ATLANTA, March 1, 2017 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) today announces record results of operations for the
full year and three-months ended December
31, 2016 (the "fourth quarter of 2016"), including record
revenue, political revenue, net income and Broadcast Cash Flow (a
non-GAAP financial measure, defined below). Moreover, adjusting for
the impact of acquisitions, financing transactions and related
costs, Gray continues to post organic revenue growth while
maintaining solid expense controls. Please see our Financial
Highlights, As-Reported Basis provided below.
Hilton H. Howell, Jr., Gray's
Chairman and CEO, commented, "We began 2016 with the
successful acquisition of the Schurz television stations.
Today we are pleased to announce that we continued to grow
throughout 2016, setting all-time records for total revenue,
political revenue, net income and Broadcast Cash Flow. We are
pleased to have reached these milestones in 2016 despite a most
unexpected and challenging political season that affected both our
Company and our entire industry. We believe we are positioned for
continued success in 2017 and beyond."
Financial Highlights
As-Reported Basis
Our record results were as follows:
- Total revenue increased $68.1
million, or 40%, to $237.6
million in the fourth quarter of 2016 when compared to the
three-months ended December 31, 2015
(the "fourth quarter of 2015").
- Political revenue was $48.5
million in the fourth quarter of 2016, which tied our record
from the fourth quarter of 2014 and was in line with revised
guidance.
- Net income increased $20.8
million, or 139%, to $35.8
million in the fourth quarter of 2016 as compared to the
fourth quarter of 2015.
- Broadcast Cash Flow was $109.5
million for the fourth quarter of 2016, which was a 61%
increase from the fourth quarter of 2015.
- Total revenue increased $215.1
million, or 36%, to $812.5
million for full year 2016 when compared to full year
2015.
- Political revenue was $90.1
million for full year 2016 and in line with revised
guidance.
- Net income increased $23.0
million, or 58%, to $62.3
million for full year 2016 as compared to full year
2015.
- Broadcast Cash Flow was $338.8
million for full year 2016, which was a 51% increase from
full year 2015.
Combined Historical Basis
The results reported today also reflect organic revenue growth
at Gray. On a Combined Historical Basis (as defined below), total
revenue increased 19% and Broadcast Cash Flow increased 36% in the
fourth quarter of 2016 compared to the fourth quarter of 2015. In
addition, on a Combined Historical Basis, our broadcast operating
expenses, excluding network compensation fees, decreased in the
fourth quarter of 2016 as compared to the fourth quarter of
2015.
The expected increases in network compensation fees were offset
by increases in gross retransmission revenue. For the full year of
2016, when compared to the full year 2015 on a Combined Historical
Basis, national sales commission expenses decreased by
approximately $12.1 million as a
result of our termination of substantially all of our national
sales representation agreements at the beginning of 2016.
Other Highlights and Recent Developments
As of December 31, 2016, our Total
Leverage Ratio Net of All Cash (as defined herein) was 5.06 times
on a trailing eight-quarter basis.
In January 2017, we completed the
acquisitions of the following television stations: WBAY (ABC) in
Green Bay, Wisconsin (the "Green
Bay Acquisition"); KWQC (NBC) in the Davenport, Iowa, Rock Island, Illinois, and Moline, Illinois (or "Quad Cities") television
market (the "Davenport Acquisition"); and KTVF (NBC), KXDF (CBS)
and KFXF (FOX) in Fairbanks,
Alaska (the "Fairbanks Acquisition"). These acquisitions
were completed with cash on hand.
On February 7, 2017, we amended
and restated our senior credit facility to, among other things,
reduce our interest rate under the term loan facility to LIBOR plus
250 basis points, increase our availability under the revolving
credit facility from $60.0 million to
$100.0 million, extend the maturity
of the revolving credit facility to 2022 and to extend the maturity
of the term loan facility to 2024. Related to the amendment and
restatement of our senior credit facility, we will record a loss on
extinguishment of debt of approximately $4.5
million, or $2.8 million after
tax, in the first quarter of 2017.
On February 7, 2017, we announced
that we anticipate receiving $90.8
million in proceeds from the FCC's recently completed
reverse auction for broadcast spectrum. We do not expect any
material change in operations or revenue for us or for any
individual market in which we operate. We anticipate that the
proceeds will be received in the second or third quarter of 2017.
Due to prior planning in connection with our recently completed
acquisitions, we anticipate that we will be able to defer any
related income tax payments on a long-term basis.
On February 16, 2017, we announced
that we had reached an agreement with Diversified Communications,
Inc. to acquire two television stations: WABI (CBS/CW) in the
Bangor, Maine market and WCJB
(ABC/CW) in the Gainesville,
Florida market (together the "Diversified Acquisition"), for
$85.0 million. Subject to receipt of
regulatory and other approvals, we expect to complete this
transaction in the second quarter of 2017, with the use of cash on
hand and, if necessary, borrowings under our senior credit
facility.
Effects of Acquisitions and Divestitures on Our Results of
Operations
From October 31, 2013 through
December 31, 2016, we completed 19
acquisition transactions and three divestiture transactions. As
more fully described in our Form 10-K to be filed with the
Securities and Exchange Commission today and in our prior
disclosures, these transactions added a net total of 43 television
stations in 25 television markets, including 20 new television
markets, to our operations.
We refer to the 13 stations acquired and retained in 2016, as
well as two stations in the Clarksburg,
West Virginia market that we commenced operating under a
local programming and marketing agreement ("LMA") in June 2016 as the "2016 Acquired Stations." During
2015, we completed six acquisitions, which collectively added seven
television stations in six markets (four new markets) to our
operations, and we refer to those stations as the "2015 Acquired
Stations." During 2014, we completed seven acquisitions, which
collectively added 22 television stations in 12 markets (10 new
markets) to our operations, and we refer to those stations as the
"2014 Acquired Stations." Unless the context of the following
discussion requires otherwise, we refer to the 2016 Acquired
Stations, the 2015 Acquired Stations and the 2014 Acquired
Stations, collectively, as the "Acquired Stations." We refer to the
stations acquired in the Fairbanks Acquisition, Green Bay
Acquisition and Davenport Acquisition as the "2017 Acquired
Stations."
