BBGI — Q2 2026 Financial Report Analysis

Beasley Broadcast Group reported net income of $84.3 million for the second quarter of 2026, against a $0.2 million loss a year earlier. Almost none of that came from running radio stations. In May the company swapped $184.1 million of its second-lien bonds for $98.5 million of new notes, and accounting rules booked the forgiven debt as a $91.8 million gain on debt restructure (net of $6.7 million of advisers' fees). Strip that out and the business lost money before tax. Revenue fell 16.7% to $44.1 million, and operating income halved to $1.3 million. Part of the revenue drop comes from selling the Fort Myers, FL stations in February, but the company also says local and national ad sales fell.

At a glance

• Revenue down 16.7% to $44.1 million. Radio ("audio") revenue fell 18.5% and digital revenue fell 11.6%. Neither part of the business is growing.
• Debt principal down about $89 million in six months, to roughly $129 million. The debt deal took about 40% off what the company owes, which turned shareholders' equity from −$49.3 million to +$38.8 million.
• Diluted EPS of $45.95, but the company sold new shares at $14.00 in September. Earnings per share look huge because of the one-time gain and the small share count (about 1.85 million shares). They say nothing about how much the business earns.

Q2 2026 results

Operating margin is the share of revenue left after running the business, before interest and tax. "n/m" means not meaningful: a percentage change from a loss to a profit has no useful meaning. Pre-tax income excluding the gain is our calculation: $91.7 million of pre-tax income minus the $91.8 million gain.

For the first half of 2026, revenue was $86.7 million, down 14.9%. Reported operating income of $9.0 million includes a $12.5 million gain from asset sales. Without that gain, the first half shows an operating loss of about $3.4 million. In the first half of 2025, operating income excluding that year's $1.7 million land-sale gain was about $0.9 million.

Where revenue went

Audio (ads aired on Beasley's stations) fell $7.3 million. The 10-Q gives two reasons: lower "local direct, local agency and national agency revenue" and the February sale of every station in Fort Myers, FL. Those five stations sold for $18.0 million in cash and produced a $12.2 million gain in the first quarter. The filing does not say how much revenue they used to bring in, so we can't tell how much of the 18.5% drop is from the sale and how much is from weaker ad demand. The company does list lower ad sales as a cause on top of the sale.

Digital (streaming ads, station websites and third-party digital ad products resold to local advertisers) fell $1.5 million, "primarily due to a decrease in third-party digital direct revenue." Digital costs went up 2.1%, so the segment's operating income nearly halved, from $3.5 million to $1.8 million. Its margin fell from 26.5% to 15.4%. Management plans to grow "higher-margin digital and local direct revenues", but this quarter both of those declined.

Costs fell, but not as fast as revenue. Audio operating expenses dropped $6.1 million (−17.5%), helped by the Fort Myers sale. Corporate overhead dropped $1.4 million (−37.4%). The 10-Q says this was "primarily due to an increase in corporate expenses allocated to operating expenses", meaning part of the overhead was moved into the station cost lines rather than cut.

The debt restructuring

This is the main event of the quarter. In February 2026 Beasley missed a scheduled interest payment. On May 1 it completed a restructuring with these parts:

Our totals; the balance sheet carries the debt at $144.8 million because of an accounting premium, explained below.

• Second-lien bondholders took 50 cents on the dollar in new PIK notes. "PIK" (payment-in-kind) means interest is paid by adding to the amount owed instead of in cash. The new notes pay 10% a year, starting October 30, 2026.
• $15.9 million of first-lien notes were bought back at par (100% of face value).
• A new $35 million revolving credit line from Siena Lending is secured on receivables. $15.0 million was drawn and $20.0 million was undrawn at quarter-end. It requires the company to keep at least $5.0 million of liquidity.

The new notes leave shareholders with two serious risks:

1. Short runway. The PIK notes mature on December 31, 2027. Under a "springing maturity" clause, the due date moves up to September 30, 2027 unless Beasley has signed deals by then (asset sales or new financing) that would raise enough to repay these notes and the remaining first-lien notes.
2. Bondholders can take nearly all of the equity. At maturity, or if the company defaults, holders of a majority of the PIK notes can convert them into 95% of the company's common stock. That falls to 80–90% only if Beasley has repaid 85–95% of the notes in cash. The conversion needs FCC approval.

Management still says there is substantial doubt about the company's ability to continue as a going concern through at least August 31, 2027. It also says its plans (cost cuts, asset sales and raising capital) are enough to remove that doubt for the next 12 months. Both statements appear in the same note.

