Good morning, and welcome to Beasley Broadcast Group's First Quarter 2023 Conference 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 quarterly reports on Form 10-Q. Today's webcast will also contain a discussion of certain non-GAAP financial measures within the meaning of the Item 10 of Regulation S-K. A reconciliation of these non-GAAP measures with their most direct 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 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 section 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, Doug, and good morning. Good morning, everyone, and thank you for joining us to review our 2023 first quarter operating results. Marie Tedesco, our CFO, is with me this morning. And as per our earnings release, we did post an earnings presentation on our website, and we hope that you will find it helpful. I'm thrilled to share our first quarter results, which, again, highlights the significant success and growth we are achieving based on our strategy to leverage our local talent to build the growing digital platform. In Q1, we generated strong year-over-year results across the board, driven by growth from our digital initiatives, new business initiatives, increased network revenue and revenue growth in the sports betting category. Our strong first quarter revenue performance drove solid SOI and EBITDA growth on a year-over-year basis. Total revenue grew 3.7%, outpacing the guidance we provided on our last earnings call, with over-the-air local spot revenue increasing 4%, network up 69%, which was strategically planned to offset the decline in political from 2022, and digital was up almost 27%. As expected, national spot revenue remained challenged and declined 15%, while overall audio revenue increased slightly. New initiatives brought $5.7 million to the quarter, that's up 14% year-over-year, and sports betting added $4.3 million year-over-year. Our overall gains were broad-based with 8 of 14 markets delivering year-over-year revenue increases, including a 16% year-over-year growth in Boston driven by sports betting. As noted on previous calls, sports betting commenced in Massachusetts on January 31 and Q1 saw the benefit of the Super Bowl and March Madness. We're well positioned in the Boston market with 5 FMs, including 98.5 and The Sports Hub, home to the New England Patriots, Boston Bruins and Boston Celtics. Now moving on to the ongoing success of our…

Thanks, Caroline, and good morning, everyone. I will review first quarter results, followed by an update of our balance sheet. First quarter net revenue increased 3.7% or $2.1 million to $57.8 million, which includes $385,000 from our esports teams. We grew revenue year-over-year in eight markets and most notably in Boston, where revenues increased $2.1 million year-over-year. Digital revenue for the quarter grew double-digits to $10 million and now represents 17.3% of total revenues as we continue to grow this revenue stream and diversify our revenue sources. Station operating expenses for the quarter increased $823,000 or 1.7% to $50.7 million, resulting a first quarter 2023 SOI of $7.1 million, an increase year-over-year of approximately $1.2 million or up 21%. Breaking down the increase in operating expenses, the main drivers were the addition of Guarantee Digital, our white label agency, which added new expenses of $1.3 million, plus cost of sales directly related to the revenue increase and a year-over-year variance from a bad debt credit adjustment that occurred in the first quarter of 2022. Looking at our revenue categories for first quarter, consumer services remained our largest revenue category at 30% of our total revenue, and we drove a 3% year-over-year revenue increase in this category during the quarter. Our second largest category was entertainment, which grew 8.3% year-over-year and accounted for 16% of total revenues. This jump was partly driven by sports betting with $4.3 million for the quarter. Retail number three, represents around 15% of first quarter total revenue and retail increased 8.8% year-over-year. Auto, our fourth largest category, saw revenues up 1.7% year-over-year and the category accounted for 9.6% of total revenue. We saw increases in auto in half of our markets, including Boston. We believe this revenue category will continue to improve as we move throughout…

Thanks, Marie. Again, I'm very pleased with our first quarter performance as it reflects our continued growth and the positive diversification afforded by our digital business. Our content strategy put in place mid '22, helped to drive 27% growth in our digital revenue for the quarter. So we're very excited about this opportunity as we continue through '23. Notably, Beasley's multi-platform, local content strategy continues to drive tremendous audience growth. And in the first quarter, our owned and operated audience reach grew 21% compared to the same period in '22. Our radio brands continue to hold dominant positions in Nielsen, where our market share grew in both our large - markets and the midsized diary markets with the key demographics of adults 25-54. Our PPM market share grew by 4% year-over-year, and our diary market share is up by 11%. Overall, our average share growth grew by 6% year-over-year. However, like other recent quarters, the largest audience growth was seen on our digital O&O assets, with unique use increasing 59% from Q1, '22 to Q1, '23. This audience growth led to a 93% increase of sellable digital impressions year-over-year, and digital now accounts for 45% of Beasley's total monthly audience, and we expect this trend to continue. Now, looking into the second quarter and into the back half of '23, our focus remains on driving revenue diversification and audience expansion, improving margins, maintaining a strong and flexible balance sheet, reducing net leverage and growing free cash flow. We're measuring the impact of a potential recession, and we're taking steps towards that. As of today, our second quarter revenue is pacing slightly down. And breaking that down, April is down 3%, with May down 2% and June is up 2%. However, this is inclusive of the home show in April '22 that was held in March of this year, which I had mentioned earlier when we were talking about March pacing. And then also to WiLD SPLASH was held in May '22, and we're not doing that this year. So if you adjust for each of these, during the quarter, we would be flat to slightly up in terms of pacing for second quarter. We are hopeful that our pacing will continue to improve moving further into the quarter as we saw a slowdown in the latter half of second quarter of '22. So we're proud of the strong results we have delivered over the last several quarters, even against headwinds, including inflation, labor challenges, interest rate increases and a potential recession. And as a season company operating for more than 60 years, we have a great understanding of the local markets we serve, and the digital transformation within our company proves that our teams are ready for the challenges and the future. So on behalf of our corporate and station personnel, we thank you for listening to our call today. And Marie, we did have a few questions that were submitted so we'll go into those.

We will move into those, Great. So the first question that was not addressed in our prepared remarks is, could you break down pacing by revenue source?

Yes, so we did go through our first quarter. For second quarter, second quarter is trending just like first quarter. So local is pacing up slightly. National is pacing down double-digits, and then digital is pacing up.

And what was adjusted EBITDA in first quarter '22, first quarter '23 and the LTM? So I'll take that. Our adjusted EBITDA in first quarter of 2022 was $4 million. And in first quarter of 2023, adjusted EBITDA was also $4 million. Our latest 12 months adjusted EBITDA at the end of first quarter 2023 was $38.1 million. Again, this includes certain add backs as described earlier in our prepared remarks. The next question is, what are you seeing with respect to digital impression pricing trend?

So digital CPMs are seasonal just, like our other business that we see. So there's typically a drop off in Q1, but we are seeing that come back in Q2. Also, digital impressions are more crowded today, especially programmatic because of supply and demand. We have integrated our O&O impressions in our proposed [indiscernible]. And so that makes it easier to sell to our direct market. And when we do that, then we're able to achieve higher CPM to the tune of five to six times more, which is still official. This is part of the whole content strategy where we're able to include more impressions, more page views. So we're going to be seeing the benefit of that.

Great, would you consider selling non-core assets?

Yes, we are considering selling non-core assets.

And then the last question, could you review the $10 million cost savings initiative? And how much hit 2022, and our all cash costs be done? So first of all, all cash costs for these cost savings were realized in fourth quarter 2022. Half of the savings or $5 million was headcount reduction, which we will see the benefit in the first three quarters of 2023. A portion of these savings will be offset by increased cost of sales and that's from increased revenue as well as the newly added expenses from our agency acquisition, which we closed on at the end of second quarter 2022. And Caroline, that concludes our submitted question.

Right, well thank you very much for attending, and we look forward to speaking with you next quarter. If you have any other questions, feel free to reach out to Marie or myself. Thank you.

Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.