Good morning, and welcome to Beasley Broadcast Group's Third Quarter 2022 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 reports 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 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'd like to turn the conference over to your host, Beasley Broadcast Group's CEO, Caroline Beasley. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us to review our third quarter results. Marie Tedesco, our CFO, is with me on the call this morning. So I'm happy to share that our third quarter results continued to show year-over-year improvement in both revenue and SOI. Overall, net revenue increased 1.5% year-over-year, exceeding the guidance we provided when we reported Q2 of a projected flat to slightly down quarter. Now breaking that down, over-the-air local spot revenue increased 1% or by $275,000 while national revenue declined 8.7% or by $1.2 million, and that includes the benefit of $1.9 million in political. Impressively, third quarter digital revenue grew 23.2% year-over-year while audio revenue decreased 1.9%. Similar to previous quarters, new business initiatives, sports betting, political and a $1.9 million year-over-year increase in digital revenue were the primary drivers that offset the continued national revenue decline. Now to dig into that a bit, national, excluding political, was down 20% or $2.7 million for the quarter, and it now accounts for about 15% of our total revenue. This trend is consistent with the past several quarters where we've been successful in offsetting declines in national with higher local and, more notably, digital revenue. As a matter of fact, in both the second and third quarters, digital was a larger part of our revenue mix than national. Third quarter digital revenue represented just over 16% of our total revenues, up from 13.2% in the year-ago third quarter. And our goal remains that digital revenues will be close to 20% of total revenue by fourth quarter with continued growth thereafter. And as a reminder, we completed the acquisition of a white label digital agency on June 23, and this will continue to accelerate our digital revenue growth and provide meaningful synergies with…

Thanks, Caroline. Good morning, and good morning, everyone. Let me start with a review of our third quarter results, followed by a review of our balance sheet. Third quarter net revenue increased 1.5% or $921,000 to $63.8 million, which includes $586,000 from our 2 esports teams as well as $1.1 million from Guarantee Digital, our second quarter agency acquisition. We grew revenue year-over-year in all but 2 of our markets, and we generated approximately $1.9 million in net political revenue in third quarter compared to $258,000 last year. We continue to see higher political spending than initially expected, which will also be evident in fourth quarter. As of today, we have exceeded the full year political revenue received in 2018 midterm election by approximately 40%. Excluding political, third quarter revenue declined 1.5% or $724,000 due to the decline in national. We saw a slowdown in July and August related to inflation, labor shortages, interest rate increases and the overall slowdown in the economy. Looking closer at the quarter, July was down approximately 3% with local flat and national down 28%. August came in flat with local up 5%, offsetting a 24% decline in national. September was up 2.8% with local up 3% and national up 5%, thanks to political. Digital revenue for the quarter grew 23.2% to $10.2 million and represented approximately 16% of total third quarter revenue compared to 13.2% in the prior year quarter. We grew our digital margin from 14.4% in second quarter 2022 and from 3.3% in prior year third quarter to an impressive 19.6% this quarter as we closed in on margin levels closer to pre-pandemic over-the-air margins. Station operating expenses for the quarter increased $326,000 or 0.6% to $51.5 million, resulting in third quarter SOI of $12.3 million, a year-over-year increase of approximately $600,000.…

Thank you, Marie. Our multi-platform local content strategy continues to drive more audience in our markets. In the third quarter, our owned and operated audience grew by 22% compared to Q3 '21. This growth was particularly evident in our digital O&O assets with unique users increasing from 16.3 million in Q3 '21 to 23.6 million in Q3 '22. That's an increase of 45%. But more important, this expanded audience spent more time and consumed more content on our digital platform, which led to higher sellable digital impressions, which has been our focus in driving digital growth. Our O&O impressions were up over 128% from Q3 '21, and we expect to reach 1 billion impressions by the end of this year. In addition to this incredible growth on our digital platforms, our radio stations continue to maintain dominant positions in Nielsen, where we currently have the highest average cost per share when compared to all other major broadcasters in PPM. Overall, our PPM market share increased 1% year-over-year with adults 25-54 in prime. In fact, we have the #1 station in most of our largest markets, including Boston, Philly, Detroit and Charlotte amongst adults 25-54. Now according to eMarketer's Global Media Intelligence Report, total audio listening in the first half of '22 grew 10% year-over-year to a total of 4 hours and 5 minutes per day. Broadcast radio increased from an hour and 7 minutes to an hour and 11 minutes, and this is likely due to an increase in at-work listening with a return to work. Between broadcast radio and podcasts, average daily time spent increased 10 minutes, with podcast listening moving from 52 to 58 minutes daily. And digital audio listening is up across the board, moving from 72% penetration during the first half of '21 to 79% in…

Okay, great. Thanks, Caroline. So we did receive a request to disclose our quarterly EBITDA numbers. And so as you could see in our prepared comments, we have included both EBITDA and our net adjusted leverage, and we will continue to do so on a go-forward basis. So going to the first question. Caroline, what is the minimum cash balance which -- what you are comfortable with? And also to follow up with that, are you interested in buying back any more bonds?

Yes. So the minimum cash balance that we feel comfortable with is about $25 million. And as far as buying back more bonds, our goal is to be opportunistic in buying back bonds. However, as I said, our minimum cash balance was $25 million and we're very conscious now, given the uncertain economic environment. So that's where we are.

Great. And another question was what products or services are driving the digital growth? And could you give us an update on expectations for digital revenue as a percent of total revenue for both '22 and 2023?

Yes. So I think that hopefully, you heard from the comments that I made earlier today is our focus has been growing our O&O audience on the digital platform. So we have rolled out an editorial content initiative, which has really driven our page views and therefore impressions. So our O&O products as a result of this were really the driver of revenue growth and we saw a 23% increase in revenue. So what are these products that we're able to sell? We've got programmatic audio and display and then, of course, our direct sales from our podcast and display shelf. Our TPP products for the quarter were flat so again, this was all driven by O&O products this year.

Great. And then we have 1 more question here. And this is about the timing of the cost reduction plan. And what are the cash costs of implementing those cuts? So I will take that. So of the $10 million annualized cost cuts, half of those are permanent reduction in headcount, which cost us just under $600,000 in severance. The headcount reduction was effective in October so we will see some benefit of that in fourth quarter less the added severance expense. And that's it. We had a few more questions but they were all covered in our prepared comments.

All right. Well, thank you very much for your time today, and feel free to reach out with any additional questions that we may not have covered. All right. Bye.

This concludes today's call. Thank you for your participation. You may now disconnect.