Beasley Broadcast Group, Inc. Class A Aktie

Good morning, and welcome to Beasley Broadcast Group First Quarter 2026 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 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 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.

Good morning, everyone, and thank you for joining us. I want to begin by grounding this conversation and how we are thinking about Beasley over the long term. Our strategy is centered on 3 clear objectives: number one, stabilizing and rebuilding our core revenue base, particularly in local direct; number two, scaling a higher-margin, more controllable digital business; and three, strengthening our balance sheet through disciplined deleveraging.

Everything we are doing operationally and financially is aligned to these priorities. This is not about short-term fixes, but rather about building a more resilient business with a higher quality earnings profile over time. With that context, I want to spend a few minutes on the most important development since our last call, which is the progress we've made on our capital structure and liquidity.

Over the past several months, we've taken meaningful and deliberate steps to improve our financial position. During the quarter, we completed the sale of our Fort Myers assets, generating approximately $18 million of proceeds following the prior sale of WPBB for approximately $8 million last year. On May 1, we executed a comprehensive second lien restructuring, exchanging approximately $184 million of existing notes into approximately $98 million of new PIK notes. In addition, we repurchased approximately $16 million of first lien notes and entered into a new $35 million asset-based credit facility.

These actions are foundational. The second lien restructuring meaningfully reduces our near-term interest burden and provides greater flexibility as we continue to execute the business. The repurchase of first lien notes reflects our commitment to reducing debt and the ABL provides us with working capital flexibility and liquidity support, allowing us to manage through near-term volatility while maintaining focus on execution. Importantly, we view these actions as the beginning of a broader deleveraging strategy, not the end.

As we look ahead to the remainder of '26, our approach is anchored in 3 areas. First, we're focused on expanding EBITDA through revenue recovery, digital growth and improved margin conversion. Second, we will continue to evaluate portfolio optimization opportunities, including potential asset sales or other strategic transactions. And third, we remain disciplined in our liquidity and capital allocation decisions with a clear focus on continuing to deleverage over time. Our objective is straightforward: to strengthen the balance sheet while improving the underlying earnings power of the business.

Now turning briefly to the quarter. Q1 reflects a business that is in transition. We delivered $41.3 million (sic) [ $42.6 million ] of revenue, down 6.7% year-over-year, SOI of $1.7 million (sic) [ $7.7 million ] and adjusted EBITDA of $600,000 (sic) [ $400,000 ], all on a same-station basis. These results reflect continued pressure in legacy revenue streams, particularly local and national agency as well as uneven pace of recovery across our markets.

At the same time, there are important positive signs. Digital continues to scale, increasing 18% in first quarter on a same-station basis. Our cost structure is meaningfully improved, and we are seeing clear evidence that where digital is working, revenue stabilizes, such as in our Tampa and Boston clusters.

And with that, I'll turn it over to Kevin to address revenue and operations.

Thank you, Caroline. I'll start with a simple observation. The quarter was challenging, but it was also clarifying. We now have a very clear understanding of where the business is performing, where it is underperforming and what needs to change. 12 weeks into my tenure at Beasley Media, my message to this group is direct. This is a portfolio in transition with identifiable, fixable problems, not a structural failure of the business. We have mobilized a market-by-market intervention plan and have clear performance fruits, as Caroline pointed out, in the Tampa and Boston markets where we are executing with urgency, delivering budgets and market share growth.

What we are managing today is not a single issue across the company, but rather a portfolio with different operating dynamics. That distinction matters because it means the solution is not a broad one-size-fits-all approach. It requires targeted execution and market-specific strategies. At the center of our strategy is a very simple focus. We are laser-focused on helping our clients achieve their advertising and marketing goals.

What we consistently see is that the best outcomes are delivered when our digital and audio products are used together. When deployed in tandem, they maximize reach, improve engagement and frequency and ultimately drive a more efficient return on advertising spend. This is not theoretical. It shows up in campaign performance and in client retention. As a result, we are intentionally shifting toward integrated bundled solutions and outcome-based selling. This represents a meaningful evolution of how we go to market.

Digital remains the most important growth driver in the business. But just as important as growth is the quality of that growth. We are prioritizing owned and operated products, direct client relationships and higher-value solutions while deliberately moving away from lower-margin revenue streams. This shift positions us for stronger margin conversion over time.

We are also operating with a clear benchmark. At the market level, we believe digital should represent at least 35% of our total revenue. Across the enterprise, we're not there yet, but we're making steady progress and remain confident in that trajectory. In parallel, we have implemented a much more disciplined operating framework across the organization. This includes full CRM adoption, weekly revenue committee reviews and standardized pipeline visibility. This allows us to manage the business with greater and more significant precision, particularly around pipeline health, sales velocity and conversion rates.

New business remains a key area of focus. We are addressing this by strengthening our market leadership, adding hunter-focused sales talent, leveraging AI tools in prospecting and across the sales funnel in addition to implementing more structured onboarding and training programs. These actions are designed to rebuild the revenue base in a sustainable way.

At a broader level, we are transforming how we go to market. We are moving from an inventory-based selling model to an outcome-based model that emphasizes integrated campaigns, measurable performance and deeper alignment with client objectives. I do want to be transparent on cadence. We did not see the level of revenue improvement in April that we would have liked, and we expect near-term conditions to remain challenging. Beasley operates in markets where mainstream advertisers, local automotive, health care, home services and restaurants are absorbing real economic pressure generated from the macroeconomic challenges and geopolitical disruptions.

Our focus of controlling what we can control, local direct selling, attribution-led ROI proof and integrated bundles is a purpose built for this environment. We are building repeatable operating discipline and manage against leading indicators that drive long-term performance. These are the inputs that when consistently executed across all markets in over 12 months, produce the outcomes this group cares about, sustainable revenue growth, margin expansion and EBITDA recovery. 12 weeks in, my conviction is stronger than the day I walked in.

This is a turnaround business, but it is a turnaround business with a clear playbook, real proof points and operational discipline to execute. In the core, scaling what works and holding every leadership team accountable to data-driven discipline.

And with that, I'll turn it over to Ilana to go through a deeper look at our numbers.

Thanks, Kevin. For the first quarter, net revenue was $41.3 million (sic) [ $46.2 million ], down 13% year-over-year. Total expenses, including $42.6 million in operating expenses and $3.5 million in corporate expenses were $45.7 million, down roughly 7% or $3.6 million versus prior year period, and SOI was $418,000 compared to $3.7 million in the same period last year.

