Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE:
GTN) today announced strong financial results for the
second quarter ended June 30, 2023, including total revenue of $813
million, which was above the high end of our revenue guidance and
total operating expenses (before depreciation, amortization and
loss on disposal of assets) of $593 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 second quarter
of 2023, Gray’s total revenue increased by $266 million or 49%
compared to 2021, our most recent non-political year, reflecting
both the integration of key assets acquired in the second half of
2021 and organic growth across the company’s footprint in core
revenue, political advertising revenue and retransmission
revenue.
We are particularly pleased with the performance of our
television stations during the quarter. Our television stations’
core advertising revenue increased 4% on a year-over-year basis. We
saw continued improvement in the automobile advertising category
with a 20% year-over-year increase, which was fueled by even larger
increases year-over-year in the national segment of that category.
In addition, political advertising revenues in a non-political year
were relatively strong at $12 million. As with the first quarter of
2023, the second quarter’s political advertising revenue was double
the amount of the corresponding quarter in 2019, the last year that
preceded a presidential election year.
Given these solid performances across our television stations’
in the first half of 2023, we anticipate that our television
station operations will grow advertising revenues during the
remainder of 2023, as well as future years, due to our strong
positions in local markets and the exceptional efforts of our local
station staff.
We are pleased to report that construction on the Assembly
Studios portion of Assembly Atlanta and much of the infrastructure
for the entire project is now substantially complete, and our main
tenant has begun moving into its leased production facilities.
Later in 2023, we expect to report the commencement of revenue from
both long-term and short-term leases of soundstages and related
facilities to various content producers. We anticipate that capital
expenditures for the Assembly Atlanta project will be in the range
of $25 million to $30 million during the second half of 2023. In
the first half of 2023 we have received a total of $38 million in
cash proceeds from a quasi-governmental authority for
infrastructure related components of the project. We anticipate
receiving approximately $90 million in additional cash proceeds
from that quasi-governmental authority and/or limited land sales,
later in 2023.
Summary of Second Quarter Operating
Results
Operating Highlights (the respective 2022
periods reflect the “on-year” of the two-year political advertising
cycle):
- Total revenue in the second quarter
of 2023 was $813 million, a decrease of 6% from the second quarter
of 2022.
- Core Advertising Revenue in the
second quarter of 2023 was $379 million, an increase of $13 million
or 4% from the second quarter of 2022.
- Net loss attributable to common
stockholders was $9 million, or $(0.10) per fully diluted share, a
decrease of 110% from the second quarter of 2022.
- Broadcast Cash Flow was $251 million
in the second quarter of 2023, a decrease of 23% from the second
quarter of 2022.
Other Key Metrics
- As of June 30, 2023, our Total
Leverage Ratio, Net of all Cash, was 5.38 times on a trailing
eight-quarter basis, netting our total cash balance of $36 million
giving effect to all Transaction Related Expenses and excluding the
cash flow of our unrestricted subsidiaries, which is calculated as
set forth in our Senior Credit Facility.
- Non-cash stock compensation was $7
million during the second quarter of 2023, and $6 million in the
second quarter of 2022.
Taxes
- During the six-months ended June 30,
2023 and 2022, we made income tax payments of $24 million and $119
million, respectively. During the remainder of 2023, based on our
current forecasts, we anticipate making income tax payments, net of
refunds, within a range of $14 million to $22 million.
- As of June 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.
CBS Network Affiliation Agreement Renewal
On June 22, 2023, we renewed the network affiliations for all of
our CBS affiliated television stations across 54 markets, including
the seven television markets acquired from Meredith Corporation in
late 2021.
Guidance for the Three-Months Ending
September 30, 2023
Based on our current forecasts for the quarter ending September
30, 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 and
gain/loss on disposal of assets from our estimates of operating
expenses.
- Revenue:
- Core advertising revenue of $360 million to $368 million, flat
to up low single digits.
- Retransmission revenue of $370 million to $380 million.
- Political advertising revenue of $15 million to $16
million.