Due to the significant effect that our acquisitions and
divestitures have had on our results of operations, and in order to
provide more meaningful period over period comparisons, we present
herein certain financial information on a "Combined Historical
Basis." Unless otherwise defined, Combined Historical Basis
reflects financial results that have been compiled by adding Gray's
historical revenue and broadcast expenses to the historical revenue
and broadcast expenses of the Acquired Stations and removing the
historical revenues and historical broadcast expenses of divested
stations as if they had been acquired or divested, respectively, on
January 1, 2014 (the beginning of the
earliest period presented). In addition, our Combined Historical
Basis non-GAAP terms "Broadcast Cash Flow," "Broadcast Cash Flow
Less Cash Corporate Expenses," "Operating Cash Flow as Defined in
our Senior Credit Agreement," "Free Cash Flow" and "Total
Leverage Ratio, Net of All Cash" give effect to the financings
related to the acquisition of the Acquired Stations as if these
financings occurred on January 1,
2014, and certain anticipated net expense savings resulting
from the completed acquisitions. Free Cash Flow presented on a
Combined Historical Basis also includes adjustments for the
purchase of property and equipment and income taxes paid, net of
refunds, as if the acquisition of the Acquired Stations occurred on
January 1, 2014. Combined
Historical Basis financial information does not reflect all
purchase accounting and other adjustments required, and includes
certain other amounts not included, in pro forma financial
statements prepared in accordance with Regulation S-X.
Selected Operating
Data on As-Reported Basis (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2016
|
|
2015
|
|
% Change
2016 to
2015
|
|
2014
|
|
% Change
2016 to
2014
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
237,619
|
|
$
169,487
|
|
40 %
|
|
$
177,886
|
|
34 %
|
Political
|
$
48,519
|
|
$
9,213
|
|
427 %
|
|
$
48,538
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
128,511
|
|
$
101,969
|
|
26 %
|
|
$
86,386
|
|
49 %
|
Corporate and
administrative
|
$
8,922
|
|
$
11,030
|
|
(19)%
|
|
$
7,585
|
|
18 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
35,834
|
|
$
14,987
|
|
139 %
|
|
$
31,253
|
|
15 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
109,469
|
|
$
67,849
|
|
61 %
|
|
$
91,399
|
|
20 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
101,515
|
|
$
57,609
|
|
76 %
|
|
$
84,540
|
|
20 %
|
Free Cash
Flow
|
$
68,486
|
|
$
28,996
|
|
136 %
|
|
$
53,596
|
|
28 %
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
% Change
2016 to
2015
|
|
2014
|
|
% Change
2016 to
2014
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
812,465
|
|
$
597,356
|
|
36 %
|
|
$
508,134
|
|
60 %
|
Political
|
$
90,095
|
|
$
17,163
|
|
425 %
|
|
$
81,975
|
|
10 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
475,131
|
|
$
374,182
|
|
27 %
|
|
$
285,990
|
|
66 %
|
Corporate and
administrative
|
$
40,347
|
|
$
34,343
|
|
17 %
|
|
$
29,203
|
|
38 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
62,273
|
|
$
39,301
|
|
58 %
|
|
$
48,061
|
|
30 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
338,801
|
|
$
224,484
|
|
51 %
|
|
$
220,977
|
|
53 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
302,332
|
|
$
193,261
|
|
56 %
|
|
$
195,306
|
|
55 %
|
Free Cash
Flow
|
$
148,126
|
|
$
93,984
|
|
58 %
|
|
$
95,240
|
|
56 %
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss (gain) on disposal of
assets.
|
|
|
|
(2) See definition of
non-GAAP terms and reconciliation of the non-GAAP amounts to net
income included elsewhere herein.
|
Selected Operating
Data on Combined Historical Basis (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2016
|
|
2015
|
|
% Change
2016 to
2015
|
|
2014
|
|
% Change
2016 to
2014
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
237,619
|
|
$
199,357
|
|
19 %
|
|
$
232,953
|
|
2 %
|
Political
|
$
48,519
|
|
$
9,667
|
|
402 %
|
|
$
65,169
|
|
(26)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
128,511
|
|
$
123,084
|
|
4 %
|
|
$
114,411
|
|
12 %
|
Corporate and
administrative
|
$
8,922
|
|
$
11,030
|
|
(19)%
|
|
$
7,585
|
|
18 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
109,497
|
|
$
80,492
|
|
36 %
|
|
$
122,075
|
|
(10)%
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
101,543
|
|
$
70,252
|
|
45 %
|
|
$
115,216
|
|
(12)%
|
Operating Cash Flow
as Defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
102,287
|
|
$
70,785
|
|
45 %
|
|
$
115,150
|
|
(11)%
|
Free Cash
Flow
|
$
69,223
|
|
$
46,004
|
|
50 %
|
|
$
81,455
|
|
(15)%
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
% Change
2016 to
2015
|
|
2014
|
|
% Change
2016 to
2014
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
829,208
|
|
$
733,207
|
|
13 %
|
|
$
753,453
|
|
10 %
|
Political
|
$
90,762
|
|
$
18,587
|
|
388 %
|
|
$
119,007
|
|
(24)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
489,681
|
|
$
467,722
|
|
5 %
|
|
$
430,512
|
|
14 %
|
Corporate and
administrative
|
$
40,347
|
|
$
34,343
|
|
17 %
|
|
$
29,203
|
|
38 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
343,706
|
|
$
288,693
|
|
19 %
|
|
$
341,398
|
|
1 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
307,236
|
|
$
257,470
|
|
19 %
|
|
$
315,727
|
|
(3)%
|
Operating Cash Flow
as Defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
312,795
|
|
$
262,744
|
|
19 %
|
|
$
321,259
|
|
(3)%
|
Free Cash
Flow
|
$
159,312
|
|
$
139,436
|
|
14 %
|
|
$
189,035
|
|
(16)%
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss (gain) on disposal of
assets.
|
(2) See definition of
non-GAAP terms and reconciliation of the non-GAAP amounts to net
income included elsewhere herein.
|
|
|
|
|
|
|
|
|
|
|
Reclassification of Revenue
Through 2015, we reported our local television advertising
revenues and our internet/digital/mobile advertising revenues
separately. In 2016, we began reporting a single line item
identified as "Local (including internet/digital/mobile)" that
combines our local television advertising revenues and our
internet/digital/mobile advertising revenues. Because this revenue
primarily originates within each local market in which we operate
and is sold by the same local sales force, we believe this
classification is more consistent and more representative of our
operating focus, to maximize all aspects of local revenue. Prior
period amounts presented herein have been reclassified to reflect
our current presentation.
Results of Operations for the Fourth Quarter of 2016:
Revenue (Less Agency Commissions) on As-Reported
Basis.
