Good morning and welcome to Beasley Broadcast Group's Third Quarter 2023 Conference Call. Before proceeding, I'd 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 despite 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'd 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 and 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 very much, and good morning. Welcome to our third quarter conference call. Marie Tedesco, our CFO, is with me this morning. The third quarter saw continued softness in the advertising market with the cyclical offset of political, which led to a 5.8% revenue decline. However, excluding last year's political revenue of approximately $1.8 million revenue was down 3.2% or $2 million. And on a positive note, our quarterly digital revenue continued to show year-over-year growth and with our proactive expense management initiatives, we decreased our operating expenses by 2.7%, resulting in SOI of $10 million and EBITDA of $5.5 million or down $2.3 million and $1.7 million, respectively. While overall revenue decreased 5.8%, we saw increases in digital, which was up 9.1% and network increasing 35%. With our consistent digital revenue growth and currently representing almost 19% of total revenue we are within a basis point of reaching the lower end of our goal of digital accounting for 20% to 30% of total revenue. The increases from digital and network were offset by challenges in National, which was down $2.6 million or 20% and down 8% excluding political. And local was also down 6%. The softness of the local side was a result of a soft local agency market, which was down 4.7% and local direct market, which was down 3.5%. As a result of this softness, we reprioritized our efforts mid-quarter with a renewed focus on developing mobile direct new business. And as a result, local new business grew 22%, $7.8 million, up from $6.4 million in the prior year. In the sports betting category, we recorded $3.7 million in the third quarter down 2.6% from the prior year, with sports betting representing 6% of total revenue. Sports betting was driven by increased spending in Boston, which…

Thanks, Caroline, and good morning, everyone. Third quarter net revenue decreased 5.8% or $3.7 million to $60.1 million, which includes $609,000 from our esports team. Excluding political, revenue decreased $2 million year-over-year or by 3.2%. We generated positive revenue growth in four of our markets, including Augusta, Boston, Fort Myers and Wilmington. Digital revenue for the quarter grew 9.1% to $11.4 million and now represents 18.6% of total revenue for the quarter and we will continue to grow this revenue stream and diversify our revenue sources. Moving to our revenue categories for third quarter. Consumer services remained our largest category at 29.2% of total revenue. This category declined 1.8% during the quarter. However, five of our markets delivered year-over-year increases. The largest decrease in this category came from medical, dental and recruitment. Our second largest category was retail, which fell 1.5% year-over-year and accounted for 16.2% of total revenue. Entertainment, number three, represents around 15.2% of third quarter total revenues and decreased 7.8% year-over-year. The entertainment category includes sports betting, which generated $3.7 million for the quarter compared to $3.8 million in the prior year quarter. Auto, our fourth largest category saw revenues up 1.6% year-over-year and the category accounted for 8.8% of total revenue. We saw increases in auto in more than half of our market, including a 24% growth in Philadelphia. Domestic auto advertising increased 1% in the quarter, while import auto ads were up around 10%. We have seen a spike in National Auto Tier 1 branding, while domestic auto has slowed somewhat, especially Tier 1, and this has been partly driven by the current auto strike. We expect continued improvement once the auto strike is resolved. Finance jumped the fifth spot with revenues up almost 4% and finance is 5.2% of our total revenue. SOI for…

Thank you, Marie. While we were faced with headwinds in third quarter, especially from National, I'm pleased with our third quarter digital revenue and new business initiatives. Our continued digital revenue growth has allowed us to partially offset the decline in spot. Our successful content strategy helped drive the growth in our digital revenue and we expect this to continue into fourth quarter and beyond. Our multi-platform local content strategy continues to drive tremendous audience growth in the third quarter. Our O&O audience monthly reach is now almost 32 million compared to approximately 29 million during the same period in 2022. This represents a 13% overall monthly audience increase from last year. Our radio brands continue to maintain dominant positions in Nielsen, where our market share grew by 6% year-over-year with the key demographic of adults 25-54. However, like other recent quarters, the largest audience growth was seen on our digital O&O assets with unique users increasing by 37% from Q3'22 to Q3'23 for a total of 31.2 million unique users in the quarter and this is compared to 21 million in the year ago quarter. And on a year-to-date basis, unique users increased 63% from 51.8 million to 84.3 million. This audience growth led to an 18% increase of sellable digital impressions from Q3'22 to Q3'23. And during Q3, our growing total digital and esports audience represented over 50% of our total monthly audience. In Q3, we successfully rolled out a more technically advanced version of our branded apps. Plus, we launched a new National content brand, podcastradious.com and broadcastradious.com, which is the first-ever radio brand in the US dedicated to podcast discovery and curation. Additionally, in October, we launched a new country format on our side channels in markets where we currently have a country format process, which…

Thanks, Caroline. And yes we did receive a handful of questions. And the first one is, do you see the opportunity to do more asset sales?

Yes. I mean we're always open, and we continue to explore potential opportunities for asset sales. However, we are looking for them to be deleveraging for the company.

Next question. Can you give us an update on esports?

Sure. As I mentioned before, it is likely that OWL will shut down by end of the year. And we will look to receive a payment from Activision Blizzard. And with that payment, we will plan to reduce our debt.

Great. Next question. Can you tell us the multiple and SOI and EBITDA for the sale of your Wilmington radio station?

Yes. So first of all, we sold Wilmington to a non-comm broadcaster. It was a stick value based on top count, and we sold it for $5 million. At the same time, we were able to move the IP format to a stream plus an HD side channel that we have in Philadelphia. So we'll be able to continue to provide the same type of content to the people of Wilmington and Philadelphia. In terms of EBITDA and SOI, EBITDA on a trailing basis for the full year was about $500,000. Again, we sold the station for $5 million. Revenue, total revenue for the station was $4 million. Digital revenue was $2 million. Most of the EBITDA, the $500,000 related to digital because we sold to a non-comm, we were able to move the digital revenue, most of the digital revenue and EBITDA over to our digital direct agency. So based on that, we're looking at a 10 times multiple with us being able to keep most of the EBITDA within the company.

Great. Thanks. Next question. Do you expect to be free cash flow positive for full year 2023 and 2024? So with the economic headwinds that we have experienced both in third quarter and now in fourth quarter, it will be a stretch to get to free cash flow positive for 2023 full year. However, we expect to be free cash flow positive in fourth quarter of 2023 and most certainly for the full year of 2024. And the last question we have received is how much political advertising did you have in 2022? And what are you expecting in 2023 and 2024? So a review of that, in 2022, we received $7.5 million of political revenue and $5.1 million of that came in fourth quarter of 2022. In 2023, year-to-date, we have received approximately $164,000 in political advertising and our expectations for 2024 is $11 million. And that concludes the questions.

Okay. Thank you very much for participating on the call today. And feel free to call either Marie or myself with any follow-up questions. Thank you very much.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today. End of Q&A: