ATLANTA, Nov. 6, 2017 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) today announces record-setting results of operations for
the third quarter and year-to-date periods ended September 30, 2017, including record revenue and
net income.
Our total advertising revenue for the third quarter of 2017 was
near the high end of our guidance range. In particular, our
combined local and national advertising revenue increased by
approximately $13.5 million, or 11%,
in the third quarter of 2017 compared to the third quarter of 2016.
On a Combined Historical Basis (as defined below), our aggregate
local and national revenue (excluding approximately $8.2 million of advertising revenue attributable
to the broadcast of the 2016 Summer Olympics) increased by
approximately 3% in the third quarter of 2017 compared to the third
quarter of 2016. In addition, our political advertising
revenue significantly exceeded the high end of our guidance. We
recorded broadcast and corporate and administrative expenses that
were below the low end of our guidance. That range for broadcast
expenses included the assumption that non-cash stock based
compensation awards of approximately $3.4
million would be granted to certain non-executive employees
during the third quarter. However, those awards were not made until
October 2017. This performance
produced fully diluted net income per share in the third quarter
and first nine months of 2017 of $0.21 and $1.33,
respectively.
As of September 30, 2017, our
Total Leverage Ratio, Net of all Cash (as defined below) has
improved to 4.99 times, on a trailing eight-quarter basis.
Looking forward, on a Combined Historical Basis, we believe that
our fourth quarter of 2017 combined local and national advertising
revenue will increase in the low single digit percentage range,
when compared to the fourth quarter of 2016.
Financial Highlights:
- Record Revenue - The following table presents certain of
our record As Reported revenue and our Combined Historical Basis
revenue for the third quarter of 2017 and the respective percentage
change from the third quarter of 2016 (dollars in millions):
|
|
Three Months Ended
September 30, 2017
|
|
|
|
|
%
|
|
Combined
|
|
%
|
|
|
As-Reported
|
|
Change
|
|
Historical
|
|
Change
|
Revenue (less
agency commissions):
|
|
|
Local (including
internet/digital/mobile)
|
|
$
110.0
|
|
8 %
|
|
$
110.0
|
|
(4)%
|
National
|
|
31.0
|
|
22 %
|
|
31.0
|
|
3 %
|
Political
|
|
4.0
|
|
(82)%
|
|
4.0
|
|
(86)%
|
Retransmission
consent
|
|
70.2
|
|
37 %
|
|
70.2
|
|
23 %
|
Other
|
|
3.8
|
|
7 %
|
|
3.8
|
|
0 %
|
Total
|
|
$
219.0
|
|
7 %
|
|
$
219.0
|
|
(6)%
|
- Record Net Income - Our net income of
$15.3 million for the third quarter
of 2017 was the highest net income for any third quarter in our
history. Our Broadcast Cash Flow was $79.9
million for the third quarter of 2017 ($79.8 million on a Combined Historical Basis).
Our Free Cash Flow was $38.1 million
for the third quarter of 2017 ($38.0
million on a Combined Historical Basis).
Other Highlights:
- On August 1, 2017, we acquired
WCAX-TV (CBS) in the Burlington,
Vermont - Plattsburgh, New
York market (DMA 97) for $29.0
million (the "Vermont Acquisition"). We had operated this
station under a local marketing agreement ("LMA") since
June 1, 2017, and the LMA expired
upon completion of the acquisition.
- On October 2, 2017, we announced
that we renewed and extended all network affiliation agreements for
our 39 stations affiliated with the CBS Network through
December 31, 2021.
Effects of Acquisitions and Divestitures on Our Results of
Operations
From October 31, 2013 through
September 30, 2017, we completed 23
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 51 television
stations in 31 television markets, including 26 new television
markets, to our operations.
We refer to the eight stations we acquired (excluding the
stations acquired in the Clarksburg Acquisition) during the first
nine-months of 2017 and the stations we commenced operating under
an LMA during that period as the "2017 Acquisitions." We refer to
the 13 stations acquired in 2016, and that we retained in those
transactions, as well as the stations in the Clarksburg Acquisition
that we commenced operating under an LMA on June 1, 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 "Acquisitions."
