Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE:
GTN) today announced strong financial results for the
third quarter ended September 30, 2023, including total revenue of
$803 million, which was above the high end of our revenue guidance
and total operating expenses (before depreciation, amortization,
impairment and loss on disposal of assets) of $598 million, which
was below the low end of our expense guidance for the quarter.
Gray continued to execute across its portfolio of high-quality
television stations and digital platforms as it combines its
market-leading local news with strong network programming to
deliver unparalleled reach for advertisers. In the third quarter of
2023, Gray’s total revenue increased by $202 million or 34%
compared to 2021, our most recent non-political year.
We are particularly pleased with the performance of our
television stations during the quarter, whose core advertising
revenue increased 1% on a year-over-year basis. We saw continued
improvement in the automobile advertising category with an 18%
year-over-year increase. In addition, political advertising
revenues in a non-political year were relatively strong at $26
million. Continuing the trend of the first and second quarters of
2023, the third quarter’s political advertising revenue exceeded
the amount of the corresponding quarter in 2019, the last year that
preceded a presidential election year. As a result of another
strong quarter of political advertising revenue, we today raise our
previous guidance for full-year 2023 political advertising revenue
by 33% to at least $80 million.
Given these solid performances across our television stations in
the first three quarters of 2023, we currently anticipate that our
television station operations will grow advertising revenues during
the remainder of 2023, due to our strong positions in local markets
and the exceptional efforts of our local station staff.
On September 1, 2023, we entered into an agreement with the CW
Network (“CW”) to extend their network affiliation agreements at
most of our legacy stations and to commence an affiliation with
PeachtreeTV, our independent television station in the Atlanta
market. Prior to that agreement, we entered into a sports rights
agreement that allows CW to broadcast a slate of Atlantic Coast
Conference (“ACC”) football as well as men’s and women’s basketball
games on a national basis.
In the third quarter, we returned the Phoenix Suns and Phoenix
Mercury local basketball games from a sports network to our local
broadcast television stations serving all three of Arizona’s media
markets covering the entire state. We continue pursuing similar
innovative arrangements to expand the local availability of
professional sports on Gray’s television stations in additional
markets.
Finally, in the third quarter, we completed and delivered to
NBCUniversal the soundstages, offices, warehouses, mill spaces,
parking and related facilities that the studio has leased from us
in our Assembly Studios real estate complex located in the Atlanta
metro area. Construction on Gray’s facilities within Assembly
Studios and key infrastructure for the surrounding Assembly Atlanta
complex is currently expected to be completed prior to year-end. We
are continuing to evaluate opportunities to unlock the value of
this unique real estate development. While we currently anticipate
that the mixed-use complex will be fully constructed and utilized
by 2030, we currently do not anticipate any material capital
projects at Assembly Atlanta in 2024.
Summary of Third Quarter Operating Results |
Operating Highlights (the respective 2022
periods reflect the “on-year” of the two-year political advertising
cycle):
- Revenue was $803 million, a decrease
of 12% from the third quarter of 2022.
- Core Advertising Revenue was $363
million, an increase of 1% from the third quarter of 2022.
- Impairment charge of $43 million was
related to the bankruptcy of Diamond Sports Group, LLC’s
(“Diamond”) Atlantic Coast Conference (“ACC”) contract with our
Raycom Sports subsidiary and its replacement with new ACC sports
rights agreements with ESPN and the CW.
- Net loss attributable to common
stockholders was $53 million, or $0.57 per share.
- Broadcast Cash Flow was $229
million, a decrease of 36% from the third quarter of 2022, due
primarily to the cyclical decrease in political advertising.
Other Key Metrics
- As of September 30, 2023, our Total
Leverage Ratio, Net of all Cash, was 5.50 times on a trailing
eight-quarter basis, netting our total cash balance of $21 million
and giving effect to all Transaction Related Expenses, which is
calculated as set forth in our Senior Credit Facility.
- Non-cash stock compensation was $5
million during the third quarter of 2023, and $6 million in the
third quarter of 2022.
Taxes
- During the nine-months ended
September 30, 2023 and 2022, we made income tax payments of $43
million and $128 million, respectively. During the remainder of
2023, based on our current forecasts, we anticipate making income
tax payments (before deducting any refunds) within a range of $5
million to $9 million. During 2020, we carried back certain net
operating losses, resulting in a refund of $21 million, excluding
interest, that is outstanding.
