ATLANTA, May 4, 2017 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) today announces record results of operations for the
three-months ended March 31, 2017,
including record revenue, net income and Broadcast Cash Flow (a
non-GAAP financial measure, defined below).
Financial Highlights:
- Record First Quarter Revenue, Net Income and
Broadcast Cash Flow (as-reported basis) - Our revenue for the
first quarter of 2017 was $203.5
million ($203.9 million on a
Combined Historical Basis, defined below), increasing $29.7 million, or 17%, from the first quarter of
2016. Our net income was $10.5
million for the first quarter of 2017. Our Broadcast Cash
Flow was $70.5 million for the first
quarter of 2017 ($70.9 million on a
Combined Historical Basis).
- Total Leverage Ratio - As of March 31, 2017, our total leverage ratio, as
defined in our senior credit facility, was 5.56 times on a trailing
eight-quarter basis, netting all $23.5
million of cash on our balance sheet.
Other Highlights and Recent Developments:
- On January 13, 2017, we acquired
KTVF-TV (NBC), KXDF-TV (CBS), and KFXF-TV (FOX) in the Fairbanks, Alaska television market, for
$8.0 million (the "Fairbanks
Acquisition").
- On January 17, 2017, we acquired
WBAY-TV (ABC), in the Green Bay,
Wisconsin television market, and KWQC-TV (NBC), in the
Davenport, Iowa, Rock Island, Illinois, and Moline, Illinois or "Quad Cities" television
market (collectively, the "Media General Acquisition"), for an
adjusted purchase price of $269.9
million.
- On February 7, 2017, we amended
and restated our senior credit facility (the "2017 Senior Credit
Facility") which provided a total commitment of $656.4 million, consisting of a $556.4 million term loan facility (the "2017 Term
Loan"), that was used to repay our prior term loan, and a
$100.0 million revolving credit
facility (the "2017 Revolving Credit Facility").
- On February 7, 2017, we announced
that we anticipate receiving, in the second or third quarter of
2017, $90.8 million in proceeds from
the Federal Communication Commission's recently completed reverse
auction for broadcast spectrum.
- On February 16, 2017, we
announced that we had agreed to acquire WABI-TV (CBS/CW) in the
Bangor, Maine market (DMA 156) and
WCJB-TV (ABC/CW) in the Gainesville,
Florida market (DMA 161) (collectively, the "Diversified
Acquisition") for a total purchase price of $85.0 million. On April 1,
2017, we began operating these stations, subject to the
ultimate control of the seller, under a standard pre-closing local
programming and marketing agreement (an "LMA"). On May 1, 2017, we completed the Diversified
Acquisition, at which time the LMA expired.
- On April 3, 2017, we borrowed
$85.0 million under an incremental
term loan (the "2017 Incremental Term Loan") under the 2017 Senior
Credit Facility and used a portion of the proceeds to prepay a
portion of the purchase price for the Diversified Acquisition.
- On May 1, 2017, we completed the
acquisition of television stations WDTV-TV (CBS) and WVFX-TV
(FOX/CW) a legal duopoly in the Clarksburg-Weston,
West Virginia market (DMA 169) (the "Clarksburg
Acquisition") for a total purchase price of $26.5 million, at which time our existing LMA
expired.
Effects of Acquisitions and Divestitures on Our
Results of Operations
From October 31, 2013 through
March 31, 2017, we completed 21
acquisition transactions and three divestiture transactions. As
more fully described in our Form 10-Q to be filed with the
Securities and Exchange Commission today and in our prior
disclosures, these transactions added a net total of 48 television
stations in 28 television markets, including 23 new television
markets, to our operations.
