusing our resources on the highest value components of the portfolio. With this in mind, I'm pleased to announce that we entered into an APA with EMF on July 31 to sell two radio stations, one in Charlotte and one in Las Vegas, for a total of $8 million. We expect closing on these stations within the next 60 to 90 days. Proceeds from the sale will be used to reduce debt from our 1L lenders. We do not expect these sales to impact our EBITDA on a go-forward basis. In June, we set up an at-the-market equity program.

We view the ATM as a supplemental capital management tool, not as a substitute for operating performance or free cash flow generation. The program gives us the flexibility to access capital opportunistically and in measured amounts when market conditions are constructive. Our intention is to use the program selectively and responsibly with a focus on actions that we believe improve long-term value for shareholders. In early June, prior to entering into our quarterly blackout period, we began utilizing our ATM and raised approximately $635,000 in gross proceeds. As for operations, the quarter reinforced the urgency of our revenue transformation. Traditional agency revenue remained under pressure. Local direct, spot revenue showed signs of stabilization during the quarter. We remain focused on rebuilding direct client relationships, improving sales activity, and strengthening the pipeline required to return the business to sustainable growth.

At the same time, the expense actions we have taken are beginning to improve the underlying economics of the business. While audio revenue remained under pressure during the quarter, the reduction in our operating cost base helped preserve station operating income and mitigate the impact of the revenue decline. This gives us a more efficient foundation from which to rebuild. Digital remains central to our strategy. While same-station digital revenue grew approximately 7% during the quarter, and digital accounted for approximately 26% of total company revenue, profitability was below our expectations. Ilana will discuss the reasons why we incurred additional costs in the second quarter, and Kevin will review the actions underway to close that monetization gap. Let me reiterate that our work is not complete. Revenue remains below where it used to be.

The traditional agency environment continues to be difficult, and performance remains inconsistent across our markets. However, we ended the quarter with a substantially stronger balance sheet, a meaningfully lower cost base, and a clearer operating structure. The next phase of the turnaround is execution, improving the productivity of our end-market sellers, rebuilding local direct revenue, developing a stronger pipeline of sales talent, and capturing more value from the digital audience and inventory we already own. Now I am going to hand it over to Kevin to discuss the actions we are taking across the sales org and digital business to address these opportunities.

Kevin? Thank you, Caroline. Last quarter, I told you we were building the machine.

Common processes, pipeline visibility, accountability in every market. Those foundational pieces are now largely in place. The machine is built. This quarter, we started producing. The work this quarter has been much less about building infrastructure and more about, as Caroline spoke of, improving execution. We run this business with brutal objectivity, which is the easiest thing to say and the hardest thing to do. We know exactly where we are winning and where we are falling short, and where we have to change. That objectivity means naming the headwinds plainly. National agency demand remains under pressure. During the quarter, we saw reduced advertising spend from Diversity, Equity, and Inclusion-focused campaigns across several categories. We do not control those currents. We control how we sell into them, which is why we build our own demand.

I will come back to that in a minute. Let us talk about our brands and our audience. Beasley's brands continued to dominate their leadership position in the second quarter across audience growth, digital engagement, and community impact. The quarter marked an important milestone in this company's digital transformation. During the second quarter, Beasley's total audience increased 1% year-over-year, driven by continued growth across our digital platforms. Over the trailing 12 months, our digital audience grew 7%, while traditional over-the-air audience declined 5%. As a result, digital now represents more than half of Beasley's total audience footprint. The first time in this company's history that digital has surpassed broadcast. A year ago, digital was 47% of our total audience. Digital transformation is no longer an aspiration at Beasley. It is simply who we are.

Radio will be our core, and digital is the driver of our future. Website traffic and podcast consumption delivered the strongest year-over-year growth, a direct return on our continued investment in those platforms. According to the latest Nielsen data, our combined PPM market rating share declined 5% quarter-over-quarter in average quarter hour among adults 25 to 54, primarily reflecting a deliberate decision to optimize investment in ratings-supporting initiatives while improving operating efficiency. As the advertising marketplace continues to shift to digital platforms, integrated marketing solutions, endorsements, and other performance-driven opportunities, we believe our investment strategy should evolve accordingly while continuing to protect the competitive strength of our brands. In the marketplace, that matters. According to Edison's latest Share of Ear study, AM/FM radio still commands 62% of all ad-supported audio, nearly three times podcasting at 22%, and roughly eight times Spotify at 8%.