From a segment perspective, local revenue remained the largest component of the business and continues to be the primary driver of overall performance. Local trends were mixed with resilience in service-based categories, offset by weakness in discretionary and agency influence spend. Importantly, we are seeing divergence at the market level where markets with stronger digital adoption and a higher mix of local direct revenue are demonstrating greater stability relative to those with heavier exposure to national and agency-driven demand.

National revenue declined year-over-year, totaling approximately $5.1 million in the quarter compared to $6.6 million in the prior year period, reflecting continued pressure in national advertising budgets. While still down, we are beginning to see early signs of stabilization in national pacing, including political revenue of $108,000 for the quarter.

Digital revenue continues to be the most important area of growth and strategic focus. Total digital revenue was approximately $10.7 million in the quarter, representing over 25% of total company revenue. Within that, we continue to see a meaningful shift in mix towards higher-quality revenue streams. Owned and operated digital grew approximately 26% year-over-year, while lower-margin third-party programmatic revenue declined. This mix shift is intentional and reflects our focus on building a more durable, higher-margin digital business over time. O&O now accounts for roughly 65% of our total digital revenue, representing a shift from prior year period of 49% of total digital revenue.

From a market perspective, digital performance remains uneven but directionally encouraging. As Kevin mentioned, Tampa and Boston continue to lead in digital adoption and momentum with strong performance in O&O products. More broadly, markets with stronger digital penetration are demonstrating greater revenue stability, reinforcing the role of digital and offsetting legacy declines.

Digital is no longer just a growth driver. It is the foundation for stabilizing and rebuilding the earnings profile of the business. Overall, the category and segment performance in the quarter reinforces 2 key points. First, advertiser demand is still present, particularly in local service-based categories where ROI and attribution are clear. Second, the composition of our revenue is evolving with digital and specifically higher-margin O&O digital products becoming an increasingly important driver of both growth and long-term profitability.

Continuing with category performance, we saw strength in several areas. Consumer services was one of the largest contributors to growth in the quarter, increasing approximately $1.7 million or 13.8% year-over-year. We also saw continued strength in categories such as legal and health care. Home improvement and construction-related categories also performed exceptionally well with increases of nearly $2 million combined. These categories continue to benefit from local demand and align well with our strategy of focusing on direct advertisers.

Offsetting this strength, we experienced declines in several more discretionary and nationally driven categories. Entertainment declined approximately $2 million year-over-year, while gaming was down approximately $1.4 million. Automotive, which remains an important category for the industry, also declined roughly $1 million. We also saw pressure in restaurant, food and certain retail-related categories, reflecting broader macroeconomic caution and reduced spend for national and agency-driven advertisers.

On the expense side, we have made meaningful progress on cost discipline over the past 18 months. However, Q1 expenses were elevated relative to the plan, driven by higher selling expenses, hard costs, promotional spending, bad debt and increase in software and contract services. Station operating income was $418,000 for the quarter, as previously mentioned, down from $3.7 million in the prior year period. The decline in SOI was largely driven by our declines in revenue, although partially offset by the aforementioned expense cut that occurred throughout '25.

Adjusted for $150,000 in severance and roughly $10,000 in stock-based compensation, SOI would have been $560,000 for the quarter.

Corporate expenses were $3.5 million for the quarter, down from $4 million in the prior year period. However, this includes over $700,000 in nonrecurring fees related to our restructuring and asset sales. So excluding that, corporate expenses would have been $2.8 million. Adjusted EBITDA for the quarter was approximately negative $375,000 compared to $1.1 million in the prior year quarter. The decline was primarily driven by lower revenue, partially offset by structural cost reductions implemented over the past 18 months. Below the EBITDA line, cash interest expense for the quarter was approximately $3.3 million, relatively flat versus the prior year period. Total capital expenditures for the quarter were $700,000.

Turning to the balance sheet. We ended the quarter with approximately $218 million of total debt after paying down nearly $15 million in debt from the proceeds of our Fort Myers transaction, and we ended the quarter with approximately $16.4 million (sic) [ $6.4 million ] in cash. As we have discussed, addressing our capital structure has been a central focus for the company. Our debt profile has changed meaningfully since the close of the quarter in result of our restructuring on May 1, as Caroline mentioned earlier.

As we look ahead, our financial priorities are closely aligned with our operating strategy. At a high level, our guiding principle is simple. Revenue growth must translate into SOI improvement. That is the standard we are holding the organization to. With that, I'll turn it back to Caroline.

Thank you, Ilana. So to summarize, while the traditional business is in transition, the direction is clear. The digital strategy is working. The cost structure is meaningfully improved and the balance sheet is stronger today than it was at the beginning of the year. What we are focused on now is execution consistency and ensuring that the progress we're seeing in parts of the portfolio become repeatable across the entire company.

Before I close, I want to briefly address near-term pacing. And based on what we are seeing today, we expect second quarter revenue to be down in the mid- to high single digits on a same-station basis. April ended the month down approximately 2% after entering the month down 10%, which shows significant end-month adds. May and June are currently pacing consistent as to how we entered April. That outlook reflects continued pressure on both a macro and micro level. And on the macro level, consumers are feeling the strain of high gas and food prices and general concern in overall economic conditions impacting both national and local revenue.

In addition, internally and on a micro level, the operational changes we've implemented will take time to fully translate into revenue and SOI. We view this as a timing dynamic, not a change in trajectory. The leading indicators in the business, including digital mix, pipeline visibility and the sales process discipline are moving in the right direction. As those continue to build, we expect to see improved revenue stability and importantly, better conversion into profitability.

We're equally focused on diligently managing our capital structure. The actions we've taken on the balance sheet, including the second lien restructuring, first lien repurchases and the establishment of the ABL have materially improved our liquidity profile. We're managing the business with a clear focus on liquidity, cash generation and cost control, and we believe we are appropriately positioned to navigate the current environment while continuing to execute our plan.

We're focused on 3 things: first, continuing to improve EBITDA through a combination of revenue stabilization, digital growth and stronger margin conversion. While the revenue environment is seeing early signs of stabilization, we continue to take decisive actions to align our cost structure with current market conditions and improve long-term profitability. In early May, we executed additional expense reduction initiatives including an early retirement offering that is expected to generate nearly $2 million in annualized savings.