- Production company revenue of $18 million to $19 million,
including, as discussed below, the impact of the rejection of the
Diamond Sports Group, LLC’s (“Diamond”) Atlantic Coast Conference
(“ACC”) contract with our Raycom Sports subsidiary and its
replacement with a new ACC sports rights agreement with the CW
Network (“CW”)
- Total revenue of $780 million to
$801 million.
- Operating Expenses:
- Broadcasting expenses of $565 million to $575 million,
including retransmission expense of approximately $235 million and
non-cash stock-based compensation expense of approximately $1
million.
- Production company expenses of approximately $18 million to $19
million, excluding, as discussed below, the non-cash impairment
charge.
- Corporate expenses of $30 million to $35 million, and non-cash
stock-based compensation expense of approximately $4 million.
- Impairment Charge (not included in Operating Expenses guidance,
above)
Several years ago, our Raycom Sports subsidiary sublicensed
certain ACC football and basketball games from ESPN to Fox Sports
that were assumed by Diamond, upon its acquisition of Fox Sports.
In March 2023, Diamond sought bankruptcy protection. On July 7,
2023, the bankruptcy court granted the request of Diamond
(supported by us) for the early rejection, and therefore the
termination, of the ACC sports rights agreements. On July 13,
2023, CW announced that it had entered into an agreement with
Raycom Sports for a similar package of sports rights related to the
ACC games that had been included in the now-terminated agreement
with Diamond. Concurrently, Raycom Sports and ESPN modified their
license agreement to correspond with the terms of the new CW
sublicense agreement. The new agreements mitigate a portion of the
losses caused by Diamond’s rejection of its ACC sports rights
agreement with Raycom Sports. As a result of the bankruptcy filings
and these new July 2023 agreements, our production companies
segment expects to record a pre-tax non-cash charge within a range
of $33 million to $43 million for impairment of goodwill and other
intangible assets, in the third quarter of 2023.
Selected Operating Data (Unaudited) |
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
2023
to |
|
|
|
2023
to |
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
(dollars in
millions) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
Core advertising |
$ |
379 |
|
|
$ |
366 |
|
4 |
% |
|
$ |
279 |
|
36 |
% |
Political |
|
12 |
|
|
|
90 |
|
(87 |
)% |
|
|
6 |
|
100 |
% |
Retransmission consent |
|
394 |
|
|
|
382 |
|
3 |
% |
|
|
242 |
|
63 |
% |
Other |
|
16 |
|
|
|
17 |
|
(6 |
)% |
|
|
10 |
|
60 |
% |
Total broadcasting revenue |
$ |
801 |
|
|
$ |
855 |
|
(6 |
)% |
|
$ |
537 |
|
49 |
% |
Production companies |
|
12 |
|
|
|
13 |
|
(8 |
)% |
|
|
10 |
|
20 |
% |
Total revenue |
$ |
813 |
|
|
$ |
868 |
|
(6 |
)% |
|
$ |
547 |
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
Broadcasting |
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
314 |
|
|
$ |
300 |
|
5 |
% |
|
$ |
209 |
|
50 |
% |
Retransmission expense |
|
235 |
|
|
|
225 |
|
4 |
% |
|
|
144 |
|
63 |
% |
Transaction Related Expenses |
|
1 |
|
|
|
2 |
|
(50 |
)% |
|
|
- |
|
100 |
% |
Non-cash stock-based compensation |
|
2 |
|
|
|
1 |
|
100 |