We refer to the five stations acquired during the first quarter
of 2017 as the "2017 Acquisitions." We refer to the 13 stations
acquired and retained in 2016, as well as the two stations in the
Clarksburg, West Virginia market
that we commenced operating under an LMA in June 2016 as the "2016 Acquisitions." 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
Acquisitions." Unless the context of the following discussion
requires otherwise, we refer to the stations acquired in the 2017
Acquisitions, the 2016 Acquisitions and the 2015 Acquisitions,
collectively, as the "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, 2015 (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 2017 Senior Credit Facility," "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,
2015, 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, 2015. 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 (unaudited):
|
|
|
As-Reported
Basis
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
203,461
|
|
$
173,723
|
|
17 %
|
|
$
133,303
|
|
53 %
|
Political
|
$
1,321
|
|
$
9,655
|
|
(86)%
|
|
$
1,159
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
133,471
|
|
$
108,568
|
|
23 %
|
|
$
86,847
|
|
54 %
|
Corporate and
administrative
|
$
7,709
|
|
$
15,678
|
|
(51)%
|
|
$
6,847
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
10,505
|
|
$
8,990
|
|
17 %
|
|
$
5,595
|
|
88 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
70,464
|
|
$
65,894
|
|
7 %
|
|
$
46,724
|
|
51 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
63,729
|
|
$
51,186
|
|
25 %
|
|
$
40,627
|
|
57 %
|
Free Cash
Flow
|
$
36,594
|
|
$
24,215
|
|
51 %
|
|
$
21,991
|
|
66 %
|
|
|
Combined
Historical Basis
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
203,890
|
|
$
205,329
|
|
(1)%
|
|
$
181,093
|
|
13 %
|
Political
|
|
$
1,321
|
|
$
13,651
|
|
(90)%
|
|
$
1,318
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
(1):
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$
135,081
|
|
$
130,877
|
|
3 %
|
|
$
120,165
|
|
12 %
|
Corporate and
administrative
|
|
$
7,709
|
|
$
15,678
|
|
(51)%
|
|
$
6,847
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
|
$
70,850
|
|
$
78,387
|
|
(10)%
|
|
$
68,227
|
|
4 %
|
Broadcast Cash Flow
Less Cash
|
|
|
|
|
|
|
|
|
|
|
Corporate
Expenses
|
|
$
64,115
|
|
$
63,679
|
|
1 %
|
|
$
62,130
|
|
3 %
|
Operating Cash Flow
as defined in
|
|
|
|
|
|
|
|
|
|
|
the 2017 Senior
Credit Facility
|
|
$
63,962
|
|
$
69,934
|
|
(9)%
|
|
$
64,531
|
|
(1)%
|
Free Cash
Flow
|
|
$
37,536
|
|
$
39,869
|
|
(6)%
|
|
$
33,808
|
|
11 %
|
|
|
(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.
|
Results of Operations for the First Quarter of 2017
Revenue (less agency commissions) on As-Reported
Basis.
The table below presents our revenue (less agency commissions)
by type for the first quarter of 2017 and 2016 (dollars in
thousands):
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
102,597
|
|
50.4%
|
|
$
89,354
|
|
51.4%
|
National
|
|
24,814
|
|
12.2%
|
|
22,079
|
|
12.7%
|
Political
|
|
1,321
|
|
0.6%
|
|
9,655
|
|
5.6%
|
Retransmission
consent
|
|
67,573
|
|
33.2%
|
|
47,269
|
|
27.2%
|
Other
|
|
7,156
|
|
3.6%
|
|
5,366
|
|
3.1%
|
Total
|
|
$
203,461
|
|
100.0%
|
|
$
173,723
|
|
100.0%
|
Total revenue increased $29.7
million, or 17%, to $203.5
million for the first quarter of 2017 compared to the first
quarter of 2016. Revenue from the 2017 Acquisitions and 2016
Acquisitions, collectively, accounted for approximately
$47.5 million of our total revenue in
the first quarter of 2017. The 2016 Acquisitions accounted for
approximately $16.6 million of our
total revenue in the first quarter of 2016.
Excluding the total revenue contributed by the 2017 Acquisitions
and 2016 Acquisitions, our total revenue decreased by $1.2 million in the first quarter of 2017 as
compared to the first quarter of 2016. The components of this net
decrease included: retransmission consent revenue increased by
$9.2 million due primarily to
increased retransmission consent rates; and political advertising
revenue decreased by $8.3 million due
to 2017 being the "off-year" of the two-year election cycle.