The table below presents our revenue (less agency commissions)
by type for the fourth quarter of 2016 and 2015 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
107,083
|
|
45.1%
|
|
$
94,543
|
|
55.8%
|
National
|
|
24,776
|
|
10.4%
|
|
23,505
|
|
13.9%
|
Political
|
|
48,519
|
|
20.4%
|
|
9,213
|
|
5.4%
|
Retransmission
consent
|
|
51,965
|
|
21.9%
|
|
39,468
|
|
23.3%
|
Other
|
|
5,276
|
|
2.2%
|
|
2,758
|
|
1.6%
|
Total
|
|
$
237,619
|
|
100.0%
|
|
$
169,487
|
|
100.0%
|
Total revenue increased $68.1
million, or 40%, to $237.6
million for the fourth quarter of 2016 compared to the
fourth quarter of 2015. The 2016 Acquired Stations and 2015
Acquired Stations, collectively, accounted for approximately
$59.6 million of our total revenue in
the fourth quarter of 2016, and the 2015 Acquired Stations
accounted for approximately $14.9
million of our total revenue for the fourth quarter of
2015.
In addition to the total revenue contributed by the 2016
Acquired Stations and 2015 Acquired Stations, our total revenue
increased in the fourth quarter of 2016, as compared to the fourth
quarter of 2015, due to increases in retransmission consent
revenue, resulting primarily from increased retransmission consent
rates, and increases in political advertising revenue, resulting
primarily from 2016 being the "on-year" of the two-year election
cycle.
The changes in revenue for the fourth quarter of 2016 compared
to the fourth quarter of 2015 were approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $12.5 million, or 13%, to
$107.1 million.
- National advertising revenue increased $1.3 million, or 5%, to $24.8 million.
- Political advertising revenue increased $39.3 million, or 427%, to $48.5 million.
- Retransmission consent revenue increased $12.5 million, or 32%, to $52.0 million.
- Other revenue increased $2.5
million, or 91%, to $5.3
million.
Within our local and national advertising revenue categories,
and excluding revenue from the 2016 Acquired Stations and 2015
Acquired Stations, our five largest customer categories exhibited
the following approximate changes during the fourth quarter of 2016
compared to the fourth quarter of 2015:
- Automotive decreased less than 1%;
- Medical decreased 6%;
- Restaurant decreased 16%;
- Furniture and appliances decreased 10%; and
- Home improvement increased 2%.
Revenue (Less Agency Commissions) on Combined Historical
Basis.
On a Combined Historical Basis, total revenue increased
$38.3 million, or 19%, to
$237.6 million in the fourth quarter
of 2016 as compared to the fourth quarter of 2015. On a Combined
Historical Basis, the changes in revenue for the fourth quarter of
2016 compared to the fourth quarter of 2015 were approximately as
follows:
- Local advertising revenue (including internet/digital/mobile)
decreased $5.0 million, or 4%, to
$107.1 million.
- National advertising revenue decreased $3.6 million, or 13%, to $24.8 million.
- Political advertising revenue increased $38.9 million, or 402%, to $48.5 million.
- Retransmission consent revenue increased $7.7 million, or 17%, to $52.0 million.
- Other revenue increased $0.3
million, or 7%, to $5.3
million.
Within our local and national advertising revenue types, and
including revenue from the 2016 Acquired Stations and 2015 Acquired
Stations, our five largest customer categories exhibited the
following approximate changes in revenue for the fourth quarter of
2016 compared to the fourth quarter of 2015:
- Automotive decreased 1%;
- Medical decreased 6%;
- Restaurant decreased 13%;
- Furniture and appliances decreased 9%; and
- Home improvement decreased 4%.
Broadcast Operating Expenses on As-Reported
Basis.
Broadcast operating expenses (before depreciation, amortization
and loss (gain) on disposal of assets) increased $26.5 million, or 26%, to $128.5 million for the fourth quarter of 2016
compared to the fourth quarter of 2015. The 2016 Acquired Stations
and 2015 Acquired Stations, collectively, accounted for
approximately $29.4 million of our
broadcast operating expenses in the fourth quarter of 2016, and the
2015 Acquired Stations accounted for approximately $7.9 million of our broadcast operating expenses
for the fourth quarter of 2015. Including the impact of the 2016
Acquired Stations and the 2015 Acquired Stations, total
retransmission expense increased $8.0
million, or 43%, to $26.3
million in the fourth quarter of 2016 compared to the fourth
quarter of 2015.
Excluding the impact of the 2016 Acquired Stations and the 2015
Acquired Stations:
- Non-compensation broadcast operating expenses increased
$4.0 million in the fourth quarter of
2016 compared to the fourth quarter of 2015. This increase was
primarily the result of an increase of $4.3
million in network programming fees, reflecting increased
fees payable to networks under our affiliation agreements
consistent with the growth of retransmission consent revenue. This
increase was partially offset by decreased national sales
commissions of $1.3 million resulting
from the termination of substantially all of our national sales
representation agreements at the beginning of 2016.
- Compensation expenses increased $1.1
million in the fourth quarter of 2016 primarily as a result
of increases in employee benefit costs. Non-cash share based
compensation expenses were $0.3
million in the fourth quarter of 2016 compared to
$0.2 million in the fourth quarter of
2015.
Broadcast Operating Expenses on Combined Historical
Basis.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and loss (gain) on disposal of
assets) increased $5.4 million, or
4%, to $128.5 million in the fourth
quarter of 2016 as compared to the fourth quarter of 2015. The
increase reflects, in part, the following:
- Network program fees increased in the fourth quarter of 2016
compared to the fourth quarter of 2015 by $6.0 million to $26.3 million, consistent with
the growth of retransmission consent revenue. This increase was
partially offset by decreased national sales commissions of
$2.1 million resulting from the
termination of substantially all of our national sales
representation agreements at the beginning of 2016.
- Compensation expense increased by approximately $1.2 million, or 2%, in the fourth quarter of
2016 compared to the fourth quarter of 2015. Non-cash share based
compensation expenses were $0.3
million in the fourth quarter of 2016 compared to
$0.2 million in the fourth quarter of
2015.
Corporate and Administrative Operating Expenses on
As-Reported Basis.
Corporate and administrative expenses (before depreciation,
amortization and loss (gain) on disposal of assets) decreased
$2.1 million, or 19%, to $8.9 million in the fourth quarter of 2016 as
compared to the fourth quarter of 2015. The decrease reflects, in
part, the following:
- Non-compensation expense decreased $1.2
million in the fourth quarter of 2016 primarily due to
decreased professional fees related to the timing of the
acquisitions of the 2016 Acquired Stations, which were completed
primarily in the first quarter of 2016, compared to the
acquisitions of the 2015 Acquired Stations, which were acquired
primarily in the fourth quarter of 2015.
- Compensation expense decreased $0.9
million primarily due to decreases in incentive compensation
costs. Non-cash share based compensation expenses were $1.0 million in the fourth quarter of 2016
compared to $0.8 million in the
fourth quarter of 2015.