% |
|
|
1 |
|
100 |
% |
Total broadcasting expense |
$ |
552 |
|
|
$ |
528 |
|
5 |
% |
|
$ |
354 |
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
Production companies |
$ |
11 |
|
|
$ |
14 |
|
(21 |
)% |
|
$ |
9 |
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
Corporate and administrative: |
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
25 |
|
|
$ |
20 |
|
25 |
% |
|
$ |
15 |
|
67 |
% |
Transaction Related Expenses |
|
- |
|
|
|
- |
|
0 |
% |
|
|
7 |
|
(100 |
)% |
Non-cash stock-based compensation |
|
5 |
|
|
|
5 |
|
0 |
% |
|
|
3 |
|
67 |
% |
Total corporate and administrative expense |
$ |
30 |
|
|
$ |
25 |
|
20 |
% |
|
$ |
25 |
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
4 |
|
|
$ |
99 |
|
(96 |
)% |
|
$ |
39 |
|
(90 |
)% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
cash flow (2): |
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
251 |
|
|
$ |
327 |
|
(23 |
)% |
|
$ |
183 |
|
37 |
% |
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
226 |
|
|
$ |
306 |
|
(26 |
)% |
|
$ |
161 |
|
40 |
% |
Free Cash Flow (3) |
$ |
49 |
|
|
$ |
38 |
|
29 |
% |
|
$ |
34 |
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
2023
to |
|
|
|
2023
to |
|
2023 |
|
2022 |
|
2022 |
|
2021 |
|
2021 |
|
(dollars in
millions) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
Core advertising |
$ |
736 |
|
|
$ |
731 |
|
1 |
% |
|
$ |
539 |
|
37 |
% |
Political |
|
20 |
|
|
|
116 |
|
(83 |
)% |
|
|
15 |
|
33 |
% |
Retransmission consent |
|
789 |
|
|
|
775 |
|
2 |
% |
|
|
489 |
|
61 |
% |
Other |
|
35 |
|
|
|
37 |
|
(5 |
)% |
|
|
24 |
|
46 |
% |
Total broadcasting revenue |
|
1,580 |
|
|
|
1,659 |
|
(5 |
)% |
|
|
1,067 |
|
48 |
% |
Production companies |
|
34 |
|
|
|
36 |
|
(6 |
)% |
|
|
24 |
|
42 |
% |
Total revenue |
$ |
1,614 |
|
|
$ |
1,695 |
|
(5 |
)% |
|
$ |
1,091 |
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
Broadcasting |
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
634 |
|
|
$ |
600 |
|
6 |
% |
|
$ |
425 |
|
49 |
% |
Retransmission expense |
|
470 |
|
|
|
452 |
|
4 |
% |
|
|
289 |
|
63 |
% |
Transaction Related Expenses |
|
1 |
|
|
|
4 |
|
(75 |
)% |
|
|
- |
|
100 |
% |
Non-cash stock-based compensation |
|
2 |
|
|
|
2 |
|
0 |
% |
|
|
1 |
|
100 |
% |
Total broadcasting expense |
$ |
1,107 |
|
|
$ |
1,058 |
|
5 |
% |
|
$ |
715 |
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
Production companies |
$ |
70 |
|
|
$ |
40 |
|
75 |
% |
|
$ |
26 |
|
169 |
% |
|
|
|
|
|
|
|
|
|
|
Corporate and administrative: |
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
49 |
|
|
$ |
43 |
|
14 |
% |
|
$ |
29 |
|
69 |
% |
Transaction Related Expenses |
|
- |
|
|
|
1 |
|
(100 |
)% |
|
|
8 |
|
(100 |
)% |
Non-cash stock-based compensation |
|
7 |
|
|
|
9 |
|
(22 |
)% |
|
|
6 |
|
17 |
% |
Total corporate and administrative expense |
$ |
56 |
|
|
$ |
53 |
|
6 |
% |
|
$ |
43 |
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
Net (loss)
income |
$ |
(27 |
) |
|
$ |
161 |
|
(117 |
)% |
|
$ |
78 |
|
(135 |
)% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
cash flow (2): |
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
438 |
|
|
$ |
598 |
|
(27 |
)% |
|
$ |
351 |
|
25 |
% |
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
389 |
|
|
$ |
554 |
|
(30 |
)% |