- As of September 30, 2023, we have an
aggregate of $344 million of various state operating loss
carryforwards, of which we expect that approximately one-third will
be utilized.
Guidance for the Three-Months Ending December 31,
2023 |
Based on our current forecasts for the quarter ending December
31, 2023, we anticipate the following key financial results, as
outlined below in approximate ranges. We present revenue net of
agency commissions. We exclude depreciation, amortization,
impairment and (gain) loss on disposal of assets from our estimates
of operating expenses.
- Revenue:
- Core advertising revenue of $410 million to $414 million; up
low single digit percentage increases over the fourth quarter of
2022.
- Retransmission revenue of $362 million to $365 million; up low
single digit percentage increases over fourth quarter 2022.
- Political advertising revenue of $34 million to $35
million.
- Production company revenue of $30 million to $31 million.
- Total revenue of $854 million to $864 million.
- Operating Expenses:
- Broadcasting expenses of $605 million to $610 million,
including retransmission expense of approximately $233 million and
non-cash stock-based compensation expense of approximately $1
million.
- Production company expenses of approximately $26 million to $28
million.
- Corporate expenses of $35 million to $40 million, including
non-cash stock-based compensation expense of approximately $4
million.
|
|
|
|
|
|
|
|
|
|
Selected Operating Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
2023
to |
|
|
|
2023
to |
|
|
2023 |
|
|
|
2022 |
|
2022 |
|
|
|
2021 |
|
|
2021 |
|
|
(dollars in
millions) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
Core advertising |
$ |
363 |
|
|
$ |
359 |
|
1 |
% |
|
$ |
292 |
|
|
24 |
% |
Political |
|
26 |
|
|
|
144 |
|
(82 |
)% |
|
|
9 |
|
|
189 |
% |
Retransmission consent |
|
378 |
|
|
|
368 |
|
3 |
% |
|
|
266 |
|
|
42 |
% |
Other |
|
16 |
|
|
|
18 |
|
(11 |
)% |
|
|
14 |
|
|
14 |
% |
Total broadcasting revenue |
|
783 |
|
|
|
889 |
|
(12 |
)% |
|
|
581 |
|
|
35 |
% |
Production companies |
|
20 |
|
|
|
20 |
|
0 |
% |
|
|
20 |
|
|
0 |
% |
Total revenue |
$ |
803 |
|
|
$ |
909 |
|
(12 |
)% |
|
$ |
601 |
|
|
34 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
Broadcasting: |
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
322 |
|
|
$ |
309 |
|
4 |
% |
|
$ |
229 |
|
|
41 |
% |
Retransmission expense |
|
234 |
|
|
|
226 |
|
4 |
% |
|
|
154 |
|
|
52 |
% |
Transaction Related Expenses |
|
- |
|
|
|
1 |
|
(100 |
)% |
|
|
- |
|
|
0 |
% |
Non-cash stock-based compensation |
|
1 |
|
|
|
1 |
|
0 |
% |
|
|
1 |
|
|
0 |
% |
Total broadcasting expense |
$ |
557 |
|
|
$ |
537 |
|
4 |
% |
|
$ |
384 |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
Production companies |
$ |
18 |
|
|
$ |
16 |
|
13 |
% |
|
$ |
13 |
|
|
38 |
% |
|
|
|
|
|
|
|
|
|
|
Corporate and administrative |
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
19 |
|
|
$ |
22 |
|
(14 |
)% |
|
$ |
19 |
|
|
0 |
% |
Transaction Related Expenses |
|
- |
|
|
|
- |
|
0 |
% |
|
|
11 |
|
|
(100 |
)% |
Non-cash stock-based compensation |
|
4 |
|
|
|
5 |
|
(20 |
)% |
|
|
2 |
|
|
100 |
% |
Total corporate and administrative expense |
$ |
23 |
|
|
$ |
27 |
|
(15 |
)% |
|
$ |
32 |
|
|
(28 |
)% |
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(40 |
) |
|
$ |
108 |
|
(137 |
)% |
|
$ |
(17 |
) |
|
(135 |
)% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Cash Flow (2): |
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