Excluding the revenue contributed by the 2017 Acquisitions and
2016 Acquisitions, local and national advertising revenue declined,
in part, as a result of the impact of the broadcast of the 2017
Super Bowl on our FOX-affiliated stations generating approximately
$0.6 million of local and national
advertising revenue, compared to $1.6
million that we earned from the broadcast of the 2016 Super
Bowl on our CBS-affiliated stations reflecting our
significantly larger portfolio of CBS-affiliated stations compared
to our portfolio of FOX-affiliated stations.
The changes in revenue for the first quarter of 2017 compared to
the first quarter of 2016 were approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $13.2 million, or 15%, to
$102.6 million.
- National advertising revenue increased $2.7 million, or 12%, to $24.8 million.
- Political advertising revenue decreased $8.3 million, or 86%, to $1.3 million.
- Retransmission consent revenue increased $20.3 million, or 43%, to $67.6 million.
- Other revenue increased $1.8
million, or 33%, to $7.2
million.
Revenue (less agency commissions) on Combined Historical
Basis.
On a Combined Historical Basis, total revenue decreased
$1.4 million to $203.9 million in the first quarter of 2017
compared to $205.3 million the first
quarter of 2016. On a Combined Historical Basis, the changes in
revenue for the first quarter of 2017 compared to the first quarter
of 2016 were approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
decreased $1.1 million, or 1%, to
$103.7 million.
- National advertising revenue decreased $1.9 million, or 7%, to $25.2 million.
- Political advertising revenue decreased $12.3 million, or 90%, to $1.3 million.
- Retransmission consent revenue increased $13.9 million, or 25%, to $68.6 million.
- Other revenue was unchanged at $5.1
million.
Local and national advertising revenue declined, in part, as a
result of the impact of the broadcast of the 2017 Super Bowl on our
FOX-affiliated stations generating approximately $0.6 million of local and national advertising
revenue, compared to $2.1 million
that we earned from the broadcast of the 2016 Super Bowl on
our CBS-affiliated stations reflecting our significantly larger
portfolio of CBS-affiliated stations compared to our portfolio of
FOX-affiliated stations.
Within our local and national advertising revenue categories,
and including the revenue attributable to the 2017 Acquisitions and
the 2016 Acquisitions, our five largest customer categories
experienced the following approximate changes during the first
quarter of 2017 compared to the first quarter of 2016:
- Automotive was unchanged;
- Medical decreased 1%;
- Restaurant decreased 10%;
- Furniture and appliances decreased 2%; and
- Communications increased 5%.
Broadcast Operating Expenses on As-Reported
Basis.
Broadcast operating expenses (before depreciation, amortization
and gain or loss on disposal of assets) increased $24.9 million, or 23%, to $133.5 million for the first quarter of 2017
compared to the first quarter of 2016. The 2017 Acquisitions and
2016 Acquisitions, collectively, accounted for approximately
$30.3 million of our broadcast
operating expenses in the first quarter of 2017, and the 2016
Acquisitions accounted for approximately $10.8 million of our broadcast operating expenses
for the first quarter of 2016. Including the impact of the 2017
Acquisitions and the 2016 Acquisitions, total retransmission
expense increased $9.9 million, or
44%, to $32.3 million in the first
quarter of 2017 compared to the first quarter of 2016.
Excluding the impact of the 2017 Acquisitions and the 2016
Acquisitions:
- Non-compensation expenses increased by $4.5 million, or 9%, in the first quarter of 2017
primarily due to retransmission expense increases of $5.1 million that were partially offset by
decreases in several categories including programming, licensing
and professional fees.
- Compensation expense increased by $0.9
million in the first quarter of 2017.
Broadcast Operating Expenses on Combined Historical
Basis.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and gain or loss on disposal of
assets) increased $4.2 million, or
3%, to $135.1 million in the first
quarter of 2017 compared to the first quarter of 2016. The increase
reflects, in part, the following:
- Retransmission expense increased $6.6
million, or 25%, to $32.7
million in the first quarter of 2017 compared to the first
quarter of 2016 consistent with increases in retransmission consent
revenue.