Results of Operations for the Year Ended December 31, 2016:
Revenue (Less Agency Commissions) on As-Reported
Basis.
The table below presents our revenue (less agency commissions)
by type for the years ended December 31,
2016 and 2015, respectively (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
403,336
|
|
49.6%
|
|
$
336,471
|
|
56.3%
|
National
|
|
98,351
|
|
12.1%
|
|
81,110
|
|
13.6%
|
Political
|
|
90,095
|
|
11.1%
|
|
17,163
|
|
2.9%
|
Retransmission
consent
|
|
200,879
|
|
24.7%
|
|
151,957
|
|
25.4%
|
Other
|
|
19,804
|
|
2.5%
|
|
10,655
|
|
1.8%
|
Total
|
|
$
812,465
|
|
100.0%
|
|
$
597,356
|
|
100.0%
|
Total revenue increased $215.1
million, or 36%, to $812.5
million for the year ended December
31, 2016 compared to the year ended December 31, 2015. The 2016 Acquired Stations and
2015 Acquired Stations, collectively, accounted for approximately
$187.8 million of our total revenue
in the year ended December 31, 2016,
and the 2015 Acquired Stations accounted for approximately
$23.2 million of our total revenue
for the year ended December 31,
2015.
In addition to the revenue contributed by the 2016 Acquired
Stations and the 2015 Acquired Stations, our total revenue
increased in the year ended December 31,
2016, as compared to the year ended December 31, 2015, primarily due to increases in
retransmission consent revenue largely resulting from increased
retransmission consent rates and increases in political advertising
revenue. Local and national advertising revenue included
approximately $1.6 million of revenue
from the broadcast of the 2016 Super Bowl on our CBS channels, an
increase of approximately $0.1
million from the $1.5 million
of revenue from the broadcast of the 2015 Super Bowl on our NBC
channels. The broadcast of the 2016 Olympic Games generated
approximately $8.2 million of
advertising revenue in 2016.
The changes in revenue for the year ended December 31, 2016 compared to the year ended
December 31, 2015 were approximately
as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $66.9 million, or 20%, to
$403.3 million.
- National advertising revenue increased $17.2 million, or 21%, to $98.4 million.
- Political advertising revenue increased $72.9 million, or 425%, to $90.1 million.
- Retransmission consent revenue increased $48.9 million, or 32%, to $200.9 million.
- Other revenue increased $9.1
million, or 86%, to $19.8
million.
Within our local and national advertising revenue categories,
and excluding revenue from the 2016 Acquired Stations and 2015
Acquired Stations, our five largest customer categories exhibited
the following approximate changes during the year ended
December 31, 2016 compared to the
year ended December 31, 2015:
- Automotive increased 2%;
- Medical decreased 1%;
- Restaurant decreased 9%;
- Furniture and appliances increased 1%; and
- Home improvement increased 6%.
Revenue (Less Agency Commissions) on Combined Historical
Basis.
On a Combined Historical Basis, total revenue increased
$96.0 million, or 13%, to
$829.2 million for the year ended
December 31, 2016 compared to the
year ended December 31, 2015. The
Combined Historical Basis components of revenue for the year ended
December 31, 2016 compared to the
year ended December 31, 2015 were
approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
decreased $1.3 million, or less than
1%, to $412.4 million.
- National advertising revenue decreased $7.1 million, or 7%, to $100.7 million.
- Political advertising revenue increased $72.2 million, or 388%, to $90.8 million.
- Retransmission consent revenue increased $31.4 million, or 18%, to $204.6 million.
- Other revenue increased $0.8
million, or 4%, to $20.7
million.
Within our local and national advertising revenue categories,
and including revenue from the 2016 Acquired Stations and 2015
Acquired Stations, our five largest customer categories exhibited
the following approximate changes in revenue during the year ended
December 31, 2016 compared to the
year ended December 31, 2015:
- Automotive increased 1%;
- Medical decreased 1%;
- Restaurant decreased 7%;
- Furniture and appliances increased 4%; and
- Home improvement increased 3%.
Broadcast Operating Expenses on As-Reported
Basis.
Broadcast operating expenses (before depreciation, amortization
and loss on disposal of assets) increased $100.9 million, or 27%, to $475.1 million for the year ended December 31, 2016 compared to the year ended
December 31, 2015. The 2016 Acquired
Stations and the 2015 Acquired Stations, collectively, accounted
for approximately $103.9 million of
our broadcast operating expenses in the year ended December 31, 2016, and the 2015 Acquired Stations
accounted for approximately $12.5
million of our broadcast operating expenses for the year
ended December 31, 2015. Including
the impact of the 2016 Acquired Stations and the 2015 Acquired
Stations, total retransmission expense increased $27.4 million, or 39%, to $97.7 million in the year ended December 31, 2016 compared to the year ended
December 31, 2015.
Excluding the impact of the 2016 Acquired Stations and the 2015
Acquired Stations:
- Non-compensation broadcast operating expense increased
$8.2 million for the year ended
December 31, 2016 primarily as a
result of: network programming fee increases of approximately
$12.5 million reflecting increased
fees payable to networks under our affiliation agreements
consistent with the growth of retransmission consent revenue;
business and professional service fee increases of $2.3 million; software license fee increases of
$1.1 million; syndicated programming
expense increases of $1.2 million;
and service, repair and maintenance expense increases of
$1.3 million. These increases were
offset in part by a decrease in national sales commissions of
$10.2 million in the year ended
December 31, 2016 primarily as a
result of the termination of substantially all of our national
sales representation agreements at the beginning of 2016.
- Compensation expense increased $1.3
million in the year ended December
31, 2016, primarily as a result of increases in employee
benefit costs. Non-cash share based compensation expenses were
$1.2 million in the year ended
December 31, 2016 compared to
$0.9 million in the year ended
December 31, 2015.
Broadcast Operating Expenses on Combined Historical
Basis.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and loss on disposal of assets)
increased $22.0 million, or 5%, to
$489.7 million for the year ended
December 31, 2016 compared to the
year ended December 31, 2015. This
increase reflects, in part, the following:
- Non-compensation expense in the year ended December 31, 2016 increased primarily as a result
of network programming fees that increased $22.1 million to $99.8
million, consistent with the growth of the related
retransmission consent revenue.
- Non-compensation expense increases were offset, in-part, by a
$12.1 million decrease in national
sales commissions in the year ended December
31, 2016, as compared to the year ended December 31, 2015, resulting from our termination
of substantially all of our national sales representation
agreements at the beginning of 2016.