229 |
|
|
$ |
357 |
|
(36 |
)% |
|
$ |
204 |
|
|
12 |
% |
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
210 |
|
|
$ |
335 |
|
(37 |
)% |
|
$ |
175 |
|
|
20 |
% |
Free Cash Flow (3) |
$ |
25 |
|
|
$ |
162 |
|
(85 |
)% |
|
$ |
(5 |
) |
|
600 |
% |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
2023
to |
|
|
|
2023
to |
|
|
2023 |
|
|
|
2022 |
|
2022 |
|
|
|
2021 |
|
|
2021 |
|
|
(dollars in
millions) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
Core advertising |
$ |
1,099 |
|
|
$ |
1,090 |
|
1 |
% |
|
$ |
831 |
|
|
32 |
% |
Political |
|
46 |
|
|
|
260 |
|
(82 |
)% |
|
|
24 |
|
|
92 |
% |
Retransmission consent |
|
1,167 |
|
|
|
1,143 |
|
2 |
% |
|
|
755 |
|
|
55 |
% |
Other |
|
51 |
|
|
|
55 |
|
(7 |
)% |
|
|
38 |
|
|
34 |
% |
Total broadcasting revenue |
|
2,363 |
|
|
|
2,548 |
|
(7 |
)% |
|
|
1,648 |
|
|
43 |
% |
Production companies |
|
54 |
|
|
|
56 |
|
(4 |
)% |
|
|
44 |
|
|
23 |
% |
Total revenue |
$ |
2,417 |
|
|
$ |
2,604 |
|
(7 |
)% |
|
$ |
1,692 |
|
|
43 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
Broadcasting |
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
955 |
|
|
$ |
909 |
|
5 |
% |
|
$ |
654 |
|
|
46 |
% |
Retransmission expense |
|
705 |
|
|
|
678 |
|
4 |
% |
|
|
444 |
|
|
59 |
% |
Transaction Related Expenses |
|
- |
|
|
|
5 |
|
(100 |
)% |
|
|
- |
|
|
0 |
% |
Non-cash stock-based compensation |
|
4 |
|
|
|
3 |
|
33 |
% |
|
|
1 |
|
|
300 |
% |
Total broadcasting expense |
$ |
1,664 |
|
|
$ |
1,595 |
|
4 |
% |
|
$ |
1,099 |
|
|
51 |
% |
|
|
|
|
|
|
|
|
|
|
Production companies |
$ |
88 |
|
|
$ |
56 |
|
57 |
% |
|
$ |
39 |
|
|
126 |
% |
|
|
|
|
|
|
|
|
|
|
Corporate and administrative |
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
68 |
|
|
$ |
65 |
|
5 |
% |
|
$ |
47 |
|
|
45 |
% |
Transaction Related Expenses |
|
- |
|
|
|
1 |
|
(100 |
)% |
|
|
19 |
|
|
(100 |
)% |
Non-cash stock-based compensation |
|
11 |
|
|
|
14 |
|
(21 |
)% |
|
|
9 |
|
|
22 |
% |
Total corporate and administrative expense |
$ |
79 |
|
|
$ |
80 |
|
(1 |
)% |
|
$ |
75 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(67 |
) |
|
$ |
269 |
|
(125 |
)% |
|
$ |
61 |
|
|
(210 |
)% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Cash Flow (2): |
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
667 |
|
|
$ |
955 |
|
(30 |
)% |
|
$ |
555 |
|
|
20 |
% |
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
599 |
|
|
$ |
889 |
|
(33 |
)% |
|
$ |
489 |
|
|
22 |
% |
Free Cash Flow (3) |
$ |
98 |
|
|
$ |
339 |
|
(71 |
)% |
|
$ |
107 |
|
|
(8 |
)% |
(1) |
Excludes depreciation, amortization, impairment and (gain) loss on
disposal of assets. |
(2) |
See definition of non-GAAP terms
and a reconciliation of the non-GAAP amounts to net income (loss)
included elsewhere herein. |
(3) |
Excludes deductions, net of
reimbursements, for purchase of property, plant and equipment
related to the Assembly Atlanta project of $42 million, $87 million
and $11 million for the 2023, 2022 and 2021 three-month periods,
respectively; and excludes $172 million, $179 million and $91
million for the 2023, 2022 and 2021 nine-month periods,
respectively. |
|
|
Detail Table of Operating Results (Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in millions, except
for per share information) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
Broadcasting |
$ |
783 |
|
|
$ |
889 |
|
|
$ |
2,363 |
|
|
$ |
2,548 |
|
Production companies |
|
20 |
|
|
|
20 |
|
|
|
54 |
|
|
|
56 |
|
Total revenue (less agency commissions) |
|