|
$ |
314 |
|
24 |
% |
Free Cash Flow (3) |
$ |
73 |
|
|
$ |
177 |
|
(59 |
)% |
|
$ |
112 |
|
(35 |
)% |
(1) |
|
Excludes depreciation, amortization and loss (gain) on disposal of
assets. |
(2) |
|
See definition of non-GAAP terms
and a reconciliation of the non-GAAP amounts to net income included
elsewhere herein. |
(3) |
|
Excludes deductions, net of
reimbursements, for purchase of property, plant and equipment
related to the Assembly Atlanta project of $65 million, $62 million
and $80 million for the 2023, 2022 and 2021 three-month periods,
respectively; and excludes $130 million, $92 million and $80
million for the 2023, 2022 and 2021 six-month periods,
respectively. |
|
|
|
Detail Table of Operating Results (Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
(in millions, except
for per share information) |
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
Broadcasting |
$ |
801 |
|
|
$ |
855 |
|
|
$ |
1,580 |
|
|
$ |
1,659 |
|
Production companies |
|
12 |
|
|
|
13 |
|
|
|
34 |
|
|
|
36 |
|
Total revenue (less agency commissions) |
|
813 |
|
|
|
868 |
|
|
|
1,614 |
|
|
|
1,695 |
|
Operating expenses before depreciation, amortization and gain
on disposal of assets, net: |
|
|
|
|
|
|
|
Broadcasting |
|
552 |
|
|
|
528 |
|
|
|
1,107 |
|
|
|
1,058 |
|
Production companies |
|
11 |
|
|
|
14 |
|
|
|
70 |
|
|
|
40 |
|
Corporate and administrative |
|
30 |
|
|
|
25 |
|
|
|
56 |
|
|
|
53 |
|
Depreciation |
|
35 |
|
|
|
31 |
|
|
|
70 |
|
|
|
63 |
|
Amortization
of intangible assets |
|
50 |
|
|
|
52 |
|
|
|
99 |
|
|
|
104 |
|
Loss (gain)
on disposal of assets, net |
|
16 |
|
|
|
- |
|
|
|
26 |
|
|
|
(5 |
) |
Operating
expenses |
|
694 |
|
|
|
650 |
|
|
|
1,428 |
|
|
|
1,313 |
|
Operating
income |
|
119 |
|
|
|
218 |
|
|
|
186 |
|
|
|
382 |
|
Other
expense: |
|
|
|
|
|
|
|
Miscellaneous expense, net |
|
(1 |
) |
|
|
- |
|
|
|
(3 |
) |
|
|
(2 |
) |
Interest expense |
|
(109 |
) |
|
|
(81 |
) |
|
|
(213 |
) |
|
|
(160 |
) |
Loss from early extinguishment of debt |
|
- |
|
|
|
- |
|
|
|
(3 |
) |
|
|
- |
|
Income
(loss) before income taxes |
|
9 |
|
|
|
137 |
|
|
|
(33 |
) |
|
|
220 |
|
Income tax
expense (benefit) |
|
5 |
|
|
|
38 |
|
|
|
(6 |
) |
|
|
59 |
|
Net income
(loss) |
|
4 |
|
|
|
99 |
|
|
|
(27 |
) |
|
|
161 |
|
Preferred
stock dividends |
|
13 |
|
|
|
13 |
|
|
|
26 |
|
|
|
26 |
|
Net (loss)
income attributable to common stockholders |
$ |
(9 |
) |
|
$ |
86 |
|
|
$ |
(53 |
) |
|
$ |
135 |
|
|
|
|
|
|
|
|
|
Basic per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.10 |
) |
|
$ |
0.92 |
|
|
$ |
(0.58 |
) |
|
$ |
1.45 |
|
Weighted-average shares outstanding |
|
93 |
|
|
|
93 |
|
|
|
92 |
|
|
|
93 |
|
|
|
|
|
|
|
|
|
Diluted per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.10 |
) |
|
$ |
0.91 |
|
|
$ |
(0.58 |
) |
|
$ |
1.44 |
|
Weighted-average shares outstanding |
|
93 |
|
|
|
94 |
|
|
|
92 |
|
|
|
94 |
|
Other Financial Data (Unaudited) |
|
|
|
|
|
Six Months
Ended June 30, |
|
2023 |
|
2022 |
|
(in millions) |
|
|
|
|
Net cash provided by operating activities |
$ |
459 |
|
|
$ |
330 |
|
Net cash
used in investing activities |
|
(187 |
) |
|
|
(201 |
) |
Net cash
used in financing activities |
|
(297 |
) |
|
|
(156 |
) |
Net decrease
in cash |
$ |
(25 |
) |
|
$ |
(27 |
) |
|
|
|
|
|
As of |