In addition, we implemented approximately $5 million in further annualized cost reduction focused on streamlining operations, reducing overhead and improving organizational efficiency. These actions build on the broader cost optimization efforts we've already undertaken over the past year and reflect our continued commitment to disciplined expense management and cash flow improvement.

Second, we're actively evaluating additional liability management opportunities, including further debt reduction as well as potential refinancings over time as the business stabilizes. And third, we're maintaining flexibility through portfolio optimization where selective asset sales or strategic transactions can accelerate deleveraging and strengthen the overall capital structure.

Importantly, we are approaching this from a position of control. We're not reliant on a single action or outcome. We have multiple levers available to us, and we are prioritizing those that create the most durable long-term value. And as we move through 2026, we would encourage you to focus on 4 key areas within our company: one, continued growth in digital revenue and mix; number two, improvement in local direct sales execution; number three, stronger conversion from revenue to SOI; and number four, ongoing progress on deleveraging.

This is a transformation that is a controlled, data-driven transformation with clear proof points and a defined path forward. So I'd like to thank you all for your time today, and we did not receive any questions. So with that, if you have any follow-up questions, please feel free to reach out to any of us on the call today. Thank you very much.

Once again, ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.

Good morning, and welcome to Beasley Broadcast Group Full Year 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, Ilana, and good morning, everyone. Thank you for joining us. We've certainly been busy over the last several months, as you may have read.

Let's start with 2025, which was a year of significant challenge for the company. But more importantly, it was a year of decisive action and meaningful transformation across every part of our business. We operated in an environment where traditional Audio revenue continued to decline at an accelerated pace, particularly within Agency-driven channels where we have historically had greater exposure. And as a result, full year net revenue declined to approximately $206 million from $240 million in 2024. This decline reflects the negative impact of Political of $13.6 million. So ex the impact of Political on a same-station basis, revenue was down 7% on a year-to-date basis.

Adjusted EBITDA declined to approximately $10.5 million in 2025 from $25.8 million in 2024 for the year. These results are not where we expect this business to perform, and we are approaching them with a clear-eye and accountable mindset. In addition, the company recorded a $224.8 million noncash impairment loss, reflecting the write-down of our SEC license, and we received a growing concern from our auditors that should be eliminated once our debt restructure is closed. What defines '25 is not simply the outcome. It's the work we did to fundamentally reposition the company.

Over the past 18 months, we executed approximately $30 million in annualized cost reductions, implementing structural permanent changes that have reset our operating model and aligned our cost basis with today's revenue environment. This was not incremental optimization. This was a comprehensive restructuring of how we operate. We streamlined our organizational structure, reduced layers across the company, centralized key functions and implemented more disciplined cost controls at both the corporate and station level. We made difficult decisions around headcount and resource allocation, and we built a leaner, more agile organization that is better positioned to operate in a lower growth Audio environment while still investing in areas that drive long-term value.

At the same time, we've been equally focused on improving the quality of our revenue. Our Digital business continues to scale and evolve with full year Digital revenue of approximately $49.5 million, increasing by $2.7 million or 5.9%. On a same-station basis, Digital revenue increased $7.7 million or 21% and Digital now represents roughly 24% of our total revenue. More importantly, Digital segment margins reached approximately 24% for the full year with even stronger performance on a same-station basis, reflecting the continued shift toward owned and operated products. Digital segment earnings were $12.8 million for the full year, indicating a full year operating margin of 28.8% on a same-station basis, up from 22.7% on a same-station basis in 2024. And while we are very proud of our Digital growth, it was not enough to offset the traditional Audio declines.

We're shifting more to O&O Digital and moving away from lower-margin third-party pass-through revenue and toward products that we own, control and can scale. And that transition is already improving both margin and visibility into future growth. We also took deliberate steps to optimize our portfolio. The sale of WPBB in Tampa and the sale of our Fort Myers market, which closed earlier this year together generated approximately $26 million in proceeds and reflects our continued focus on concentrating capital behind our strongest assets. These were not isolated transactions. They're part of a broader strategy to continuously evaluate our portfolio and ensure our capital is deployed where it can generate the highest return. Taken together, these actions represent a full reset of the business operationally, strategically and financially. And that leads to what we believe is the most important development for Beasley as we enter 2026, the transformation of our balance sheet.

But before I come back to that, I want to take a moment to introduce you all to Kevin LeGrett. Many of you already know him. He joined our company on February 1 and is already playing a key role in helping us move from restructuring into execution. He brings more than 2 decades of experience across media, digital strategy and revenue transformation with a strong track record of driving growth, building high-performing teams and modernizing go-to-market models. He's operated at the intersection of content, distribution and monetization and has a deep understanding of both the traditional broadcast business and the evolving digital ecosystem. We brought Kevin in, very intentionally to help accelerate the next phase of this company, which is about execution, growth and operational discipline, and he has not let any grass grow under his feet.

I'll turn it over to him to share with you what he's been focused on since joining Beasley. Kevin?

Great. Thanks, Caroline, and good morning, everyone. As Caroline mentioned, 2026 is a reset year for the company. From an operating standpoint, that reset started with a very clear understanding, where the pressures were coming from. And just as importantly, what needed to change to reposition the business for growth.

The most significant challenge we faced was a continued decline in Agency business, both locally, regionally and nationally. That pressure was structural, not cyclical, and it requires us to rethink how we operate, from how we sell to how we manage accounts to how we prioritize our inventory. At the same time, when we look at the underlying health of the business, particularly from a ratings and audience standpoint, our brands remain very strong. We continue to hold top positions in the majority of the markets that we work in and reach nearly 18 million listeners on a weekly basis. The issue was not relevance. It was execution, monetization and alignment with where demand is moving. We had the years. Now we need to put money against those years. So the focus in 2026 is very simple: rebuild the revenue engine with discipline, accountability and a digital-first mindset.

We've been executing against what I would frame as three core pillars: First is accountability and sales execution. We fundamentally changed how the sales organization operates. The move to a 5-day in-office structure has significantly improved CRM engagement and pipeline visibility. We are no longer managing the business based on estimates or emotions. We are managing it based on real-time data with active pipeline management and clear accountability at the market and individual level. We've also introduced what we call a war room operating cadence, particularly at quarter end, where all leadership is directly engaged in pacing, deal flow and closing activity. That has already led to a measurable impact. This is a very different operating rhythm than what existed previously. It's more hands-on, more data-driven and significantly more accountable.