803 |
|
|
|
909 |
|
|
|
2,417 |
|
|
|
2,604 |
|
Operating
expenses before depreciation, amortization, impairment |
|
|
|
|
|
|
|
and (gain) loss on disposal of assets, net: |
|
|
|
|
|
|
|
Broadcasting |
|
557 |
|
|
|
537 |
|
|
|
1,664 |
|
|
|
1,595 |
|
Production companies |
|
18 |
|
|
|
16 |
|
|
|
88 |
|
|
|
56 |
|
Corporate and administrative |
|
23 |
|
|
|
27 |
|
|
|
79 |
|
|
|
80 |
|
Depreciation |
|
36 |
|
|
|
33 |
|
|
|
106 |
|
|
|
96 |
|
Amortization
of intangible assets |
|
48 |
|
|
|
52 |
|
|
|
147 |
|
|
|
156 |
|
Impairment
of goodwill and other intangible assets |
|
43 |
|
|
|
- |
|
|
|
43 |
|
|
|
- |
|
(Gain) loss
on disposal of assets, net |
|
(6 |
) |
|
|
(1 |
) |
|
|
20 |
|
|
|
(6 |
) |
Operating
expenses |
|
719 |
|
|
|
664 |
|
|
|
2,147 |
|
|
|
1,977 |
|
Operating
income |
|
84 |
|
|
|
245 |
|
|
|
270 |
|
|
|
627 |
|
Other
expense: |
|
|
|
|
|
|
|
Miscellaneous expense, net |
|
(10 |
) |
|
|
(1 |
) |
|
|
(13 |
) |
|
|
(3 |
) |
Interest expense |
|
(111 |
) |
|
|
(94 |
) |
|
|
(324 |
) |
|
|
(254 |
) |
Loss from early extinguishment of debt |
|
- |
|
- |
|
- |
|
|
|
(3 |
) |
|
|
- |
|
(Loss)
income before income taxes |
|
(37 |
) |
|
|
150 |
|
|
|
(70 |
) |
|
|
370 |
|
Income tax
expense (benefit) |
|
3 |
|
|
|
42 |
|
|
|
(3 |
) |
|
|
101 |
|
Net (loss)
income |
|
(40 |
) |
|
|
108 |
|
|
|
(67 |
) |
|
|
269 |
|
Preferred
stock dividends |
|
13 |
|
|
|
13 |
|
|
|
39 |
|
|
|
39 |
|
Net (loss)
income attributable to common stockholders |
$ |
(53 |
) |
|
$ |
95 |
|
|
$ |
(106 |
) |
|
$ |
230 |
|
|
|
|
|
|
|
|
|
Basic per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.57 |
) |
|
$ |
1.04 |
|
|
$ |
(1.15 |
) |
|
$ |
2.47 |
|
Weighted-average shares outstanding |
|
93 |
|
|
|
91 |
|
|
|
92 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
Diluted per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.57 |
) |
|
$ |
1.03 |
|
|
$ |
(1.15 |
) |
|
$ |
2.47 |
|
Weighted-average shares outstanding |
|
93 |
|
|
|
92 |
|
|
|
92 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
Other Financial Data (Unaudited) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
|
|
Net cash
provided by operating activities |
$ |
565 |
|
|
$ |
596 |
|
Net cash
used in investing activities |
|
(259 |
) |
|
|
(362 |
) |
Net cash
used in financing activities |
|
(346 |
) |
|
|
(279 |
) |
Net decrease
in cash |
$ |
(40 |
) |
|
$ |
(45 |
) |
|
|
|
|
|
As of |
|
September 30, 2023 |
|
December 31, 2022 |
|
(in millions) |
|
|
Cash |
$ |
21 |
|
|
$ |
61 |
|
Long-term debt, including current portion, less deferred |
|
|
financing costs |
$ |
6,186 |
|
|
$ |
6,455 |
|
Series A
Perpetual Preferred Stock |
$ |
650 |
|
|
$ |
650 |
|
Borrowing
availability under Revolving Credit Facility |
$ |
469 |
|
|
$ |
496 |
|
|
|
|
|
The Company
We are a multimedia company headquartered in Atlanta, Georgia
and the nation’s largest owner of top-rated local television
stations and digital assets in the United States. Our television
stations serve 113 television markets that collectively reach
approximately 36 percent of US television households. This
portfolio includes 80 markets with the top-rated television station
and 102 markets with the first and/or second highest rated
television station. We also own video program companies Raycom
Sports, Tupelo Media Group, and PowerNation Studios, as well as the
studio production facilities Assembly Atlanta and Third Rail
Studios. Gray owns a majority interest in Swirl
Films. For more information, please visit
www.gray.tv.