|
June 30, 2023 |
|
December 31, 2022 |
|
(in millions) |
|
|
|
|
Cash |
$ |
36 |
|
|
$ |
61 |
|
Long-term debt, including current portion, less deferred
financing costs |
$ |
6,212 |
|
|
$ |
6,455 |
|
Series A
Perpetual Preferred Stock |
$ |
650 |
|
|
$ |
650 |
|
Borrowing
availability under Revolving Credit Facility |
$ |
444 |
|
|
$ |
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, 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 second quarter
operating results on August 4, 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 and the confirmation code is 898476, until September
4, 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 July 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 June 30, |
|
2023 |
|
2022 |
|
2021 |
|
(in millions) |
|
|
|
|
|
|
Net income |
$ |
4 |
|
|
$ |
99 |
|
|
$ |
39 |
|
Adjustments to reconcile from net income to |
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
Depreciation |
|
35 |
|
|
|
31 |
|
|
|
25 |
|
Amortization of intangible assets |
|
50 |
|
|
|
52 |
|
|
|
27 |
|
Non-cash stock-based compensation |
|
7 |
|
|
|
6 |
|
|
|
3 |
|
Loss (gain) on disposal of assets, net |
|
16 |
|
|
|
- |
|
|
|
(1 |
) |
Miscellaneous expense, net |
|
1 |
|
|
|
- |
|
|
|
7 |
|
Interest expense |
|
109 |
|
|
|
81 |
|
|
|
47 |
|
Income tax expense |
|
5 |
|
|
|
38 |
|
|
|
15 |
|
Amortization of program broadcast rights |
|
10 |
|
|
|
12 |
|
|
|
8 |
|
Payments for program broadcast rights |
|
(11 |
) |
|
|
(13 |
) |
|
|
(9 |
) |
Corporate and administrative expenses before depreciation,
amortization of intangible assets and non-cash stock-based
compensation |
|
25 |
|
|
|
21 |
|
|
|
22 |
|
Broadcast Cash Flow |
|
251 |
|
|
|
327 |
|
|
|
183 |
|
Corporate and administrative expenses before depreciation,
amortization of intangible assets and non-cash stock-based
compensation |
|
(25 |
) |
|
|
(21 |
) |
|
|
(22 |
) |
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
226 |
|
|
|
306 |
|
|
|
161 |
|
Pension benefit |
|
(1 |
) |
|
|
(1 |
) |
|
|
- |
|
Interest expense |
|
(109 |
) |
|
|
(81 |
) |
|
|
(47 |
) |
Amortization of deferred financing costs |
|
3 |
|
|
|
4 |
|
|
|
3 |
|
Preferred stock dividends |
|
(13 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
Common stock dividends |
|
(7 |
) |
|
|
(8 |
) |
|
|
(7 |
) |
Purchases of property and equipment (1) |
|
(26 |
) |
|
|
(50 |
) |
|
|
(28 |
) |
Reimbursements of property and equipment purchases (2) |
|
- |
|
|
|
- |
|
|
|
3 |
|
Income taxes paid, net of refunds |
|
(24 |
) |
|
|
(119 |
) |
|
|
(38 |
) |
Free
Cash Flow |
$ |
49 |
|
|
$ |
38 |
|
|
$ |
34 |
|
(1) |
|
Excludes approximately $77 million, $62 million and $80 million
related to the Assembly Atlanta project in 2023, 2022 and 2021,
respectively. |
(2) |
|
Excludes approximately $12
million related to the Assembly Atlanta project in 2023. |
Reconciliation of Non-GAAP Terms (Unaudited) |
|
|
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2021 |
|
(in millions) |
|
|
|
|
|
|
Net (loss) income |
$ |
(27 |
) |
|
$ |
161 |
|
|
$ |
78 |
|
Adjustments to reconcile from net income to |
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
Depreciation |
|
70 |
|
|
|
63 |
|
|
|
50 |
|
Amortization of intangible assets |
|
99 |
|
|
|
104 |
|
|
|
53 |