- Compensation expense increased $6.9
million, or 3%, in the year ended December 31, 2016 compared to the year ended
December 31, 2015. Non-cash share
based compensation expenses were $1.2
million in the year ended December
31, 2016 compared to $0.9
million in the year ended December
31, 2015.
Corporate and Administrative Operating Expenses on
As-Reported Basis.
Corporate and administrative expenses (before depreciation,
amortization and loss on disposal of assets) increased $6.0 million, or 17%, to $40.3 million for the year ended December 31, 2016 compared to the year ended
December 31, 2015. This increase
reflects in part the following:
- Non-compensation expense increased $5.6
million in the year ended December
31, 2016 due to $15.2 million
of professional fees, primarily related to the acquisition of the
2016 Acquired Stations compared to $10.1
million of professional fees incurred in the year ended
December 31, 2015, primarily related
to the acquisition of the 2015 Acquired Stations.
- Compensation expense increased $0.4
million primarily due to routine increases in salaries and
wages which were offset, in-part, by reductions in severance and
relocation expenses. Non-cash share based compensation expenses
were $3.9 million in the year ended
December 31, 2016 compared to
$3.1 million in the year ended
December 31, 2015.
Taxes
During the year ended December 31,
2016, the Company made aggregate federal and state income
tax payments totaling $14.6 million
compared to $1.8 million for the year
ended December 31, 2015. Based on our
current forecasts, we do not expect to make significant federal and
state income tax payments during 2017. However, we may make
significant federal and state income tax payments beginning in
2018.
Detailed table of operating results on As-Reported
Basis:
|
|
|
|
|
|
|
|
Gray Television,
Inc.
|
Selected Operating
Data (Unaudited)
|
(in thousands except
for net income per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 237,619
|
|
$ 169,487
|
|
$ 812,465
|
|
$ 597,356
|
Operating expenses
before depreciation, amortization
|
|
|
|
|
|
|
|
and loss (gain) on
disposal of assets, net:
|
|
|
|
|
|
|
|
Broadcast
|
128,511
|
|
101,969
|
|
475,131
|
|
374,182
|
Corporate and
administrative
|
8,922
|
|
11,030
|
|
40,347
|
|
34,343
|
Depreciation
|
11,686
|
|
9,806
|
|
45,923
|
|
36,712
|
Amortization of
intangible assets
|
4,231
|
|
3,267
|
|
16,596
|
|
11,982
|
Loss (gain) on
disposal of assets, net
|
395
|
|
(482)
|
|
329
|
|
80
|
Operating
expenses
|
153,745
|
|
125,590
|
|
578,326
|
|
457,299
|
Operating
income
|
83,874
|
|
43,897
|
|
234,139
|
|
140,057
|
Other income
(expense):
|
|
|
|
|
|
|
|
Miscellaneous income,
net
|
35
|
|
1
|
|
775
|
|
103
|
Interest
expense
|
(23,766)
|
|
(18,649)
|
|
(97,236)
|
|
(74,411)
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
(31,987)
|
|
-
|
Income before income
tax
|
60,143
|
|
25,249
|
|
105,691
|
|
65,749
|
Income tax
expense
|
24,309
|
|
10,262
|
|
43,418
|
|
26,448
|
Net income
|
$
35,834
|
|
$
14,987
|
|
$
62,273
|
|
$
39,301
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
0.50
|
|
$
0.21
|
|
$
0.87
|
|
$
0.58
|
Weighted-average
shares outstanding
|
71,845
|
|
71,638
|
|
71,848
|
|
68,330
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
0.49
|
|
$
0.21
|
|
$
0.86
|
|
$
0.57
|
Weighted-average
shares outstanding
|
72,889
|
|
72,439
|
|
72,764
|
|
68,987
|
|
|
|
|
|
|
|
|
Political advertising
revenue (less agency commissions)
|
$
48,519
|
|
$
9,213
|
|
$
90,095
|
|
$
17,163
|
|
|
|
|
|
|
|
|
Revenue related to
Olympic broadcasts (less agency
|
|
|
|
|
|
|
|
commissions)
|
$
-
|
|
$
-
|
|
$
8,192
|
|
$
-
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
December 31,
2016
|
|
December 31,
2015
|
|
(in
thousands)
|
|
|
|
|
Cash
|
$
325,189
|
|
$
97,318
|
Long-term debt
including current portion
|
$
1,756,747
|
|
$
1,220,084
|
Borrowing
availability under our senior credit facility (1)
|
$
60,000
|
|
$
50,000
|
|
|
|
|
|
Year Ended
December 31,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
|
|
|
|
Net cash provided by
operating activities
|
$
206,633
|
|
$
105,614
|
Net cash used in
investing activities
|
(479,334)
|
|
(206,382)
|
Net cash provided by
financing activities
|
500,572
|
|
167,317
|
Net increase in
cash
|
$
227,871
|
|
$
66,549
|
|
|
(1)
|
On February 7, 2017,
we amended and restated our senior credit facility to, among other
things, increase our
availability under the revolving credit facility from $60.0 million
to $100.0 million.
|
Guidance for the Quarter Ending March
31, 2017 (the "first quarter of
2017"):
Based on our current forecasts for the first quarter of 2017, we
anticipate the changes from the three-months ended March 31, 2016 (the "first quarter of 2016") as
outlined below. Our estimates for the first quarter of 2017 include
approximately $10.7 million of
revenue and $6.8 million of broadcast
operating expense estimated to be contributed by the 2017 Acquired
Stations.
|
|
Low
End
|
|
%
Change
|
|
High
End
|
|
%
Change
|
|
|
|
|
Guidance
for
|
|
From
|
|
Guidance
for
|
|
From
|
|
Actual
|
|
|
the
First
|
|
Actual
First
|
|
the
First
|
|
Actual
First
|
|
First
|
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
Selected operating
data:
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2016
|
|
|
(dollars in
thousands)
|
OPERATING
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
|
$
192,000
|
|
11 %
|
|
$
196,000
|
|
13 %
|
|
$ 173,723
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization and
|
|
|
|
|
|
|
|
|
|
loss (gain) on
disposals of assets):
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$
136,000
|
|
25 %
|
|
$
138,000
|
|
27 %
|
|
$ 108,568
|
Corporate and
administrative
|
|
$
8,500
|
|
(46)%
|
|
$
9,500
|
|
(39)%
|
|
$
15,678
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED
DATA:
|
|
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
|
|
|
(less agency
commissions)
|
|
$
500
|
|
(95)%
|
|
$
1,000
|
|
(90)%
|
|
$
9,655
|
Comments on First Quarter 2017 Guidance:
First Quarter of 2017 on As-Reported Basis:
Revenue on As-Reported Basis.