- Compensation expense decreased by approximately $1.5 million, or 2%, in the first quarter of 2017
compared to the first quarter of 2016. Non-cash share based
compensation expenses were $0.3
million in each of the first quarter of 2017 and 2016.
Corporate and Administrative Operating Expenses on
As-Reported Basis.
Corporate and administrative expenses (before depreciation,
amortization and gain or loss on disposal of assets) decreased
$8.0 million, or 51%, to $7.7 million in the first quarter of 2017 as
compared to the first quarter of 2016. The decrease reflects, in
part, the following:
- Non-compensation expense decreased $7.6
million, primarily due to a decrease of $7.3 million in professional fees related to
acquisition activities.
- Compensation expense decreased $0.4
million, primarily due to decreases in incentive
compensation costs. Non-cash share based compensation expenses were
$1.0 million in each of the first
quarter of 2017 and 2016.
Loss from Early Extinguishment of Debt.
In the first quarter of 2017, we recorded a loss from early
extinguishment of debt of approximately $2.5
million, or $1.5 million after
tax, related to the amendment and restatement of our senior credit
facility.
Taxes.
During the first quarter of 2017, we made aggregate federal and
state income tax payments of approximately $0.3 million. During the remainder of 2017, we
anticipate making income tax payments (net of refunds) of
approximately $1.1 million. We
anticipate making significant federal and state income tax payments
beginning in 2018, assuming no significant changes to the corporate
tax code as currently in effect.
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
|
|
March
31,
|
|
2017
|
|
2016
|
|
|
|
|
Revenue (less agency
commissions)
|
$
203,461
|
|
$
173,723
|
Operating expenses
before depreciation,
|
|
|
|
amortization and
(gain) loss on disposal of assets, net:
|
|
|
|
Broadcast
|
133,471
|
|
108,568
|
Corporate and
administrative
|
7,709
|
|
15,678
|
Depreciation
|
12,629
|
|
11,126
|
Amortization of
intangible assets
|
5,567
|
|
3,888
|
Loss (gain) on
disposals of assets, net
|
527
|
|
(1,648)
|
Operating
expenses
|
159,903
|
|
137,612
|
Operating
income
|
43,558
|
|
36,111
|
Other income
(expense):
|
|
|
|
Miscellaneous income,
net
|
7
|
|
569
|
Interest
expense
|
(23,191)
|
|
(21,275)
|
Loss from early
extinguishment of debt
|
(2,540)
|
|
-
|
Income before income
taxes
|
17,834
|
|
15,405
|
Income tax
expense
|
7,329
|
|
6,415
|
Net income
|
$
10,505
|
|
$
8,990
|
|
|
|
|
Basic per share
information:
|
|
|
|
Net income
|
$
0.15
|
|
$
0.13
|
Weighted-average
shares outstanding
|
71,877
|
|
71,791
|
|
|
|
|
Diluted per share
information:
|
|
|
|
Net income
|
$
0.14
|
|
$
0.12
|
Weighted-average
shares outstanding
|
72,519
|
|
72,582
|
|
|
|
|
Political revenue
(less agency commissions)
|
$
1,321
|
|
$
9,655
|
Other Financial Data:
|
As
of
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
(in
thousands)
|
|
|
|
|
Cash
|
$
23,541
|
|
$
325,189
|
Long-term debt,
including current portion
|
$
1,754,280
|
|
$
1,756,747
|
Borrowing
availability under our revolving credit facility
|
$
100,000
|
|
$
60,000
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in
thousands)
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
$
(483)
|
|
$
29,712
|
Net cash used in
investing activities
|
(293,393)
|
|
(420,162)
|
Net cash (used in)
provided by financing activities
|
(7,772)
|
|
413,786
|
Net (decrease)
increase in cash
|
$
(301,648)
|
|
$
23,336
|
Guidance for the Three-Months Ending June 30, 2017
Based on our current forecasts for the second quarter of 2017,
we anticipate the changes from the three-months ended June 30, 2016 as outlined below. Our estimates
for the second quarter of 2017 include approximately $19.2 million of revenue and $8.0 million of broadcast operating expense
estimated to be contributed by the 2017 Acquisitions and the
stations acquired in the Diversified Acquisition.