Cautionary Statements for Purposes of the
“Safe Harbor” Provisions of the Private Securities Litigation
Reform Act
This press release contains certain forward-looking statements
that are based largely on our current expectations and reflect
various estimates and assumptions by us. These statements are
statements other than those of historical fact and may be
identified by words such as “estimates,” “expect,” “anticipate,”
“will,” “implied,” “assume” and similar expressions.
Forward-looking statements are subject to certain risks, trends and
uncertainties that could cause actual results and achievements to
differ materially from those expressed in such forward-looking
statements. Such risks, trends and uncertainties, which in some
instances are beyond our control, include: estimates of future
revenue, future expenses, future proceeds from Assembly Atlanta
property sales, future proceeds from any quasi-governmental
entities related to Assembly Atlanta, and other future events. We
are subject to additional risks and uncertainties described in our
quarterly and annual reports filed with the Securities and Exchange
Commission from time to time, including in the “Risk Factors,” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections contained therein, which reports
are made publicly available via our website, www.gray.tv. Any
forward-looking statements in this press release should be
evaluated in light of these important risk factors. This press
release reflects management’s views as of the date hereof. Except
to the extent required by applicable law, Gray undertakes no
obligation to update or revise any information contained in this
press release beyond the published date, whether as a result of new
information, future events or otherwise. Information about certain
potential factors that could affect our business and financial
results and cause actual results to differ materially from those
expressed or implied in any forward-looking statements are included
under the captions “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” in our
Annual Report on Form 10-K for the year ended December 31, 2022,
and may be contained in reports subsequently filed with the U.S.
Securities and Exchange Commission and available at
www.sec.gov.
Conference Call
Information:
We will host a conference call to discuss our third quarter
operating results on November 8, 2023. The call will begin at 11:00
AM Eastern Time. The live dial-in number is 1 (800) 285-6670. The
call will be webcast live and available for replay at www.gray.tv.
The taped replay of the conference call will be available at 1
(888) 556-3470, Confirmation Code: 898476# until December 8,
2023.
Gray Contacts:
Web site: www.gray.tv
Hilton H. Howell, Jr., Executive Chairman and
Chief Executive Officer, (404) 266-5513
Pat LaPlatney, President and Co-Chief Executive
Officer, (334) 206-1400
Jim Ryan, Executive Vice President and Chief
Financial Officer, (404) 504-9828
Kevin P. Latek, Executive Vice President, Chief
Legal and Development Officer, (404) 266-8333
Effects of Acquisitions and Divestitures on Our Results of
Operations and Non-GAAP Terms |
From time to time, we supplement our financial
results prepared in accordance with GAAP by disclosing the non-GAAP
financial measures Broadcast Cash Flow, Broadcast Cash Flow Less
Cash Corporate Expenses, Operating Cash Flow as defined in the
Senior Credit Agreement, Free Cash Flow and Total Leverage Ratio,
Net of All Cash. These non-GAAP amounts are used by us to
approximate amounts used to calculate key financial performance
covenants contained in our debt agreements and are used with our
GAAP data to evaluate our results and liquidity.
We define Broadcast Cash Flow as net income or loss plus loss on
early extinguishment of debt, non-cash corporate and administrative
expenses, non-cash stock-based compensation, depreciation and
amortization (including amortization of intangible assets and
program broadcast rights), any loss on disposal of assets, any
miscellaneous expense, interest expense, any income tax expense,
non-cash 401(k) expense, Broadcast Transactions Related Expenses
and broadcast other adjustments less any gain on disposal of
assets, any miscellaneous income, any income tax benefits and
payments for program broadcast rights.