Based on our current forecasts for the first quarter of 2017, we
anticipate the changes from the first quarter of 2016 as outlined
below:
- We believe our first quarter of 2017 local advertising revenue,
excluding political advertising revenue, will increase within a
range of approximately 9% to 12%.
- We expect our first quarter of 2017 national advertising
revenue, excluding political advertising revenue, will increase
within a range of approximately 6% to 8%.
- We believe our first quarter of 2017 political revenue will be
within a range of approximately $0.5 million
to $1.0 million. Our first quarter of 2015 political revenue
was approximately $1.2 million.
- We believe our first quarter of 2017 retransmission consent
revenue will be approximately $66.0
million.
We also anticipate that local and national advertising revenue
from the broadcast of the 2017 Super Bowl on our FOX-affiliated
stations will be approximately $0.6
million, compared to $1.6
million that we earned from the broadcast of the 2016 Super
Bowl on our CBS-affiliated stations. Our portfolio of
CBS-affiliated stations is much larger and these CBS-affiliated
stations serve larger television markets than our portfolio of
FOX-affiliated stations.
Broadcast Operating Expenses (before depreciation,
amortization and loss (gain) on disposal of assets)
on As-Reported Basis.
For the first quarter of 2017, we anticipate our broadcast
operating expenses will increase from the first quarter of 2016,
reflecting a $30.2 million
incremental impact of the 2016 Acquired Stations and the 2017
Acquired Stations, as well as the anticipated increases in payroll
and related employee benefits. We anticipate that our broadcast
operating expenses will also reflect increases in network
programming fees of approximately $9.8
million (to a total of approximately $32.1 million for the first quarter of 2017).
Non-cash share based compensation expenses included in broadcast
operating expenses are expected to be $0.3
million in the first quarter of 2017.
Corporate and Administrative Operating Expenses (before
depreciation, amortization and loss (gain) on
disposal of assets) on As-Reported Basis.
For the first quarter of 2017, we anticipate
our corporate and administrative operating expense will decrease to
within a range of approximately $8.5 million
to $9.5 million, reflecting an anticipated decrease from the
first quarter of 2016 of approximately $7.0
million as a result of higher acquisition related expenses
in 2016. Non-cash share based compensation expenses included in
corporate and administrative operating expenses are expected to be
$1.1 million in the first quarter of
2017.
Loss on Extinguishment of Debt
We will record a loss on extinguishment of debt of approximately
$4.5 million, or $2.8 million after tax, in the first quarter of
2017, related to the amendment and restatement of our senior credit
facility.
First Quarter of 2017 on Combined Historical Basis:
Based on our current forecasts for the first quarter of 2017, we
anticipate the changes from the first quarter of 2016 on a Combined
Historical Basis, as outlined below. For the purposes hereof, our
Combined Historical Basis for the first quarter of 2016 has been
adjusted to give effect to the 2016 Acquired Stations and the 2017
Acquired Stations.
Revenue on Combined Historical Basis:
- We believe our first quarter of 2017 total revenue will be
within a range of approximately $194.0
million to $198.0 million (or approximately -4% to
-6%).
- We believe our first quarter of 2017 local advertising revenue,
excluding political advertising revenue, will be within a range of
approximately $98.5 million to $101.0
million (or approximately -4% to -6%).
- We expect our first quarter of 2017 national advertising
revenue, excluding political advertising revenue, will be within a
range of approximately $23.5 million to
$24.0 million (or approximately -11% to -13%).
- We believe our first quarter of 2017 political advertising
revenue will be within a range of approximately $0.5 million to $1.0 million compared to
$13.7 million in the first quarter of
2016.
- We believe our first quarter of 2017 retransmission consent
revenue will be approximately $67.0
million (or approximately +23%).
We also anticipate that local and national advertising revenue
from the broadcast of the 2017 Super Bowl on our FOX-affiliated
stations will be approximately $0.6
million, compared to $2.1
million that we earned from the broadcast of the 2016 Super
Bowl on our CBS-affiliated stations. Our portfolio of
CBS-affiliated stations is much larger and these CBS-affiliated
stations serve larger television markets than our portfolio of
FOX-affiliated stations.
Broadcast Operating Expenses (before depreciation,
amortization and loss (gain) on disposal of assets)
on Combined Historical Basis:
Our total broadcast operating expenses for the first quarter of
2017 are anticipated to increase from the first quarter of 2016 on
a Combined Historical Basis by approximately $6.1 million to $8.1 million to total
approximately $137.0 million to $139.0
million. This increase reflects expected increases of
$6.5 million in network programming
fees to approximately $32.6 million
in the first quarter of 2017. Consistent with our strategy, and the
realization of our operating synergies, we believe that our
Combined Historical Basis broadcast compensation costs will
increase by approximately $1.0
million, or 1%, in the first quarter of 2017 compared to the
first quarter of 2016.
Non-GAAP Terms
From time to time, Gray supplements its financial results
prepared in accordance with accounting principles generally
accepted in the United States of
America ("GAAP") by disclosing the non-GAAP financial
measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash
Corporate Expenses, Operating Cash Flow as defined in Gray's Senior
Credit Agreement ("Operating Cash Flow"), Free Cash Flow and Total
Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by
us to approximate the amount 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. These
non-GAAP amounts may be provided on an As-Reported Basis as well as
a Combined Historical Basis.
We define Broadcast Cash Flow as net income plus loss from early
extinguishment of debt, corporate and administrative expenses,
broadcast 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 less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations and network compensation revenue.
We define Broadcast Cash Flow Less Cash Corporate Expenses as
net income plus loss from 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, and non-cash 401(k) expense, less
any gain on disposal of assets, any miscellaneous income, any
income tax benefits, payments for program broadcast obligations and
network compensation revenue.
We define Operating Cash Flow as Combined Historical Basis net
income plus loss from 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 and
pension expenses less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations, network compensation revenue and cash
contributions to pension plans.
We define Free Cash Flow as net income plus loss from 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, amortization of deferred
financing costs, any income tax expense, non-cash 401(k) expense
and pension expense, less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations, network compensation revenue, contributions
to pension plans, amortization of original issue discount on our
debt, capital expenditures (net of any insurance proceeds) and the
payment of income taxes (net of any refunds received).
Our Total Leverage Ratio, Net of All Cash is calculated as our
Operating Cash Flow for the preceding eight quarters, divided by
two, which is then divided by our long term debt, excluding net
premiums and net deferred financing costs, but including any other
debt, net of all cash.