|
|
Three Months
Ending June 30,
|
|
|
Low
End
|
|
%
Change
|
|
High
End
|
|
%
Change
|
|
|
|
|
Guidance
|
|
From
|
|
Guidance
|
|
From
|
|
|
|
|
for
|
|
As-Reported
|
|
for
|
|
As-Reported
|
|
As-Reported
|
|
|
the
Second
|
|
Second
|
|
the
Second
|
|
Second
|
|
Second
|
|
|
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)
|
|
$218,000
|
|
11 %
|
|
$223,000
|
|
13 %
|
|
$
196,633
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization and
|
|
|
|
|
|
|
|
|
|
|
gain or loss on
disposals of assets):
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$141,000
|
|
20 %
|
|
$143,000
|
|
22 %
|
|
$
117,335
|
Corporate and
administrative
|
|
$
9,250
|
|
9 %
|
|
$
9,750
|
|
14 %
|
|
$
8,524
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED
DATA:
|
|
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
|
|
|
(less agency
commissions)
|
|
$
750
|
|
(92)%
|
|
$
1,200
|
|
(88)%
|
|
$
9,649
|
Comments on Second Quarter of 2017 Guidance:
Second Quarter of 2017 on As-Reported Basis:
Revenue on As-Reported Basis.
Based on our current forecasts for the second quarter of 2017,
we anticipate the following changes from the second quarter of 2016
as outlined below:
- We believe our second quarter of 2017 local advertising revenue
(including internet/digital/mobile) will increase to be within a
range of approximately$116.5 million to $118.5 million, or +11% to +13%.
- We believe our second quarter of 2017 national advertising
revenue will increase to be within a range of approximately
$28.0 to $29.5 million, or +7% to
+13%.
- We believe our second quarter of 2017 political revenue will be
within a range of approximately $0.8 million
to $1.2 million. For the second quarter of 2015, we reported
political revenue of approximately $2.2
million.
- We believe our second quarter of 2017 retransmission consent
revenue will be approximately $69.5
million.
Broadcast Operating Expenses (before depreciation,
amortization and gain or loss on disposal of assets, net) on
As-Reported Basis.
For the second quarter of 2017, we anticipate our broadcast
operating expenses will increase from the second quarter of 2016,
reflecting the impact of the 2017 Acquisitions and the 2016
Acquisitions as well as anticipated increases in payroll and
related employee benefits. We anticipate that our broadcast
operating expenses will also reflect increases in retransmission
expense of approximately $9.9
million, to total approximately $34.0
million for the second quarter of 2017.
Corporate and Administrative Operating Expenses (before
depreciation, amortization and gain or loss on disposal of assets)
on As-Reported Basis.
For the second quarter of 2017, we anticipate our corporate and
administrative operating expense will increase to within a range of
approximately $9.3 million to $9.8
million, primarily attributable to routine increases in
compensation and professional service fees.
Second Quarter of 2017 on Combined Historical Basis:
Based on our current forecasts for the second quarter of 2017,
we anticipate the following changes from the Combined Historical
Basis for the second quarter of 2016 as outlined below. For the
purposes hereof, our Combined Historical Basis revenues and
expenses for the second quarter of 2016 have been adjusted to give
effect to the 2017 Acquisitions, 2016 Acquisitions and the
Diversified Acquisition.
Revenue on Combined Historical Basis:
- We believe our second quarter of 2017 total revenue will change
by approximately 0% to +2%.
- We believe our second quarter of 2017 local advertising revenue
will change by approximately -1% to +1%.
- We believe our second quarter of 2017 national advertising
revenue will decrease by approximately -7% to -2%.
- We believe our second quarter of 2017 retransmission consent
revenue will increase by approximately +25%.