The second pillar is accelerating the Digital transition. Digital is just not a growth area. It is the foundation of how we improve both revenue quality and margin profile over time. We've seen strong momentum here. Same-station Digital revenue increased over 33% in fourth quarter of 2025, and the Digital operating margins have increased meaningfully from 17.4% in Q4 of 2024 to over 29% in Q4 2025, putting us close to what we view as a Digital inflection point, where incremental revenue drops through at a much higher margin. We are also more intentional about what types of Digital revenue we prioritize. We're shifting towards owned and operated projects and integrated campaigns, all of which carry better margins and greater scalability than third-party or pass-through revenue. This is not just about growth. It's about building a higher-quality revenue base.

The third pillar is rebuilding our local revenue engine. One of the most important shifts we've made is moving away from reliance on National and Agency-driven revenue and refocusing the business on local-direct relationships. This includes three key components. One, is actively managing churn through targeted retention efforts at the market level. Two, is increasing our share of wallet through asset bundling, combining Audio, Digital, Events and Content into integrated solutions for our clients and prospects. And lastly, driving new business through a more disciplined pipeline-driven approach and using AI to prospect in key vertical areas.

We've spent a significant amount of time in the field. I personally visited the markets in my first 8-weeks, resetting expectations, coaching teams and in some cases, making leadership changes, where needed. What we're seeing is a clear separation between markets that are executing well and those that require intervention. Markets like Tampa, Boston and Augusta are pacing above prior year levels and are becoming the models for the rest of the organization, while others are receiving more targeted, surgical support to improve performance. As we move into the second quarter of 2026, we're starting to see early signs that these changes are taking hold. Local revenue is stabilizing and in some markets beginning to grow. Digital continues to accelerate within owned and operated channels, and the organization is operating with a much higher level of urgency and discipline than we've seen historically.

At the same time, we remain realistic about the environment we're in. National and Agency channels are likely to remain under pressure, and we are not building our plan around a recovery in those areas. Instead, we're focusing on what we can control, improving sales execution, increasing our local share of wallet, scaling Digital, hunting for Political dollars in all of our markets and continuing to drive accountability across the organization. To put it simply, the foundation is being rebuilt in real-time. We are leaner, more disciplined, more focused on the right parts of our business. The local engines are starting to accelerate. Digital is approaching that inflection point, and the organization is aligned around execution. We still have a lot of work to do, but we believe the changes we've made position us to move from decline to stabilization and even growth, as we progress through 2026.

And with that, I'll turn it over to Ilana.

Thanks, Kevin. I'll walk through the financial performance for the year in more detail, including revenue trends, expense structure, profitability and our cash flow and balance sheet position.

Starting with revenue. Full year net revenue was approximately $205.9 million, down from $240 million in 2024. This decline was primarily driven by continued weakness in Agency revenue, both Local and National as well as the absence of $13.6 million in Political Advertising in 2025, which had been a meaningful contributor in the prior year.

From a category perspective, Audio revenue declined meaningfully year-over-year, reflecting these pressures. Digital revenue, on the other hand, increased to approximately $49.5 million, representing roughly 24% of our total revenue and grew 21% on a same-station basis for the full year, reflecting continued demand for our Digital offerings. As a result, the overall revenue mix continues to shift in a positive direction. Local revenue, inclusive of Digital now represents roughly 76% of total revenue, which provides greater stability and visibility compared to National and Agency-driven revenue streams. New business represented approximately 13% of net revenue for the full year and 12% in the fourth quarter, reflecting our continued focus on expanding our advertiser base and driving incremental demand across our markets. While New business declined 14% for the full year and 18% in the fourth quarter on a year-over-year basis, this performance must be viewed in the context of the broader revenue environment.

Importantly, we are seeing improved pipeline activity and engagement as we enter 2026, supported by increased CRM accountability, more disciplined sales execution and a renewed focus on local-direct relationships, which Kevin previously discussed on this call. We believe these changes position us to reaccelerate New business growth as the year progresses, particularly towards the second half of the year.

Turning to National. Revenues continued to decline in 2025, consistent with industry-wide trends that have persisted since the COVID period as national advertisers continue to shift spend away from traditional audio. National revenue was down approximately 34% for the full year and 50% in the fourth quarter. However, these comparisons were significantly impacted by Political Advertising in the prior year, including $8.2 million in the fourth quarter and $13.6 million for the full year 2024. Excluding Political, National revenue declined approximately 10% in the fourth quarter and 13% for the full year, which we believe reflects a more normalized run rate and early signs of stabilization. While we remain cautious on the outlook for National, this trend is consistent with what we outlined in our restructuring materials and reinforces our strategic shift toward local-direct and Digital revenue streams as the primary drivers of growth going forward.

Turning to expenses. Total operating expenses declined year-over-year, reflecting the impact of the cost reduction initiatives that Caroline referenced earlier. Station operating expenses were reduced through a combination of headcount optimization, vendor rationalization and tighter cost controls, while corporate expenses also declined as we streamlined our organizational structure. Station operating income was $16.2 million for the full year 2025, down from $38.5 million in 2024. The decline in SOI was largely driven by our declines in revenue, although partially offset by the aforementioned expense cuts that occurred throughout the back half of '24 and the full year of '25. Adjusted for $2.3 million of severance and $34,000 in stock-based compensation, SOI would have been $18.5 million for the full year.

Adjusted EBITDA for the year was approximately $10.5 million compared to $25.8 million in 2024. The decline was primarily driven by lower revenue, particularly in higher-margin spot advertising, partially offset by the structural cost reductions implemented over the past 18 months. Below the EBITDA line, cash interest expense for the year was approximately $20.7 million, relatively flat versus the prior year. From a cash flow perspective, net cash used in operating activities was approximately $8.5 million reflecting delivered EBITDA performance, while investing activities provided approximately $5.6 million, primarily related to asset sales. Total capital expenditures for the year were $4.8 million. Capital expenditures remain disciplined as we continue to prioritize investments that support digital growth and operational efficiency while maintaining overall capital discipline. We saw an uptick compared to last year, primarily due to costs associated with our Charlotte build-out, which we discussed in detail last call.