We define Broadcast Cash Flow Less Cash Corporate Expenses as
net income or loss plus loss on early extinguishment of debt,
non-cash stock-based compensation, depreciation and amortization
(including amortization of intangible assets and program broadcast
rights), any loss on disposal of assets, any miscellaneous expense,
interest expense, any income tax expense, non-cash 401(k) expense,
Transaction Related Expenses and other adjustments less any gain on
disposal of assets, any miscellaneous income, any income tax
benefits and payments for program broadcast rights.
We define Operating Cash Flow as defined in our Senior Credit
Agreement as net income or loss plus loss on early extinguishment
of debt, non-cash stock-based compensation, depreciation and
amortization (including amortization of intangible assets and
program broadcast rights), any loss on disposal of assets, any
miscellaneous expense, interest expense, any income tax expense,
non-cash 401(k) expense, Transaction Related Expenses, other
adjustments, certain pension expenses, synergies and other
adjustments less any gain on disposal of assets, any miscellaneous
income, any income tax benefits, payments for program broadcast
rights, pension income and contributions to pension plans.
We define Free Cash Flow as net income or loss, plus loss on
early extinguishment of debt, non-cash stock-based compensation,
depreciation and amortization (including amortization of intangible
assets and program broadcast rights), any loss on disposal of
assets, any miscellaneous expense, any income tax expense, non-cash
401(k) expense, Transactions Related Expenses, broadcast other
adjustments, certain pension expenses, synergies, other adjustments
and amortization of deferred financing costs less any gain on
disposal of assets, any miscellaneous income, any income tax
benefits, payments for program broadcast rights, pension income,
contributions to pension plans, preferred and common dividends,
purchase of property and equipment (net of reimbursements and
certain defined purchases) and income taxes paid (net of any
refunds).
Operating Cash Flow as defined in our Senior Credit Agreement
gives effect to the revenue and broadcast expenses of all completed
acquisitions and divestitures as if they had been acquired or
divested, respectively, on October 1, 2021. It also gives effect to
certain operating synergies expected from the acquisitions and
related financings and adds back professional fees incurred in
completing the acquisitions. Certain of the financial information
related to the acquisitions has been derived from, and adjusted
based on, unaudited, un-reviewed financial information prepared by
other entities, which Gray cannot independently verify. We cannot
assure you that such financial information would not be materially
different if such information were audited or reviewed and no
assurances can be provided as to the accuracy of such information,
or that our actual results would not differ materially from this
financial information if the acquisitions had been completed on the
stated date. In addition, the presentation of Operating Cash Flow
as defined in the Senior Credit Agreement and the adjustments to
such information, including expected synergies resulting from such
transactions, may not comply with GAAP or the requirements for pro
forma financial information under Regulation S-X under the
Securities Act of 1933. Our Total Leverage Ratio, Net of All Cash
is determined by dividing our Adjusted Total Indebtedness, Net of
All Cash, by our Operating Cash Flow as defined in our Senior
Credit Agreement, divided by two. Our Adjusted Total Indebtedness,
Net of All Cash, represents the total outstanding principal of our
long-term debt, plus certain other obligations as defined in our
Senior Credit Agreement, less all cash (excluding restricted cash).
Our Operating Cash Flow, as defined in our Senior Credit Agreement,
divided by two, represents our average annual Operating Cash Flow
as defined in our Senior Credit Agreement for the preceding eight
quarters.
We define Transaction Related Expenses as incremental expenses
incurred specific to acquisitions and divestitures, including but
not limited to legal and professional fees, severance and incentive
compensation, and contract termination fees. We present certain
line items from our selected operating data, net of Transaction
Related Expenses, in order to present a more meaningful comparison
between periods of our operating expenses and our results of
operations.
These non-GAAP terms are not defined in GAAP and our definitions
may differ from, and therefore may not be comparable to, similarly
titled measures used by other companies, thereby limiting their
usefulness. Such terms are used by management in addition to, and
in conjunction with, results presented in accordance with GAAP and
should be considered as supplements to, and not as substitutes for,
net income and cash flows reported in accordance with GAAP.