Broadcast Operating Expenses (before depreciation,
amortization and gain or loss on disposal of assets) on Combined
Historical Basis.
Our total broadcast operating expenses for the second quarter of
2017 are anticipated to increase from the second quarter of 2016 on
a Combined Historical Basis by 9% to 10%. This increase reflects an
expected increase of $7.4 million in
retransmission expense (to total approximately $34.0 million for the second quarter of
2017).
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 2017
Senior Credit Facility ("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, in thousands:
|
Three Months
Ended
|
|
March
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Net income
|
$
10,505
|
|
$
8,990
|
|
$
5,595
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
12,629
|
|
11,126
|
|
8,798
|
Amortization of
intangible assets
|
5,567
|
|
3,888
|
|
2,771
|
Non-cash stock-based
compensation
|
1,338
|
|
1,284
|
|
993
|
Loss (gain) on
disposals of assets, net
|
527
|
|
(1,648)
|
|
(18)
|
Miscellaneous income,
net
|
(7)
|
|
(569)
|
|
(7)
|
Interest
expense
|
23,191
|
|
21,275
|
|
18,530
|
Loss from early
extinguishment of debt
|
2,540
|
|
-
|
|
-
|
Income tax
expense
|
7,329
|
|
6,415
|
|
3,940
|
Amortization of
program broadcast rights
|
5,222
|
|
4,396
|
|
3,607
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
7
|
|
6
|
|
6
|
Payments for program
broadcast rights
|
(5,119)
|
|
(3,977)
|
|
(3,588)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
6,735
|
|
14,708
|
|
6,097
|
Broadcast Cash
Flow
|
70,464
|
|
65,894
|
|
46,724
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(6,735)
|
|
(14,708)
|
|
(6,097)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
$
63,729
|
|
$
51,186
|
|
$
40,627
|
Pension
expense
|
(85)
|
|
40
|
|
2,401
|
Contributions to
pension plans
|
(624)
|
|
(520)
|
|
-
|
Interest
expense
|
(23,191)
|
|
(21,275)
|
|
(18,530)
|
Amortization of
deferred financing costs
|
1,151
|
|
1,071
|
|
799
|
Amortization of net
original issue premium on
|
|
|
|
|
|
5.875% senior notes
due 2026
|
(153)
|
|
(216)
|
|
(216)
|
Purchase of property
and equipment
|
(3,977)
|
|
(5,931)
|
|
(2,849)
|
Income taxes paid,
net of refunds
|
(256)
|
|
(140)
|
|
(241)
|
Free Cash
Flow
|
$
36,594
|
|
$
24,215
|
|
$
21,991
|
Reconciliation on Combined Historical Basis, in
thousands:
|
Three Months
Ended
|
|
March
31,
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Net income
|
$
9,204
|
|
$
11,729
|
|
$
8,800
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
12,732
|
|
12,625
|
|
12,329
|
Amortization of
intangible assets
|
5,583
|
|
4,849
|
|
4,651
|
Non-cash stock-based
compensation
|
1,338
|
|
1,284
|
|
993
|
Loss (gain) on
disposals of assets, net
|
527
|
|
(1,448)
|
|
35
|
Miscellaneous income,
net
|
(7)
|
|
394
|
|
1,516
|
Interest
expense
|
23,191
|
|
24,849
|
|
23,306
|
Loss from early
extinguishment of debt
|
2,540
|
|
-
|
|
-
|
Income tax
expense
|
7,329
|
|
5,775
|
|
3,444
|
Amortization of
program broadcast rights
|
5,276
|
|
5,254
|
|
5,206
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
7
|
|
6
|
|
6
|
Payments for program
broadcast rights
|
(5,173)
|
|
(4,835)
|
|
(5,187)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
6,735
|
|
14,708
|
|
6,097
|
Other
|
1,568
|
|
3,197
|
|
7,031
|
Broadcast Cash
Flow
|
$
70,850
|
|
$
78,387
|
|
$
68,227
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(6,735)
|
|
(14,708)
|
|
(6,097)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
$
64,115
|
|
$
63,679
|
|
$
62,130
|
Pension
expense
|
(85)
|
|
40
|
|
2,401
|
Contributions to
pension plans
|
(624)
|
|
(520)
|
|
-
|
Other
|
556
|
|
6,735