|
Non-cash stock-based compensation |
|
9 |
|
|
|
11 |
|
|
|
7 |
|
Non-cash 401(k) expense |
|
- |
|
|
|
- |
|
|
|
1 |
|
Loss (gain) on disposal of assets, net |
|
26 |
|
|
|
(5 |
) |
|
|
(5 |
) |
Miscellaneous expense, net |
|
3 |
|
|
|
2 |
|
|
|
6 |
|
Interest expense |
|
213 |
|
|
|
160 |
|
|
|
95 |
|
Loss from early extinguishment of debt |
|
3 |
|
|
|
- |
|
|
|
- |
|
Income tax (benefit) expense |
|
(6 |
) |
|
|
59 |
|
|
|
30 |
|
Amortization of program broadcast rights |
|
20 |
|
|
|
25 |
|
|
|
17 |
|
Payments for program broadcast rights |
|
(21 |
) |
|
|
(26 |
) |
|
|
(18 |
) |
Corporate and administrative expenses before depreciation,
amortization of intangible assets and non-cash stock-based
compensation |
|
49 |
|
|
|
44 |
|
|
|
37 |
|
Broadcast Cash Flow |
|
438 |
|
|
|
598 |
|
|
|
351 |
|
Corporate and administrative expenses before depreciation,
amortization of intangible assets and non-cash stock-based
compensation |
|
(49 |
) |
|
|
(44 |
) |
|
|
(37 |
) |
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
389 |
|
|
|
554 |
|
|
|
314 |
|
Pension benefit |
|
(1 |
) |
|
|
(2 |
) |
|
|
- |
|
Interest expense |
|
(213 |
) |
|
|
(160 |
) |
|
|
(95 |
) |
Amortization of deferred financing costs |
|
7 |
|
|
|
8 |
|
|
|
6 |
|
Preferred stock dividends |
|
(26 |
) |
|
|
(26 |
) |
|
|
(26 |
) |
Common stock dividends |
|
(14 |
) |
|
|
(16 |
) |
|
|
(15 |
) |
Purchases of property and equipment (1) |
|
(45 |
) |
|
|
(67 |
) |
|
|
(41 |
) |
Reimbursements of property and equipment purchases (2) |
|
- |
|
|
|
5 |
|
|
|
7 |
|
Income taxes paid, net of refunds |
|
(24 |
) |
|
|
(119 |
) |
|
|
(38 |
) |
Free
Cash Flow |
$ |
73 |
|
|
$ |
177 |
|
|
$ |
112 |
|
(1) |
|
Excludes approximately $168 million, $92 million and $80 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. |
Reconciliation of Total Leverage Ratio, Net of All Cash
(Unaudited) |
|
|
|
|
|
Eight
Quarters |
|
|
Ended |
|
|
June 30, 2023 |
|
|
(dollars in
millions) |
|
|
|
Net income |
|
$ |
438 |
|
Adjustments
to reconcile from net income to Operating Cash Flow as defined
in our Senior Credit Agreement: |
|
|
Depreciation |
|
|
254 |
|
Amortization of intangible assets |
|
|
371 |
|
Non-cash stock-based compensation |
|
|
38 |
|
Common stock contributed to 401(k) plan |
|
|
16 |
|
Loss on disposal of assets, net |
|
|
71 |
|
Interest expense |
|
|
675 |
|
Loss on early extinguishment of debt |
|
|
3 |
|
Income tax expense |
|
|
202 |
|
Amortization of program broadcast rights |
|
|
88 |
|
Impairment of investment |
|
|
18 |
|
Payments for program broadcast rights |
|
|
(90 |
) |
Pension benefit |
|
|
(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 |
|
|
121 |
|
Transaction Related Expenses |
|
|
75 |
|
Other |
|
|
4 |
|
Operating Cash Flow as defined in our Senior Credit
Agreement |
|
$ |
2,318 |
|
Operating Cash Flow as defined in our Senior Credit
Agreement, divided by two |
|
$ |
1,159 |
|
|
|
|
|
|
June 30, 2023 |
Adjusted Total Indebtedness: |
|
|
Total outstanding principal |
|
$ |
6,268 |
|
Letters of credit outstanding |
|
|
6 |
|
Cash |
|
|
(36 |
) |
Adjusted Total Indebtedness, Net of All Cash |
|
$ |
6,238 |
|
|
|
|
Total Leverage Ratio, Net of All Cash |
|
|
5.38 |
|
|
|
|
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