These non-GAAP terms are not defined in GAAP and our definitions
may differ from, and therefore 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 on As-Reported Basis - Quarter:
Reconciliation of net income to the non-GAAP terms, in
thousands:
|
Three Months
Ended
|
|
December
31,
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Net income
|
$
35,834
|
|
$
14,987
|
|
$
31,253
|
Adjustments to
reconcile from net income to
|
|
|
|
|
|
Broadcast Cash
Flow Less Cash Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
11,686
|
|
9,806
|
|
8,650
|
Amortization of
intangible assets
|
4,231
|
|
3,267
|
|
3,006
|
Non-cash stock based
compensation
|
1,274
|
|
1,009
|
|
980
|
Loss (gain) on
disposal of assets, net
|
395
|
|
(482)
|
|
238
|
Miscellaneous income,
net
|
(36)
|
|
(1)
|
|
(9)
|
Interest
expense
|
23,766
|
|
18,649
|
|
19,195
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
189
|
Income tax
expense
|
24,309
|
|
10,262
|
|
21,393
|
Amortization of
program broadcast rights
|
4,975
|
|
4,123
|
|
3,644
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
8
|
|
7
|
|
7
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(113)
|
Payments for program
broadcast rights
|
(4,927)
|
|
(4,018)
|
|
(3,893)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
7,954
|
|
10,240
|
|
6,859
|
Broadcast Cash
Flow
|
109,469
|
|
67,849
|
|
91,399
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(7,954)
|
|
(10,240)
|
|
(6,859)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
101,515
|
|
57,609
|
|
84,540
|
Pension
expense
|
45
|
|
17
|
|
1,515
|
Contributions to
pension plans
|
(10)
|
|
(1,505)
|
|
(2,057)
|
Interest
expense
|
(23,766)
|
|
(18,649)
|
|
(19,195)
|
Amortization of
deferred financing costs
|
1,220
|
|
798
|
|
812
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(153)
|
|
(216)
|
|
(216)
|
Purchase of property
and equipment
|
(10,366)
|
|
(8,972)
|
|
(11,763)
|
Income taxes received
(paid), net of refunds
|
1
|
|
(86)
|
|
(40)
|
Free Cash
Flow
|
$
68,486
|
|
$
28,996
|
|
$
53,596
|
Reconciliation on As-Reported Basis – Full Year:
Reconciliation of net income to the non-GAAP terms, in
thousands:
|
Year
Ended
|
|
December
31,
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Net income
|
$
62,273
|
|
$
39,301
|
|
$
48,061
|
Adjustments to
reconcile from net income to
|
|
|
|
|
|
Broadcast Cash
Flow Less Cash Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
45,923
|
|
36,712
|
|
30,248
|
Amortization of
intangible assets
|
16,596
|
|
11,982
|
|
8,297
|
Non-cash stock based
compensation
|
5,101
|
|
4,020
|
|
5,012
|
Loss on disposal of
assets, net
|
329
|
|
80
|
|
623
|
Miscellaneous income,
net
|
(775)
|
|
(103)
|
|
(23)
|
Interest
expense
|
97,236
|
|
74,411
|
|
68,913
|
Loss from early
extinguishment of debt
|
31,987
|
|
-
|
|
5,086
|
Income tax
expense
|
43,418
|
|
26,448
|
|
31,736
|
Amortization of
program broadcast rights
|
19,001
|
|
14,960
|
|
12,871
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
29
|
|
26
|
|
25
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(456)
|
Payments for program
broadcast rights
|
(18,786)
|
|
(14,576)
|
|
(15,087)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
36,469
|
|
31,223
|
|
25,671
|
Broadcast Cash
Flow
|
338,801
|
|
224,484
|
|
220,977
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(36,469)
|
|
(31,223)
|
|
(25,671)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
302,332
|
|
193,261
|
|
195,306
|
Pension
expense
|
165
|
|
4,207
|
|
6,126
|
Contributions to
pension plans
|
(3,048)
|
|
(5,421)
|
|
(6,770)
|
Interest
expense
|
(97,236)
|
|
(74,411)
|
|
(68,913)
|
Amortization of
deferred financing costs
|
4,884
|
|
3,194
|
|
2,970
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(779)
|
|
(863)
|
|
(863)
|
Purchase of property
and equipment
|
(43,604)
|
|
(24,222)
|
|
(32,215)
|
Income taxes paid,
net of refunds
|
(14,588)
|
|
(1,761)
|
|
(401)
|
Free Cash
Flow
|
$148,126
|
|
$
93,984
|
|
$
95,240
|
Reconciliation on Combined Historical Basis -
Quarter:
Reconciliation of net income to the non-GAAP terms, in
thousands:
|
Three Months
Ended
|
|
December
31,
|
|
2016
|
|
2015
|
|
2014
|
|
|
Net income
|
$
35,834
|
|
$
17,138
|
|
$
49,896
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
11,686
|
|
11,912
|
|
9,707
|
Amortization of
intangible assets
|
4,231
|
|
4,983
|
|
4,812
|
Non-cash stock-based
compensation
|
1,274
|
|
1,009
|
|
980
|
Loss (gain) on
disposal of assets, net
|
395
|
|
(424)
|
|
126
|
Miscellaneous expense
(income), net
|
(36)
|
|
(40)
|
|
(3,445)
|
Interest
expense
|
23,766
|
|
23,364
|
|
24,290
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
189
|
Income tax
expense
|
24,309
|
|
8,526
|
|
23,646
|
Amortization of
program broadcast rights
|
4,975
|
|
4,123
|
|
3,669
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
8
|
|
7
|
|
7
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(113)
|
Payments for program
broadcast rights
|
(4,927)
|
|
(4,018)
|
|
(3,914)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
7,954
|
|
10,240
|
|
6,859
|
Other
|
28
|
|
3,672
|
|
5,366
|
Broadcast Cash
Flow
|
109,497
|
|
80,492
|
|
122,075
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(7,954)
|
|
(10,240)
|
|
(6,859)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
101,543
|
|
70,252
|
|
115,216
|
Pension
expense
|
45
|
|
17
|
|
1,515
|
Contributions to
pension plans
|
(10)
|
|
(1,505)
|
|
(2,057)
|
Other
|
709
|
|
2,021
|
|
476
|
Operating Cash
Flow as Defined in Senior Credit Facility
|
102,287
|
|
70,785
|
|
115,150
|
Interest
expense
|
(23,766)
|
|
(23,364)
|
|
(24,290)
|
Amortization of
deferred financing costs
|
1,220
|
|
798
|
|
812
|
Net amortization of
original issue (premium) discount
|
.
