Good morning, and welcome to Beasley Broadcast Group's Second Quarter 2025 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 quarterly report 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 remind listeners that following its completion, a replay of today's call can be accessed for 5 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.

Thank you, and good morning, everyone. We appreciate you joining us to review our second quarter results. Q2 was a challenging but important quarter for Beasley, yielding mixed results. On a positive note, I am pleased to announce that we signed this week an agreement to sell WBCN-AM, WJPT-FM and WWCN-FM in Fort Myers to a third party for $9 million. In addition, we entered into a purchase agreement to sell WRXK-FM and WXKB-FM in Fort Myers to a separate third party for $9 million. As a result of the sales, which are subject to FCC approval, the company will no longer have operations in the Fort Myers Naples market. In June, we announced the sale of WPBB-FM in Tampa, Florida for $8 million. So to summarize, we will be selling these assets for a combined $26 million in gross proceeds. As stated in previous quarters, we remain open to additional opportunities where the strategic rationale is compelling, and the financial impact supports our broader objective. While our digital business continues to gain meaningful traction with strong revenue growth and expanding margins, our core audio segment significantly underperformed, contributing to a larger-than-expected revenue shortfall. These results highlight both the progress we're making in reshaping the business and the urgency of the transformation still underway. We're operating with our eyes wide open. This quarter underscores the importance of accelerating our progress on the priorities we laid out earlier this year. Number one, advancing our digital road map; number two, reducing structural costs; and then number three, taking tangible steps to improve our capital position. It also reinforced the need to drive accountability across our sales force. In Q2, digital revenue grew by 1.3% or 8.1% on a same- station basis and accounted for 25% of our total revenue. This is an…

Thanks, Caroline, and good morning, everyone. Let me begin by directly addressing the primary driver of our second quarter performance, continued weakness in our agency business. Macroeconomic volatility was not the defining challenge this quarter. It was the continued structural decline across national and local agency channels. These channels, which historically represented a sizable portion of our overall business, have proven increasingly fragile in the current traditional media environment. In Q2, agency-related revenue declines were deep and widespread. National Agency revenue was down 12.1% year-over-year, reflecting ongoing budget compression, delayed decision-making and reduced upfront commitments from larger advertisers. Local agency performance deteriorated even further, down 24.7% year-over-year, with most of our markets seeing high double-digit declines. This is not just cyclical, it is structural. Agency business models are evolving. And with that, the mechanics of media buying are shifting. Increasingly, agencies are incorporating large language models and AI-driven recommendation engines into their planning workflows. These systems prioritize media channels based on digital attribution data, real-time performance metrics and optimization algorithms, areas where traditional audio often lack direct parity. As a result, radio is being systematically deprioritized in media mixes, not necessarily due to performance, but because it is underrepresented in the digital data sets and signals that power these tools. This trend has accelerated the shift away from legacy audio buys and has further widened the gap between traditional planning cycles and where advertising dollars are flowing. Without deliberate human override or advocacy, traditional formats like radio are often omitted altogether. While this presents a near- term headwind, it also reinforces the urgency behind our digital transformation and the importance of positioning our owned and operated assets, targeting capabilities and measurement tools to compete in a technology-first buying environment. The impact on our total revenue was material. While we continue…

Thank you, Lauren. While Q2 marked another step in the maturity of our digital platform, looking ahead, the most exciting part of this evolution is still to come. We are preparing to launch Display Plus later this quarter, our newest proprietary digital product, which will pair with Audio Plus to give advertisers full-funnel solutions and advanced attribution across our digital footprint. Together with our new video platform now live in select markets and our expanded market newsletters, these tools form the foundation of a comprehensive multi-platform advertising ecosystem that's built for performance and scale. By the end of the year, we will be launching our self-serve advertising platform, a major milestone in our digital transformation. This tool will enable small and midsized businesses to plan, purchase and manage their campaigns entirely online, using AI-powered features that simplify everything from proposal generation to creative development and reporting. It's a turnkey solution designed for the long tail and one that will reduce our dependence on traditional sales channels while unlocking new scalable revenue streams. Each of these investments is purpose-driven to improve client outcomes, increase monetization per impression and drive higher margins across our digital business. Now looking ahead to third quarter, we are seeing continued softness across national and local agency channels, which account for roughly 45% of our total revenue. And as of today, total revenue is pacing down high single digits, and that's excluding political. When you include political, we're looking at similar pacing as what we ended second quarter with. The decline continues to be driven by softness in both local and national agency business, which are currently pacing down 15% and 20%, respectively. On the positive side, the business that we have control over, local direct and digital are pacing up approximately 3% and 18%, respectively. In…

Yes. We will now take the questions that were submitted ahead of today's call. One, can you update us on where the cost savings plan stand? How much has hit the numbers and how much more will benefit 2025? Given the current revenue challenges, do you expect to do more cuts in 2026?

So first, thanks for the question. As Caroline noted, since the second quarter of last year, we have taken cost actions that will take out approximately $30 million in annualized total costs. As you think about 2025, we reported approximately $219 million in operating and corporate expenses in 2024. I would expect our 2025 expenses to land kind of $20 million to below $20 million less for the full year of 2025, and that sort of includes the sort of annualized portion of the cost cuts that we did in 2024 as well as the cost cuts that we've done year-to-date. So as we look ahead to 2026, I think we're continuing to make proactive and prudent calls about our cost structure. And in particular, we're focused on as we renew key vendor contracts for next year, sort of being prudent in how we do that and sort of rationalizing what services we really require. So I think you'll continue to see that the cost structure be further optimized as we head forward here.

How are CPMs trending? Are peers being competitive on pricing given the challenged environment?

So we're going to break this out. Digital CPMs are holding in the current environment, and we see this with the competition as well. Our effective CPMs on digital continue to increase as we are selling more direct O&O. Then as far as traditional over-the-air CPMs, we are seeing those trending down primarily due to the fact that agency business is trending down double digits. So pricing remains competitive in our market.

And the last question, do you see the opportunity for more asset sales?

So as we have consistently stated and as we demonstrated today, we're always open to asset sales or swaps if it makes sense for the company. So is that it? That's all of our questions. All right. Thank you very much. Should you have any follow-up questions, please feel free to reach out to Lauren or myself, and we appreciate your time today. Thank you.