|
|
-
|
Operating Cash
Flow as defined in 2017 Senior Credit Facility
|
$
63,962
|
|
$
69,934
|
|
$
64,531
|
Interest
expense
|
(23,191)
|
|
(24,849)
|
|
(23,306)
|
Amortization of
deferred financing costs
|
1,151
|
|
1,071
|
|
799
|
Amortization of net
original issue premium on
|
|
|
|
|
|
5.875% senior notes
due 2026
|
(153)
|
|
(216)
|
|
(216)
|
Purchase of property
and equipment
|
(3,977)
|
|
(5,931)
|
|
(6,750)
|
Income taxes paid,
net of refunds
|
(256)
|
|
(140)
|
|
(1,250)
|
Free Cash
Flow
|
$
37,536
|
|
$
39,869
|
|
$
33,808
|
Reconciliation of Total Leverage Ratio, Net of All Cash, in
thousands except for ratio:
Combined
Historical Basis Operating Cash Flow
|
|
Eight Quarters
Ended
|
as defined in the
2017 Senior Credit Facility:
|
|
March 31,
2017
|
|
|
|
Net income
|
|
$
149,083
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
Depreciation
|
|
99,509
|
Amortization of
intangible assets
|
|
38,020
|
Non-cash stock-based
compensation
|
|
9,466
|
Loss on disposal of
assets, net
|
|
2,862
|
Miscellaneous income,
net
|
|
4,410
|
Interest
expense
|
|
192,919
|
Loss from early
extinguishment of debt
|
|
34,527
|
Income tax
expense
|
|
70,750
|
Amortization of
program broadcast rights
|
|
42,218
|
Common stock
contributed to 401(k) plan
|
|
|
excluding corporate
401(k) contributions
|
|
56
|
Payments for program
broadcast rights
|
|
(41,535)
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible assets
and non-cash stock-based compensation
|
|
68,330
|
Other
|
|
21,450
|
Broadcast Cash
Flow
|
|
692,065
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible assets
and non-cash stock-based compensation
|
|
(68,330)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
|
623,735
|
Pension
expense
|
|
1,886
|
Contributions to
pension plans
|
|
(9,093)
|
Other
|
|
15,486
|
Operating Cash
Flow as defined in 2017 Senior Credit Facility
|
|
$
632,014
|
Operating Cash
Flow as defined in 2017 Senior Credit Facility,
|
|
|
divided by
two
|
|
$
316,007
|
|
|
|
|
|
March 31,
2017
|
Adjusted Total
Indebtedness:
|
|
|
Long term
debt
|
|
$
1,754,280
|
Capital leases and
other debt
|
|
643
|
Total deferred
financing costs, net
|
|
31,410
|
Premium on
subordinated debt, net
|
|
(5,644)
|
Cash
|
|
(23,541)
|
Adjusted Total
Indebtedness, Net of All Cash
|
|
$
1,757,148
|
Total Leverage
Ratio, Net of All Cash
|
|
5.56
|
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. As
of the date of this release, we own and/or operate television
stations in 56 television markets that broadcast more than 200
separate program streams, including 103 channels affiliated with
the CBS Network, the NBC Network, the ABC Network and the FOX
Network. Our portfolio, including pending acquisitions, includes
the number-one and/or number-two ranked television station
operations in essentially all of our markets, which collectively
cover approximately 10.3 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 second quarter of 2017 or other periods, the impact of
recently completed transactions, anticipated receipt of proceeds
from the auction of broadcast spectrum, future operating expenses,
future income tax payments 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 May 4, 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 first quarter
operating results on May 4, 2017. The
call will begin at 11:00 a.m. Eastern
Time. The live dial-in number is 1-800-768-6490 and the
confirmation code is 1813885. 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: 1813885 until June 3, 2017.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/gray-reports-record-operating-results-300451154.html
SOURCE Gray Television, Inc.