Turning to our balance sheet. We ended the year with approximately $235 million of total debt and approximately $10 million of cash. As we've discussed, addressing our capital structure has been a central focus for the company. Given the significance of the transaction that we have underway, I'll now turn it back to Caroline to walk through it in more detail.

Thank you, Ilana. As we announced, we are currently executing a comprehensive debt exchange with our second lien bondholders that represents a meaningful inflection point for Beasley. Upon completion, we expect to reduce our second lien debt by approximately 50% and repay roughly $15 million of first lien debt, resulting in a reduction of total outstanding debt from approximately $220 million today to approximately $110 million. The process is actively underway with bondholders having until April 20 to participate, and we expect the transaction to close by the end of April.

In addition, we are in discussions with an ABL lender to provide liquidity on a go-forward basis. This transaction is the result of a significant amount of work behind the scenes, working with Guggenheim as our adviser, engaging with our lenders, aligning stakeholders and structuring a solution that meaningfully improves our balance sheet while positioning the company for long-term success. Importantly, this is not just about reducing debt, it's about resetting the financial foundation of the company. A stronger balance sheet gives us greater flexibility, reduces risk and allows us to focus more fully on execution and growth.

Looking ahead, our priorities are clear. We're focused on stabilizing and growing EBITDA, continuing to scale our Digital business and further optimizing our portfolio. Over time, we expect to continue de-leveraging through a combination of operational improvement and disciplined capital allocation.

To step back, while 2025 was a difficult year from an operating standpoint, it was also a year where we did the hard work required to reset the business. We reduced costs, improved the quality of our revenue, streamlined our portfolio and are now in the process of fundamentally improving our balance sheet. 2026 is a year of reset for the company, and we are at an inflection point. We're rebuilding the foundation in real time. The strategy is clear and the organization is aligned around execution. This is the year where the work begins to translate into performance, further supported by the midterm election cycle as Political Advertising returns across our key markets. As such, we are looking at same-station Q1 revenue to be down in the mid-single digits. And I am pleased to report that we saw gradual improvement through the quarter with January ending down 8%, February down 6% and March increasing 3%, and on an actual basis, including Fort Myers and Digital Direct, revenue was down double digits for the quarter.

We remain focused on what we can control, having the best leadership, our cost structure, our digital road map, our direct-local relationships and the strength of our brands. And we believe the actions we've taken position Beasley to unlock the full earnings potential and value of the company. Thank you very much. Thank you for joining us, and we look forward to speaking again for first quarter earnings.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome to Beasley Broadcast Group's Third 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 questions 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.

Thank you, Ilana, and good morning, everyone. We appreciate you joining us to review our third quarter results. Before we begin, I want to share an important update. Lauren Burrows, our Chief Financial Officer, resigned effective October 17 to pursue a new opportunity, and we thank her for her contributions to the company over the last year, and we wish her much success in this next chapter. Effective immediately, I am serving as Beasley's Principal Financial Officer to ensure continuity and maintain the financial discipline that has always been central to our culture.

Sean Greening has been elevated to Chief Accounting Officer. And together, we are working closely with our finance and operations teams to ensure a seamless transition. Many of you know that I served in Beasley's finance leadership for much of my career, including as EVP, CFO, Treasurer and Secretary until 2016. That experience provides both continuity and a deep knowledge of the company's financial framework as we continue to navigate the evolving media landscape.

Against this backdrop, our strategy remains clear and our execution remains disciplined. #1, to scale higher-margin digital products; #2, strengthen the quality of our earnings; and #3, pivot our sales organization towards direct data-driven relationships.

In addition, I'm pleased to announce that the company closed on the sale of WPBB in Tampa on September 29. However, given the government shutdown, we are still in a holding pattern for our Fort Myers closings.

Now moving on to our results. For the third quarter, total company revenue was approximately $51 million, representing an 11% decline on a same-station basis or a 7.5% decline year-over-year, excluding $2.7 million of political in Q3 '24.

While this result was broadly consistent with the expectations we outlined last quarter, we are disappointed with our revenue performance this year, and we view these results as unacceptable. Despite disciplined expense management that helped offset much of the top line shortfall, the rate of revenue decline underscores a fundamental need to execute more aggressively across our sales org and accelerate the transformation already in motion.

We are taking deliberate structural steps to strengthen accountability, sharpen focus and realign our go-to-market strategy towards sustainable growth. As we discussed last year -- last quarter, we are aggressively retooling our sales org to align with the realities of a modern, digitally led marketplace.

This process is well underway, and we are adding dedicated digital AEs and digital sales managers in markets to accelerate adoption and execution. We recognize that this transformation will not happen overnight. Many of our legacy sellers remain more comfortable with traditional over-the-air products.

Driving sustained digital growth requires a fundamentally different sales skill. And over the past several months, we focused on redefining roles, compensation structures and training programs to build a culture of digital fluency and accountability. At the same time, our digital business continues to outperform, serving as clear validation of our strategy and demonstrating the long-term potential of the Beasley platform.

Year-to-date, digital revenue has accounted for roughly 25% of company's revenue. That compares with 19% at this time last year. And on a same-station basis, digital revenue grew approximately 28% year-over-year, driven by the continued expansion of our O&O products and accelerating advertiser adoption across our digital portfolio.

What stands out is not just the growth rate, but the quality of that growth. Advertisers are spending differently, not simply more. Campaigns are increasingly integrated across display, audio and streaming. The result is a healthier, more diversified digital business that is both scalable and durable.

Among our products, Audio Plus delivered an exceptional quarter. Revenue from Audio Plus exceeded $1.2 million in Q3, representing over 200% growth from Q2, driven by extraordinary performance in Philadelphia, Detroit and Boston. These markets exemplify the power of pairing our broadcast products with targeted data-rich digital solutions, a combination that is renovating strongly with advertisers seeking both reach and precision.

Our digital margins tell the same story. Digital segment operating income reached 28% on a same-station basis, the highest in the company's history. This improvement reflects greater control of our inventory economics with O&O products representing roughly 58% of total digital revenue for the quarter. That mix gives us stronger pricing flexibility and lower transaction friction, all of which compound over time.

While programmatic demand continues to grow, the real driver of profitability is our ability to capture and activate first-party insights by delivering advertisers measurable ROI and leveraging campaign automation through Audio Plus for generating higher average deal values with less operational complexity.