|
|
|
|
|
on senior
notes
|
(153)
|
|
(215)
|
|
(217)
|
Purchase of property
and equipment
|
(10,366)
|
|
(750)
|
|
(8,750)
|
Income taxes received
(paid), net of refunds
|
1
|
|
(1,250)
|
|
(1,250)
|
Free Cash
Flow
|
$
69,223
|
|
$
46,004
|
|
$
81,455
|
Reconciliation on Combined Historical Basis – Full
Year:
Reconciliation of net income to the non-GAAP terms, in
thousands:
|
Year
Ended
|
|
December
31,
|
|
2016
|
|
2015
|
|
2014
|
|
|
Net income
|
$
60,659
|
|
$
51,903
|
|
$
100,628
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
46,668
|
|
46,531
|
|
43,503
|
Amortization of
intangible assets
|
17,438
|
|
18,827
|
|
15,262
|
Non-cash stock-based
compensation
|
5,101
|
|
4,020
|
|
5,012
|
Loss on disposal of
assets, net
|
545
|
|
757
|
|
876
|
Miscellaneous expense
(income), net
|
(806)
|
|
(9)
|
|
(279)
|
Interest
expense
|
99,396
|
|
93,639
|
|
94,331
|
Loss from early
extinguishment of debt
|
31,987
|
|
-
|
|
5,086
|
Income tax
expense
|
43,304
|
|
19,980
|
|
32,495
|
Amortization of
program broadcast rights
|
19,001
|
|
14,960
|
|
13,004
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
29
|
|
26
|
|
25
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(456)
|
Payments for program
broadcast rights
|
(18,786)
|
|
(14,576)
|
|
(15,153)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
36,470
|
|
31,223
|
|
25,671
|
Other
|
2,700
|
|
21,412
|
|
21,393
|
Broadcast Cash
Flow
|
343,706
|
|
288,693
|
|
341,398
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(36,470)
|
|
(31,223)
|
|
(25,671)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
307,236
|
|
257,470
|
|
315,727
|
Pension
expense
|
165
|
|
4,207
|
|
6,126
|
Contributions to
pension plans
|
(3,048)
|
|
(5,421)
|
|
(6,770)
|
Other
|
8,442
|
|
6,488
|
|
6,176
|
Operating Cash
Flow as Defined in Senior Credit Facility
|
312,795
|
|
262,744
|
|
321,259
|
Interest
expense
|
(99,396)
|
|
(93,639)
|
|
(94,331)
|
Amortization of
deferred financing costs
|
4,884
|
|
3,194
|
|
2,970
|
Net amortization of
original issue (premium) discount
|
|
|
|
|
|
on senior
notes
|
(779)
|
|
(863)
|
|
(863)
|
Purchase of property
and equipment
|
(43,604)
|
|
(27,000)
|
|
(35,000)
|
Income taxes paid,
net of refunds
|
(14,588)
|
|
(5,000)
|
|
(5,000)
|
Free Cash
Flow
|
$
159,312
|
|
$
139,436
|
|
$
189,035
|
Reconciliation of Total Leverage Ratio, Net of All
Cash:
Reconciliation of net income to the non-GAAP term, in
thousands except for ratio:
|
|
|
Combined
Historical Basis Operating Cash Flow
|
|
Eight Quarters
Ended
|
as defined in the
Senior Credit Agreement:
|
|
December 31,
2016
|
|
|
|
Net income
|
|
$
112,562
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
Depreciation
|
|
93,199
|
Amortization of
intangible assets
|
|
36,265
|
Non-cash stock-based
compensation
|
|
9,121
|
Loss on disposal of
assets, net
|
|
1,302
|
Miscellaneous income,
net
|
|
(815)
|
Interest
expense
|
|
193,035
|
Loss from early
extinguishment of debt
|
|
31,987
|
Income tax
expense
|
|
63,284
|
Amortization of
program broadcast rights
|
|
33,961
|
Common stock
contributed to 401(k) plan
|
|
|
excluding corporate
401(k) contributions
|
|
55
|
Payments for program
broadcast rights
|
|
(33,362)
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible assets
and non-cash stock-based compensation
|
|
67,693
|
Other
|
|
24,112
|
Broadcast Cash
Flow
|
|
632,399
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
non-cash stock-based
compensation
|
|
(67,693)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
|
564,706
|
Pension
expense
|
|
4,372
|
Contributions to
pension plans
|
|
(8,469)
|
Other
|
|
14,930
|
Operating Cash
Flow as defined in Senior Credit Agreement
|
|
$
575,539
|
Operating Cash
Flow as defined in Senior Credit
|
|
|
Agreement, divided
by two
|
|
$
287,770
|
|
|
|
|
|
December 31,
2016
|
Adjusted Total
Indebtedness:
|
|
|
Long term
debt
|
|
$
1,756,747
|
Capital leases and
other debt
|
|
680
|
Total deferred
financing costs, net
|
|
30,488
|
Premium on
subordinated debt, net
|
|
(5,797)
|
Cash
|
|
(325,189)
|
Adjusted Total
Indebtedness, Net of All Cash
|
|
$
1,456,929
|
Total Leverage
Ratio, Net of All Cash
|
|
5.06
|
The Company
We are a television broadcast company headquartered in
Atlanta, Georgia, that owns and
operates television stations and leading digital assets in markets
throughout the United States. We
own and/or operate television stations in 54 television markets
that broadcast over 200 separate program streams, including 37
channels affiliated with CBS, 29 channels affiliated with NBC, 20
channels affiliated with ABC and 15 channels affiliated with
FOX. We own the number-one or number-two ranked television
station operations in 52 of those 54 markets. Our stations
reach approximately 10.1 percent of total United States television households.
Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and the federal securities
laws. These "forward-looking statements" are not statements of
historical facts, and may include, among other things, statements
regarding our current expectations and beliefs of operating results
for the first quarter of 2017 or other periods, the impact of
recently completed transactions, future expenses and other future
events. Actual results are subject to a number of risks and
uncertainties and may differ materially from the current
expectations and beliefs discussed in this press release. All
information set forth in this release is as of March 1, 2017. We do not intend, and undertake no
duty, to update this information to reflect future events or
circumstances. 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,
2016 and may be contained in reports subsequently filed with
the U.S. Securities and Exchange Commission (the "SEC") and
available at the SEC's website at www.sec.gov.
Conference Call Information
We will host a conference call to discuss our fourth quarter
operating results on March 1, 2017.
The call will begin at 1:00 p.m. Eastern
Time. The live dial-in number is 1 (888) 684-1259 and the
confirmation code is 4067229. 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) 203-1112, Confirmation
Code: 4067229 until March 31,
2017.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/gray-reports-record-operating-results-300415561.html
SOURCE Gray Television, Inc.