What the headline numbers hide

• The profit comes from accounting, not cash. First-half net income was +$87.5 million, while operating cash flow was −$15.2 million, compared with −$0.4 million a year earlier. The 10-Q lists $7.9 million of restructuring-related payments, $7.1 million less cash collected from customers and $7.9 million more paid out for operating expenses. Accounts payable (bills owed to suppliers) fell from $25.8 million to $14.2 million as the company paid down old bills after the deal. Cash fell from $9.9 million to $6.7 million, even with $19.3 million of asset-sale proceeds coming in.
• Interest expense will mostly disappear from future income statements, but the debt still costs money. Under the accounting rule for troubled debt restructurings (ASC 470-60), the notes are carried at the total of all their future principal and interest payments. The filing says future payments "will reduce the carrying amount of the debt and, generally, no interest expense will be recognized." That's why the debt is carried at $144.8 million while the principal is about $129 million. From Q3 onward, reported profit will look better than the real cost of borrowing. By our calculation, 10% PIK interest on $98.5 million adds about $9.8 million a year to the amount owed, even though no cash goes out.
• The tax bill is mostly on paper. Q2 tax expense was $7.3 million (an 8% effective rate on $91.7 million of pre-tax income). The rate is low because cancelled debt is largely excluded from taxable income under section 108 of the tax code. Cash taxes paid in the first half were only $18,060. The company also recorded a $5.1 million reserve for uncertain tax positions.
• Asset sales are covering the operating shortfall. The first half included a $12.5 million gain from asset sales: the Fort Myers stations and a $1.4 million land sale in New Jersey. A further $8.0 million sale of WNKS-FM (Charlotte) and KXTE-FM (Las Vegas) was signed on July 31 and should close in Q4, pending FCC approval. Each sale brings in cash and reduces debt, but it also shrinks the revenue left to pay what remains.
• Receivables are not a concern. Accounts receivable fell 17% since December, to $37.7 million, about in line with the drop in revenue and the station sale.

After the quarter

• August 19: Nasdaq confirmed Beasley is again compliant with its $2.5 million minimum stockholders' equity rule. The restructuring gain fixed that problem.
• September 19–24: A director on the audit committee died. That left the committee with two members, below Nasdaq's minimum of three. The company is using the cure period, which runs until its next annual meeting or September 19, 2027.
• September 30: Beasley raised about $4.3 million net by selling 357,000 shares (including pre-funded warrants) at $14.00. The buyer also got warrants for another 357,000 shares at $15.00. This is roughly 19% more shares on a base of about 1.85 million, plus the same again if the warrants are exercised. Together with proceeds from selling towers, real estate and two stations, the money is going to repay about $2.2 million of the credit line and redeem about $11.4 million of the $15.0 million in 11% first-lien notes.

Takeaway: The $84 million profit is a bookkeeping gain from bondholders accepting half of what they were owed, not a sign the business has turned around. The stations are earning less (revenue −16.7%, operating margin down to 3.0%), cash is still going out, and by September 2027 Beasley needs a deal to repay the PIK notes ($98.5 million) and whatever is left of the first-lien notes ($15.0 million at quarter-end). If it doesn't get one, the PIK holders can take up to 95% of the stock.

Outlook

The 10-Q gives no revenue or earnings guidance. What we can see:

• Political advertising isn't showing up yet. The company says radio revenue tends to rise in even-numbered years because of political spending, which is "typically heaviest during the fourth quarter." In Q2 of a midterm year, revenue still fell double digits. Q4 political ad money is the main near-term help for revenue.
• Deleveraging depends on selling stations. The pending $8.0 million Charlotte/Las Vegas sale and the September equity raise should leave first-lien principal at about $3.6 million. That would make the $98.5 million PIK notes nearly all of the bond debt, with the September 2027 deadline unchanged.
• Reported earnings will look better than the business. With interest expense largely gone from the income statement, cash flow from operations is the figure to watch, not net income or EPS. So is whether digital revenue starts growing again.

Our view: costs are being cut, but not as fast as revenue is falling, and the company is shrinking its station portfolio to pay down debt. The Q3 10-Q, due around mid-November, is the first quarter without a large one-time gain. It will show whether operating cash flow can turn positive.

Source: Beasley Broadcast Group Form 10-Q for the quarter ended June 30, 2026 (filed August 14, 2026). Post-quarter events are from the company's 8-Ks filed August 24, September 24 and September 30, 2026.