In short, we're no longer just selling impressions, we're selling intelligence, precision and performance visibility. That evolution is powering the sustained digital margin expansion you're seeing quarter-over-quarter. Now beyond digital, we continue to advance our product innovation initiatives and this is led by Dave Snyder.

In Q3, we piloted our self-serve advertising portal in Tampa, enabling small and midsized businesses to plan and purchase digital campaigns across our properties independently. With testing complete, we are preparing to launch in the fourth quarter across more markets. This platform represents an important step in expanding access to Beasley's digital ecosystem.

Simplifying how advertisers engage with our inventory, unlocking new customer segments and driving high-margin incremental digital revenues through automation. Local direct revenue, which includes digital packages sold locally, grew 3.5% year-over-year, now representing nearly 60% of total local business. Discontinued rebalancing towards direct relationship-based revenue enhances predictability and reduces exposure to external volatility.

Finally, we maintained our focus on efficiency and expense control. In Q3, we executed a comprehensive cost reduction targeting non-revenue-generating functions, duplicative systems and underperforming vendor relationships. Collectively, these measures are expected to yield an additional $1.5 million in run rate savings hitting the P&L by year-end with full benefit realized in 2026. These cost-cutting measures will only compound the progress we've already achieved. Building on the structural efficiencies established earlier this year and last year.

In the third quarter, station operating expenses were down 8% year-over-year or nearly $4 million and this is less the [indiscernible] retro adjustment. We do plan to book the BMI retro adjustment in fourth quarter. Also, corporate expenses were down nearly 50% year-over-year, and that's partially due to onetime reclass benefits, which we will discuss in further detail.

In the last 12 months, we have centralized core functions such as accounting and engineering support automated manual processes across our business and rationalize vendor relationships to capture national scale pricing and eliminate redundancy. We've also simplified management layers and consolidated corporate services across markets, aligning fixed overhead with our streamlined footprint.

For the 9-month period ending September 30, total corporate and station operating expenses are down $15 million, and this includes over $4 million of onetime expenses such as severance, and other expenses. Excluding these onetime expenses, total corporate and station operating expenses are down nearly $20 million. These declines reflect durable structural efficiency gains not temporary belt tightening.

Through all of this, our focus remains unchanged. #1, driving higher quality revenue; #2, executing with consistency and #3, positioning Beasley for durable profitable growth.

And with that, I'm going to turn the call over to Ilana Goldstein, our Director of Finance, who will provide additional detail on the quarter's financial results. Ilana?

Thank you, Caroline, and good morning, everyone. Let me expand on some of the dynamics behind our third quarter performance and how we're positioning the company as we close out the year, while total company revenue of $51 million represented an 11% year-over-year decline on a same-station basis and 7.5% decline ex-political, the composition of that revenue continues to improve in quality. Agency softness remains the single largest drag on total revenue.

However, the story beneath the top line is one of improving mix resilience. National Agency revenue ex-political declined approximately 16% year-over-year reflecting continued contraction in large-scale traditional media buying. This decline is driven by continued pullback in telecom and cable, insurance and quick service restaurant advertising, the category remains under sustained pressure as agencies reallocate budgets toward digital performance channels and reduce forward commitments across broadcast.

The rate of decline accelerated modestly from the 12.1% decrease in Q2, reinforcing the importance of Beasley's pivot toward direct client relationships and digital monetization. Local Agency revenue fell roughly 17% year-over-year, a meaningful improvement from the 24.7% decline in Q2 reflecting stronger execution and improved conversion in key markets, including Philadelphia, Tampa and New Jersey.

Declines were primarily tied to category-specific softness in auto, retail and sports betting. The gap left by agency contraction continues to be partially offset by the ongoing strength of local direct business, which as Caroline previously mentioned, grew 3.5% year-over-year and now represents nearly 60% of total local revenue.

New business remains under pressure, down approximately 12% year-over-year ex-political, but the rate of decline has slowed materially compared to Q2's 21.6% contraction. We are seeing increased pipeline activity across retail, professional services and regional health care categories with health care alone now accounting for nearly 9% of total revenue, up from 6% a year ago, one of the key categories delivering consistent double-digit growth this year.

From a category standpoint, the mix continues to evolve in a way that supports our long-term strategy. Consumer services accounted for roughly 30% of total revenue, underscoring the strength of locally driven service-based advertisers across home improvement, health care and personal services. Meanwhile, entertainment, auto and retail continue to show weakness, representing approximately 14%, 9% and 16% of total revenue, respectively.

Entertainment declined nearly 40% year-over-year, reflecting delayed commitments from National promoters and a softer event calendar. Auto was down roughly 8%, constrained by manufacturer level budget compression and dealer consolidation. Retail decreased 22% year-over-year as advertisers continue to shift spending towards e-commerce and digital performance platform.

Taken together, however, these trends point to a more balanced revenue mix, an incremental recovery across several core categories, while agency and national channels remain under pressure, local execution and digital adoption are helping to offset the headwinds and provide a clearer line of sight into stabilization heading into Q4.

Our digital business continues to define the trajectory of our company, as Caroline previously mentioned, revenue grew approximately 28% year-over-year on a same-station basis, accounting for roughly 25% of total company revenue. What's most notable this quarter is the step change in digital profitability.

On a total company basis, not to be confused with the same-station basis. Digital operating margin expanded from roughly 7% in the prior-year period to 21% in Q3, reflecting the combined effects of portfolio optimization, tighter cost control and improved monetization efficiency.

Turning to expenses. This remains 1 of the clearest proof points of our transformation. As Caroline previously mentioned, operating expenses for the quarter were down approximately 8% year-over-year for $4 million. Corporate expenses are now nearly 50% lower than the prior-year period.

However, in Q3 '25, we benefited from the onetime reclassification of $278,000 in capital expenditures and a $526,000 franchise adjustment, which reduced reported corporate expenses in the current quarter. We do expect franchise tax expense to trend higher in Q4, 2025 as those adjustments normalize.

Additionally, while we recognized no severance at the corporate level in Q3, 2025, we recognized over $400,000 in corporate severance expense in Q3 '24 all of which makes the year-over-year reduction appear more pronounced than it truly is on a normalized basis.

