Good morning and welcome to Beasley Broadcast Group's Second Quarter 2020 Conference Call. Before proceeding, I would like to emphasize that today's conference 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 quarterly reports on Form 10-Q. Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of Item 10 of Regulation 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 in this morning's news announcement and on the company's website. I would also like to remind listeners that following its completion, a replay of today's call can be accessed for five days on the company's website, www.bbgi.com. You can also find a copy of today's press release on the Investors or Press Room sections of the site. At this time, I would like to turn the conference over to your host, Beasley Broadcast Group's CEO, Caroline Beasley. Please go ahead.

Thank you, Chantal. And good morning, everyone. Thank you for joining us to review our 2020 second quarter operating results. First of all, I'd like to say my apologies for any confusion on the conference call time this morning. And then moving on, Marie Tedesco, our CFO, is on the call with me today. As the world continues to confront the challenges brought on by the spread of COVID-19 and as our country continues to respond to the changes in our day-to-day lives, our priority, as it has always been, is to ensure the health and safety of our employees while they are returning to work and delivering premium local content and critical information that our listeners trust and rely on. As we get started, I want to acknowledge all of our team members for their efforts to provide listeners and users with continuous access to the local news, information and the other critical services we provide as we are presented with the challenges of the pandemic and recent civil unrest. We take our commitment to the communities we serve very seriously. Throughout our nearly six decades as broadcasters, we've stressed targeted localism across our platform and actively supported our communities. With a greater than ever percentage of our audience working from home and practicing social distancing, now more than ever, people need a trusted companion, one that connects them to their communities. And I'm proud of our teams for their perseverance in upholding this commitment despite the challenges now being faced. As expected, our second quarter results reflect the direct impact of the pandemic on national and local advertisers. Since the nationwide virus outbreak, we've been working diligently to preserve liquidity and best position the company, our stations, digital operations and esports interest for renewed long-term success. In this…

Thank you, Caroline. I will start with a review of the second quarter results followed by a review of our balance sheet. Second quarter net revenue decreased 53.7% or $35.3 million to $30.4 million, which includes $823,000 from our esports teams, the Outlaws and the Renegades. We generated $228,000 in net political revenue compared to $110,000 in the prior-year second quarter. Breaking down the quarter, April was down 60.4% year-over-year; May was down 60.6%; and in June, we saw a 43.7% decrease year-over-year. The decreases were broad based with a few markets doing slightly better, including Augusta, Detroit and Fayetteville. Station operating expenses for the quarter decreased 13.4% to $41.4 million and includes $1.9 million of expenses related to our esports teams that we did not have in 2019 or, as in the Renegades' case, not included in our reporting in the comparable period. We added $613,000 in expenses from the September 2019 WDMK acquisition. And we also incurred $1.3 million of expenses related to our digital growth initiatives, which was recorded under corporate expenses during the second quarter 2019 that are being allocated to our stations in 2020. In response to the pandemic, we have diligently been reducing operating expenses, beginning with the company-initiated expense cuts on April 1, 2020 of $13 million. After reopening of businesses were delayed, and especially so in our key markets, we initiated a second round of cuts beginning June 1, 2020 with an additional $8 million. These cuts are in addition of voluntary market cuts done in first quarter of close to $5 million. Now looking at our revenue categories for second quarter on an actual basis during this pandemic period. Consumer services remained our largest revenue category at 36% of our revenue and we had a 36.7% year-over-year revenue decrease for the…

Thank you, Marie. So, to provide more color on second quarter revenue, spot revenue was down 61%, with local down 61% and national down 62%. We also saw our smaller markets being less impacted by COVID, and this is partly due to their focus on local direct business and, of course, the delayed opening of some of our larger markets, including Boston and Philly. Digital revenue, as mentioned earlier, was down 15%. Moving on to the esports front. We're very pleased to report that in early May, the Outlaws began participating in the first-of-its-kind Esports Guild and team competition series, the Lone Star Showdown played in the Dallas Fuel, which took place over a three-week period with Samsung serving as the anchor sponsor. The challenges and matches were professionally produced by Overwatch League casters, Jake Lyon and Mitch Uber Leslie on YouTube. And to drive further audience awareness and reach of the event, we partnered with Tegna, who owns TV stations in both Dallas and Houston as well as 11 other markets throughout Texas to produce a weekly docuseries chronicling the competition and to show what life is like as a professional esports player. The series highlighted how esports is thriving and continues to reach new fans as one of the only leagues in the world with continued competition during COVID. Now moving on to third quarter. We're not going to be providing specific guidance for the quarter due to the uncertainty of the current business environment. However, we are seeing positive progressions month-to-month, including solid political revenue contributions, with July ending down approximately 32%. And our goal is to generate monthly sequential improvements in our pacings for the quarter. And as I mentioned earlier, we're entering August at a higher revenue number than we ended July. So, we continue to navigate through the evolving challenges presented by the pandemic based on our core value of serving our local communities with great content and entertainment and critical information, whether that's on air or online. In this regard, Beasley stations and our teams have carefully provided our listeners and users up to the minute information not only on the pandemic, but the civil unrest and protests related to race relations. In closing, today's challenges allowed us the opportunity to step back and reassess our business model. We will emerge on the other side of this pandemic a stronger, smarter and more agile Beasley. In addition, Beasley and the radio industry have a unique opportunity during this time and we must not forget that. We are live and local. We serve our communities and we are free. And we at Beasley are reinforcing this every day as this sets us apart from our competition. I'd like to thank our employees for everything they've done and are doing to help us get through the many challenges that we are facing. So, with that, Marie, I think we have a couple of questions that we're going to address.

Yes. We received several questions, of which most have already been addressed on this call. I will review a few additional ones with the first one as follows. With regards to the $26 million of cost cuts referenced in the press release, is this on a run rate basis and are these cuts permanent?

So, the $26 million is for 2020. The majority of these cost cuts are permanent. However, about 20% of this is based on the temporary wage cuts. Another 20% is based upon performance. So, as revenue returns next year, we expect some of these expenses to return.

Thank you. And finally, we were asked to touch on thoughts on the working capital going forward and whether or not advertisers have been stretching their payments. So, first of all, we are very prudent with our spending. And as Caroline mentioned earlier, we have made substantial expense cuts that will benefit our working capital going forward. We saw a fairly significant stretch in advertiser payments early on. And even though our accounts receivables are at higher levels than normal, we are now seeing some of that older receivables coming in. Our collections are in line or slightly better than projected.

Okay. So, that concludes our call today. I'd like to thank you for dialing in. And should you have any questions, please feel free to reach out to either Marie or myself. Thank you. And hope you have a great week.

Thank you very much. Ladies and gentlemen, this now concludes today's conference. You may disconnect your phone lines and have a great rest of the week. Thank you.