Good morning, ladies and gentlemen, and welcome to the Beasley Broadcast Group's Second Quarter 2022 Conference Call. Before proceeding, I would like to emphasize that, today's conference call and webcast will contains 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, 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 to the following: In 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 this site. At this time, I'd like to turn the conference over to your host, Beasley Broadcast Group's CEO, Caroline Beasley. Please go ahead.

Thank you very much. And good morning, everyone. Thank you for joining us to review our second quarter results. Marie Tedesco, our CFO, is with me this morning. I'm pleased to report that our growth momentum continued through second quarter. Net revenue increased 8.8% year-over-year, exceeding the guidance when we reported Q1 of a projected 7% increase in revenue. On a pro forma basis, that excludes our divested Boca Raton station, which closed on April 1st, our revenues grew 9.2% for the quarter. Second quarter digital revenue grew an impressive 34.3%, while audio revenue increased 4.3% year-over-year. Similar to previous quarters, new business initiatives, sports betting, political and year-over-year increase in digital revenue were the primary driver to our quarter. Our new business performance was robust this quarter, as we recorded $7.8 million in revenue, up 60% from Q1 and up 16% from second quarter of ‘21. Given the declining economic backdrop, we remain watchful of every market, every expense and all of our content creation and other initiatives as we move into the back half of the year. Now breaking down second quarter, as I mentioned before, revenue increased 8.8%, . Over-the-air local revenue increased 10.5% or by $3.5 million, while national declined percent or by . This is with the trends of the past several quarters where declines in national offset by increased local. Also given the growth that we have had in digital, digital now accounts for a larger share of revenue than national, and we expect this gap to increase going forward, net of political. Our overall gains were again based with 11 of our 13 markets delivering year-over-year revenue increases. Now looking closer at the quarter, April was up 7.4%, May was up 11.1%, and then June was 5% year-over-year as we started to see…

Thanks, Caroline. And good morning, everyone. I will start with our review of the second quarter results and follow up with a review of our balance sheet. Second quarter net revenue increased 8.8% or $5.2 million to $64.8 million, which includes $673,000 from our 2 esports teams, the Outlaws and AXLR-R8. We grew revenue year-over-year in 11 of our markets, including our Boston, Charlotte, Detroit, New Jersey, Philadelphia and Tampa clusters. And for comparison, we generated approximately $600,000 in net political revenue in second quarter compared to $85,000 last year, as we are a higher spend than initially expected, including more spend on pass related campaigns. Digital revenue for the quarter 34.4% to $10.7 million and now represents 16.5% of total revenue, also up 14% from the previous quarter. As we continue to manage our digital assets, we expect to grow our digital margin from 14.4% this quarter to a margin closer to pre-pandemic over-the-air margin. Largely reflecting the revenue growth, station operating expenses for the quarter increased or 10.6% to resulting in second quarter SOI of $11.2 million, a year-over-year increase of approximately $100,000. Breaking down the increase in operating expenses, the main drivers of the increase were cost of sales of approximately $1.5 million year-over-year, including third-party costs related to the revenue increase, also concerts and events expenses of $1.6 million, inflation related wage increases, investment in station marketing and a bad debt variance of approximately $1 million stemming from the prior year period. Reflected in these variances is approximately $2.5 million, which is directly related to the investments in our digital agency, which has been the driver of the success of ongoing growth of our digital revenue. Now looking at our revenue categories for second quarter, consumer service remains our largest revenue category at 30.5% of our…

Okay. Thank you, Marie. Beasley brands continue to grow driven by the highest quality multi-platform local content in the industry. In the second quarter, as mentioned before, our digital owned and operated audience grew 24% compared to second quarter of ‘21 with unique users now at 20.3 million, but even more important this expanded audience spent more time and consumed content on our digital platforms, which the higher sellable digital impressions. Our O&O impressions were up over 95% from Q2 ‘21 to Q2 ‘22. And we are in the very early innings of capitalizing on our ability to leverage growing impressions. And we're laser focused on this aspect of our business. In addition to the incredible growth on the digital platform, our radio stations continue to maintain dominant positions in Nielsen ratings, where we currently have the highest cluster share when compared to every other major broadcaster in PPM. In fact, we have the number one station in most of our largest markets, including Bostin, Philadelphia, Detroit and Charlotte of adults 25-54 during this spring rating period. Moving on to eSport, the Overwatch season is well underway and we're presently rating 6th in the world. We are expanding our overall presence with the introduction of an academy team. And that's in partnership with the University of St. Thomas in Houston. And we'll have more to report on this in the coming quarters. Now looking ahead to third quarter and the back half of ‘22, as we stay focused on driving further revenue diversification and growing our audience, especially on the digital platform with our new strategic initiatives, we are seeing slowdown in July and August related to inflation, labor shortages, interest rate increases and the continuing chip and auto inventory issues and just an overall slowdown in the economy. Third quarter revenue as of today is flat to prior year. And breaking that down, July was down 4%. August is now pacing down 2% and September is pacing up 8%. Breaking that down further, national is pacing down 16% and local is pacing up . We are mindful of our expenses and we initiated cost reductions in second quarter through the end of the year. And so lastly, before going to Q&A, I'd like to once again acknowledge our team members across the company for everything they have done and are doing to help us move past these economic challenges. And also we thank you very much for being on the call today. And should you have any further questions after we address the questions you sent in, please feel free to reach out to us. So, Marie, I'm going to hand it over to you at this point.

Thanks, Caroline. So there's a couple of questions in addition to our prepared script that wasn't covered. The first question was to please provide on the small acquisition of this digital agency. If we could touch both on the price and the revenue impact of such?

Yes. So we paid $2 million for the agency and the incremental revenue on a pro forma basis for the full year should be about $4 million. As mentioned in the script, we are expecting synergies as a result of this acquisition, and we're expecting those to be probably between $1 million, $1.5 million in synergies. Thank you.

And the second question is can you break down the increase in operating expenses and how much is related to digital as well as the agency build out? So, in addition to what we reviewed in our script, digital expenses for the quarter, total was approximately $9.2 million or 17% of total expenses. Our digital agency accounted for approximately $2.5 million of that. And also for some additional color, our total third party expenses for the quarter was $5.7 million. And that concludes our questions.

All right, again, thank you so much for attending the call today. And should you have any follow up questions, please feel free to reach out. All right. Have a good week.

Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.