During the quarter, we incurred approximately $1.1 million in onetime costs primarily related to severance from the Q3 workforce realignment and transaction fees tied to the pending Fort Myer sale and sale of WPBB in Tampa. On profitability, station operating income or SOI was $4.9 million. Adjusted SOI, excluding stock-based compensation, severance and onetime items was $5.9 million and adjusted EBITDA was $3.9 million, excluding $50,000 in stock-based compensation, $1 million in severance and $1.6 million in transaction fees and onetime expenses.

Interest expense totaled $3.3 million, largely consistent with prior periods. We remain disciplined in capital allocation and continue to prioritize deleveraging as proceeds from the Fort Myers transactions are realized. The combined effect of these actions is a leaner, more efficient enterprise. One capable of generating higher returns on every dollar of revenue and converting cost savings into sustainable shareholder value.

From a liquidity standpoint, we maintained a cash position of $14.3 million. Capital expenditures totaled approximately $2.2 million in Q3 primarily reflecting onetime investments tied to our build-out of a combined centralized engineering center and studio relocation project in Charlotte, North Carolina. This initiative is designed to consolidate engineering infrastructure, while also transitioning our local studio operations into a more modern cost-efficient footprint.

The project is expected to reduce annual operating expenses by nearly $1 million in 2026. The program remained on track for completion by Q1 of 2026 with the majority of related CapEx expected to occur in Q4, 2025.

With that, I'll turn the call back over to Caroline.

Thank you, Ilana. Before we move into our ratings recap, I want to take a moment to acknowledge a tremendous loss within our family.

Earlier this month, we said goodbye to Pierre Robert, a legendary voice in Philadelphia and one of the most loved figures and rock radio. Pierre's passing marks the end of an era, not only for WMMR, but for our entire company and for the generations of listeners, who grew up with his voice his warmth and his genuine love of music.

For more than 4 decades, Pierre embodied everything that makes local radio meaningful. Authenticity, storytelling in a deep connection with his community, his kindness and energy inspired countless colleagues and listeners alike, and his influence will continue to shape our culture for years to come.

On behalf of everyone at Beasley, including our colleagues at WMMR. We extend our heartfelt condolences to Pierre's family and the many fans, who welcome him into their life. His spirit will always be part of who we are.

Now turning to ratings. Beasley brands continued to deliver strong results during the third quarter. According to the latest Nielsen data, our combined PPM and dairy market ratings rose 6% year-over-year in AQH among adults 25-54, underscoring the continued strength of our content our brands and our connection to the core audiences.

Speaking of our connection to our audiences, we were once again recognized at the 2025 NAB Marconi awards, where WMMR, Philadelphia earned 3 Marconi, #1, Legendary Station of the Year; #2 Major Market Station of the Year and #3 Major Market Personality of the Year for Preston and Steve. A remarkable achievement that speaks to both heritage and innovation.

As we look to the fourth quarter, we remain much realistic and encouraged, while industry headwinds persist, particularly in agency categories, we continue to see momentum in the areas under our direct control, including local, direct and O&O product growth. Including approximately $8.2 million in political revenue from the fourth quarter of last year, total company revenue for Q4 is pacing down roughly 20% year-over-year.

Ex-political, revenue is pacing down in the high single digits, which is generally consistent with third quarter trends. We are expecting the full year 2025 station operating and corporate expenses to be down between $25 million and $30 million. This excludes severance and other onetime expenses.

Operationally, we are entering the fourth quarter with clarity and conviction. The sustained improvement in digital margins, the strength of our brands and the dedication of our teams all point to a company that is stronger more efficient and positioned for growth. And easily, we're guided by the same principles that have anchored used for over 60 years. Integrity, creativity and service to our communities.

As we look ahead to 2026 and beyond, we remain committed to advancing our strategy of scaling our high-margin digital products, improving our overall margins across all products and pivoting ourselves toward direct data-driven revenue. By executing on these initiatives, we will strengthen our balance sheet and deliver long-term value for our shareholders, partners and employees.

So I thank you for your continued support and ilana, I think we have a few questions that came in earlier today.

Yes. Here are the questions that were submitted prior to this call. #1, can you comment further on the agency channel issues? At what point do we anniversary the challenges there?

Yes. As I just mentioned, agency business continues to be a headwind, although we do see it as slightly improved in the fourth quarter ex-political. We do expect that we will be anniversary -- the anniversary of these challenges will take shape in first quarter of next year.

The second question -- given the current revenue challenges, do you expect to do more cost savings in 2026?

Yes. A couple of things. We anticipate the benefit of savings from our third and fourth quarter cuts to be about $4 million for next year, plus we are looking at further savings as we go into 2026.

And last question. Can you provide a sales price on Fort Myers? Who is the buyer of Fort Myers, do you see the opportunity for more asset sales?

So there are 2 transactions that cover the Fort Myers sale. 1 is $9 million, the other is for $9 million, so a total of $18 million to Fort Myers broadcasting and Sun broadcasting. And as I've said this entire year, we're always open to discussing accretive transactions that will help us reduce our debt and our leverage.

Thank you so much. That concludes our conference call this morning.

Thank you very much. Colby, we will hand it over to you.

Thank you. This concludes today's conference call. You may now disconnect.

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 important milestone and one that we've been working towards deliberately. But this growth isn't just about top line. It's about quality of earnings and operating leverage.

Our digital business continues to scale profitably with our digital segment operating margin improving 900 basis points quarter-over-quarter from 17.8% to 26.8%. This margin expansion is the result of targeted product development, disciplined sales alignment and increasingly efficient infrastructure.

Two key strategic drivers are fueling this margin improvement. First, we saw a meaningful shift in our digital inventory mix from 49% O&O in Q1 to 55% in Q2. This increases profit margin and gives us far greater control over the end-to-end monetization cycle. Then number two, we continue to deliver on programmatic growth, driven by enhancements to our back-end tech stack that improved inventory access, targeting precision and campaign optimization.

We further refined our ad delivery infrastructure to maximize impressions across content channels and implemented ongoing improvements to our programmatic waterfall, enabling more efficient yield management and higher CPM realization across key demand sources.

These improvements are compounding. We're not just driving higher-margin revenue. We're building a scalable data-driven digital platform with durable earnings power. Our teams across engineering, product and content have executed with focus and the impact is visible in both our financial results and client feedback.

At the same time, we recognize the challenges facing our broader revenue performance. While digital continues to scale, overall net revenue was down 11% on a same-station basis, a performance we take full ownership of. This is not simply a macroeconomic issue. It reflects a deeper challenge in sales execution.