Reconciliation of Non-GAAP Terms (Unaudited): |
|
|
|
|
|
|
|
Three Months
Ended |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(in
millions) |
|
|
|
|
|
|
Net (loss)
income |
$ |
(40 |
) |
|
$ |
108 |
|
|
$ |
(17 |
) |
Adjustments to reconcile from net income (loss) to |
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
Depreciation |
|
36 |
|
|
|
33 |
|
|
|
26 |
|
Amortization of intangible assets |
|
48 |
|
|
|
52 |
|
|
|
28 |
|
Impairment of goodwill and other intangible assets |
|
43 |
|
|
|
- |
|
|
|
- |
|
Non-cash stock-based compensation |
|
5 |
|
|
|
6 |
|
|
|
3 |
|
(Gain) loss on disposal of assets, net |
|
(6 |
) |
|
|
(1 |
) |
|
|
51 |
|
Miscellaneous expense, net |
|
10 |
|
|
|
1 |
|
|
|
1 |
|
Interest expense |
|
111 |
|
|
|
94 |
|
|
|
48 |
|
Income tax expense |
|
3 |
|
|
|
42 |
|
|
|
35 |
|
Amortization of program broadcast rights |
|
9 |
|
|
|
11 |
|
|
|
9 |
|
Payments for program broadcast rights |
|
(9 |
) |
|
|
(11 |
) |
|
|
(9 |
) |
Corporate and administrative expenses before |
|
|
|
|
|
depreciation, amortization of intangible assets, impairment |
|
|
|
|
|
and non-cash stock-based compensation |
|
19 |
|
|
|
22 |
|
|
|
29 |
|
Broadcast Cash Flow |
|
229 |
|
|
|
357 |
|
|
|
204 |
|
Corporate and administrative expenses before |
|
|
|
|
|
depreciation, amortization of intangible assets, impairment |
|
|
|
|
|
and non-cash stock-based compensation |
|
(19 |
) |
|
|
(22 |
) |
|
|
(29 |
) |
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
210 |
|
|
|
335 |
|
|
|
175 |
|
Contributions to pension plans |
|
(4 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
Interest expense |
|
(111 |
) |
|
|
(94 |
) |
|
|
(48 |
) |
Amortization of deferred financing costs |
|
3 |
|
|
|
4 |
|
|
|
3 |
|
Preferred stock dividends |
|
(13 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
Common stock dividends |
|
(8 |
) |
|
|
(7 |
) |
|
|
(8 |
) |
Purchase of property and equipment (1) |
|
(33 |
) |
|
|
(52 |
) |
|
|
(22 |
) |
Reimbursements of property and equipment purchases |
|
- |
|
|
|
2 |
|
|
|
3 |
|
Income taxes paid, net of refunds (2) |
|
(19 |
) |
|
|
(9 |
) |
|
|
(91 |
) |
Free
Cash Flow (1) (2) |
$ |
25 |
|
|
$ |
162 |
|
|
$ |
(5 |
) |
|
|
|
|
|
|
(1) Excludes $42 million, $87 million and $11 million related to
the Assembly Atlanta project in 2023, 2022 and 2021,
respectively.(2) Included $72 million of income tax payments in the
2021 three-month period, related to the divestiture of certain
stations acquired from Quincy Media.
Reconciliation of Non-GAAP Terms(Unaudited): |
|
|
|
|
|
|
|
Nine Months
Ended |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(in
millions) |
|
|
|
|
|
|
Net (loss)
income |
$ |
(67 |
) |
|
$ |
269 |
|
|
$ |
61 |
|
Adjustments to reconcile from net income to |
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
Depreciation |
|
106 |
|
|
|
96 |
|
|
|
76 |
|
Amortization of intangible assets |
|
147 |
|
|
|
156 |
|
|
|
81 |
|
Impairment of goodwill and other intangible assets |
|
43 |
|
|
|
- |
|
|
|
- |
|
Non-cash stock-based compensation |
|
14 |
|
|
|
17 |
|
|
|
10 |
|
Non-cash 401(k) expense |
|
- |
|
|
|
- |
|
|
|
1 |
|
Loss (gain) on disposal of assets, net |
|
20 |
|
|
|
(6 |
) |
|
|
46 |
|
Miscellaneous expense, net |
|
13 |
|
|
|
3 |
|
|
|
7 |
|
Interest expense |
|
324 |
|
|
|
254 |
|
|
|
143 |
|
Loss from early extinguishment of debt |
|
3 |
|
|
|
- |
|
|
|
- |
|
Income tax (benefit) expense |
|
(3 |
) |
|
|
101 |
|
|
|
65 |
|