For too long, our business has been overly dependent on agency-driven revenue at both the national and local levels. In 2025, both channels have experienced significant and sustained pullback. The impact has been especially pronounced with our largest brands, which have historically attracted a greater share of agency spend.

Our sales organization has not yet fully evolved to offset these losses through direct digitally led selling, an area where we are now making deliberate changes. We recognize this reality, and we're not approaching that with short-term solutions. The pivot away from legacy selling models and toward a digitally native local-first approach is a foundational shift and one that will take time to fully implement and scale.

Our focus is on building a high-performing team that can lead with data, convert traditional agency clients into digital first buyers and unlock the long-tail SMB market through scalable, repeatable processes. To support this pivot, we are training AE to lead with full funnel marketing strategy, bundling on-air endorsements with trackable digital solutions. Our ability to offer integrated radio and digital campaigns has already demonstrated measurable success as these campaigns have shown 30% plus higher purchase intent versus radio or digital alone.

This is a long-term investment and capability, not a quick fix. We don't expect the full impact to materialize next quarter, but we are executing against it with urgency, clarity and conviction. The sales team we're building reflects where Beasley is headed, platform-driven, insight-led and positioned for growth across O&O and programmatic inventory.

On the expense side, we continue to manage with discipline. In the first half of the year, we implemented approximately $10 million in annualized expense reductions, bringing the total to roughly $30 million over the past 12 months. These actions span every part of the company. At the corporate level, we streamlined G&A expenses, optimized vendor contracts and restructured support functions.

At the market level, we've realigned resources to focus on high-performing stations and product categories while eliminating redundancies. And in digital, we've retooled infrastructure to improve automation, reduce overhead and shift investment toward growth products. Our aim is not just to cut costs, it's to rebalance the organization for long-term sustainability and value creation.

With that, I'll turn it over to Lauren to walk through the financial results in more detail, including agency trends and expense reductions. Lauren?

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 to see growth in digital and stability in local direct, these gains were not sufficient to fully offset the contraction in agency. As a result, as Caroline previously mentioned, total net revenue for the quarter declined by 11.1% year-over-year on a same-station basis.

That said, the data also reinforces where our strengths lie. Local direct revenue was up 1.7% year-over-year and now represents the majority of our local sales mix. Digital growth continues to accelerate at 8.1% year-over-year on a same-station basis and 22.5% quarter-over-quarter, as Caroline mentioned earlier, with strong contribution from owned and operated channels and programmatic monetization.

This further validates the strategic pivot we are making to reorient the business around scalable, higher-margin revenue streams. We are acting with urgency to address the core issues. As Caroline mentioned, we've begun a broad transformation of our sales organization, starting with recruiting and process realignment. While that transition will take time, we are confident it is the right path forward and early signs of traction in digital and direct reinforce that confidence.

Turning to expenses. Our cost discipline remains a defining strength. Q2 total operating expenses were down $4.6 million or 9.3% year-over-year, driven by the impact of previously announced restructuring actions and incremental cost containment across corporate, market and digital operations. These cost actions were not reactive, they were strategic. They allowed us to preserve margin amid revenue compression while continuing to reinvest in our highest conviction growth priorities.

Station operating income for the quarter was $8.2 million, reflecting an SOI margin of 15.6%. Adjusted for stock-based compensation and nonrecurring severance expenses, our SOI would have been $8.4 million, reflecting a margin of 15.8%. Corporate expenses for the quarter totaled $3.8 million, a 2.8% year-over-year decline. It is worth noting that our Q2 2024 results included a onetime $225,000 vendor credit that partially offset expenses in that period.

Excluding that credit, the year-over-year improvement in corporate spend reflects continued discipline in managing overhead, optimizing vendor relationships and streamlining centralized functions to support a leaner, more efficient operating structure.

Adjusted EBITDA was $4.7 million after adding back $226,000 in severance and stock-based compensation. We continue to manage margin and liquidity tightly, and we believe the work done over the last year has created a more resilient operating base. From a liquidity standpoint, we ended Q2 with $13.7 million in cash on hand and continue to manage capital expenditures, which were $600,000 in the second quarter.

In summary, while top line performance remains under pressure due to continued agency softness, our strategic direction is clear. We're simplifying the business, reallocating resources towards digital and direct and executing with discipline across both operations and the balance sheet. With that, I'll turn it back to Caroline.

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 Q3, we expect digital will account for between 25% and 30% of our total revenue mix for the first time.

Now turning to Ratings. Our brands continue to solidify their premium status in the radio industry, delivering impressive growth across key metrics in the second quarter. According to Nielsen, our PPM market station ratings rose by 14% year-over-year and AQH among the critical adult 25-54 demo. Notably, 4 of our PPM stations in Boston, Charlotte, Detroit and Philly ranked #1 in their respective markets within that same demo.

Our total cume, which includes traditional over-the-air, streaming and podcast is up 7% year-over-year, reflecting our continued ability to attract and engage listeners across platforms. In addition, thanks to our focused efforts on social engagement, our social media audience has grown over 8% compared to last year. And as we move into the second half of the year, we remain focused on our priorities. Number one, executing on our digital strategy, which is focused on scaling proprietary inventory, enhancing monetization efficiency and building a platform capable of delivering durable margin growth.

Number two, strengthening our sales organization and building a digitally fluent local-first revenue engine. Number three, continuing to streamline our operations for agility and efficiency. And number four, sharpening our capital structure through disciplined deleveraging, focused asset rationalization and a clear commitment to long-term financial resilience. On the capital structure front, we took action this quarter.

In May, we repurchased $1.5 million of our stub notes, reducing the remaining balance to $2.8 million. And as I mentioned at the beginning of the call, we've entered into an agreement to sell WPBB and Tampa for $8 million and our Fort Myers cluster for a total of $18 million. This combined total is $26 million, and we plan to use the net proceeds to reduce debt and therefore, strengthen our capital structure.

We've been clear about our priorities, and we've taken action from meaningful cost reductions to portfolio optimization and targeted debt repayment. We are delivering on the road map we laid out. That consistency matters. It builds trust with our partners, confidence with our investors and clarity with our lenders, and we're committed to sustaining that discipline in the quarters ahead.

So thank you very much and Lana, I think we have some questions that were submitted today.

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.