Amortization of program broadcast rights |
|
29 |
|
|
|
36 |
|
|
|
26 |
|
Payments for program broadcast rights |
|
(30 |
) |
|
|
(37 |
) |
|
|
(27 |
) |
Corporate and administrative expenses before |
|
|
|
|
|
depreciation, amortization of intangible assets, impairment |
|
|
|
|
|
and non-cash stock-based compensation |
|
68 |
|
|
|
66 |
|
|
|
66 |
|
Broadcast Cash Flow |
|
667 |
|
|
|
955 |
|
|
|
555 |
|
Corporate and administrative expenses before |
|
|
|
|
|
depreciation, amortization of intangible assets, impairment |
|
|
|
|
|
and non-cash stock-based compensation |
|
(68 |
) |
|
|
(66 |
) |
|
|
(66 |
) |
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
599 |
|
|
|
889 |
|
|
|
489 |
|
Pension income |
|
(1 |
) |
|
|
(2 |
) |
|
|
- |
|
Contributions to pension plans |
|
(4 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
Interest expense |
|
(324 |
) |
|
|
(254 |
) |
|
|
(143 |
) |
Amortization of deferred financing costs |
|
10 |
|
|
|
12 |
|
|
|
9 |
|
Preferred stock dividends |
|
(39 |
) |
|
|
(39 |
) |
|
|
(39 |
) |
Common stock dividends |
|
(22 |
) |
|
|
(23 |
) |
|
|
(23 |
) |
Purchase of property and equipment (1) |
|
(78 |
) |
|
|
(119 |
) |
|
|
(63 |
) |
Reimbursements of property and equipment purchases (2) |
|
- |
|
|
|
7 |
|
|
|
10 |
|
Income taxes paid, net of refunds (3) |
|
(43 |
) |
|
|
(128 |
) |
|
|
(129 |
) |
Free
Cash Flow (1) (2) (3) |
$ |
98 |
|
|
$ |
339 |
|
|
$ |
107 |
|
|
|
|
|
|
|
(1) Excludes approximately $210 million, $179 million and
$91 million related to the Assembly Atlanta project in 2023, 2022
and 2021, respectively.(2) Excludes approximately $38 million
related to the Assembly Atlanta project in 2023.(3) Included
$72 million of income tax payments in the 2021 nine-month period,
related to the divestiture of certain stations acquired from Quincy
Media.
|
|
|
Reconciliation of Total Leverage Ratio, Net of All Cash
(Unaudited): |
|
|
|
|
|
Eight
Quarters Ended |
|
|
September 30, 2023 |
|
|
(in
millions) |
Net income |
|
$ |
417 |
|
Adjustments to reconcile from net income to operating cash flow
as |
|
|
defined in our Senior Credit Agreement: |
|
|
Depreciation |
|
|
264 |
|
Amortization of intangible assets |
|
|
391 |
|
Impairment of goodwill and other intangible assets |
|
|
61 |
|
Non-cash stock-based compensation |
|
|
39 |
|
Loss on disposals of assets, net |
|
|
14 |
|
Interest expense |
|
|
739 |
|
Loss from early extinguishment of debt |
|
|
3 |
|
Income tax expense |
|
|
169 |
|
Amortization of program broadcast rights |
|
|
88 |
|
Non-cash 401(k) expense |
|
|
16 |
|
Payments for program broadcast rights |
|
|
(90 |
) |
Pension gain |
|
|
(5 |
) |
Contributions to pension plans |
|
|
(7 |
) |
Adjustments for unrestricted subsidiaries |
|
|
46 |
|
Adjustments for stations acquired or divested, financings and
expected |
|
|
synergies during the eight quarter period |
|
|
53 |
|
Transaction Related Expenses |
|
|
64 |
|
Operating Cash Flow as defined in our Senior Credit
Agreement |
|
$ |
2,262 |
|
Operating Cash Flow as defined in our Senior Credit
Agreement, |
|
|
divided by two |
|
$ |
1,131 |
|
|
|
|
|
|
September 30, 2023 |
Adjusted Total Indebtedness: |
|
|
Total outstanding principal |
|
$ |
6,239 |
|
Letters of credit outstanding |
|
|
5 |
|
Cash |
|
|
(21 |
) |
Adjusted Total Indebtedness, Net of All Cash |
|
$ |
6,223 |
|
|
|
|
Total Leverage Ratio, Net of All Cash |
|
|
5.50 |
|
|
|
|
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