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 Acquisitions and subtracting the
historical revenues and 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) (the "Completed Transactions").
Combined Historical Basis financial information does not include
any adjustments for other events attributable to the Completed
Transactions except "Broadcast Cash Flow," "Broadcast Cash Flow
Less Cash Corporate Expenses," "Operating Cash Flow as Defined in
the Senior Credit Agreement" and "Total Leverage Ratio, Net of All
Cash" each give effect to expected synergies, and "Free Cash Flow"
on a Combined Historical Basis gives effect to the financings and
certain expected operating synergies related to the Completed
Transactions. "Operating Cash Flow as Defined in the Senior Credit
Agreement" and "Total Leverage Ratio, Net of All Cash" on a
Combined Historical Basis also reflect the add-back of legal and
other professional fees incurred in completing acquisitions.
Certain of the Combined Historical Basis financial information has
been derived from, and adjusted based on, unaudited, unreviewed
financial information prepared by other entities, which Gray cannot
independently verify. We cannot assure you that such financial
information would not be materially different if such information
were audited or reviewed and no assurances can be provided as to
the accuracy of such information, or that our actual results would
not differ materially from the Combined Historical Basis financial
information if the Completed Transactions had been completed at the
stated date. In addition, the presentation of Combined Historical
Basis, "Broadcast Cash Flow," "Broadcast Cash Flow Less Cash
Corporate Expenses," "Operating Cash Flow as Defined in the Senior
Credit Agreement," "Total Leverage Ratio, Net of All Cash," "Free
Cash Flow" and the adjustments to such information, including
expected synergies resulting from such transactions, may not comply
with GAAP or the requirements for pro forma financial information
under Regulation S-X under the Securities Act.
Selected Operating
Data on As-Reported Basis (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
218,977
|
|
$
204,490
|
|
7 %
|
|
$
151,102
|
|
45 %
|
Political
|
$
4,005
|
|
$
22,272
|
|
(82)%
|
|
$
4,594
|
|
(13)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
139,430
|
|
$
120,717
|
|
16 %
|
|
$
98,921
|
|
41 %
|
Corporate and
administrative
|
$
8,318
|
|
$
7,223
|
|
15 %
|
|
$
10,022
|
|
(17)%
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
15,316
|
|
$
(213)
|
|
7291 %
|
|
$
6,609
|
|
132 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
79,936
|
|
$
84,170
|
|
(5)%
|
|
$
52,667
|
|
52 %
|
Broadcast Cash Flow
Less Cash Corporate Expenses
|
$
72,794
|
|
$
77,916
|
|
(7)%
|
|
$
43,434
|
|
68 %
|
Free Cash
Flow
|
$
38,145
|
|
$
29,495
|
|
29 %
|
|
$
15,609
|
|
144 %
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
649,119
|
|
$
574,846
|
|
13 %
|
|
$
427,869
|
|
52 %
|
Political
|
$
9,034
|
|
$
41,576
|
|
(78)%
|
|
$
7,950
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
406,446
|
|
$
346,620
|
|
17 %
|
|
$
272,213
|
|
49 %
|
Corporate and
administrative
|
$
24,436
|
|
$
31,425
|
|
(22)%
|
|
$
23,313
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
96,382
|
|
$
26,439
|
|
265 %
|
|
$
24,314
|
|
296 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
243,639
|
|
$
229,332
|
|
6 %
|
|
$
156,635
|
|
56 %
|
Broadcast Cash Flow
Less Cash Corporate Expenses
|
$
222,431
|
|
$
200,817
|
|
11 %
|
|
$
135,652
|
|
64 %
|
Free Cash
Flow
|
$
130,622
|
|
$
79,640
|
|
64 %
|
|
$
64,988
|
|
101 %
|
|
(1) Excludes
depreciation, amortization, and loss 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
September 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
218,977
|
|
$
233,798
|
|
(6)%
|
|
$
203,223
|
|
8 %
|
Political
|
$
4,005
|
|
$
28,181
|
|
(86)%
|
|
$
5,535
|
|
(28)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
139,430
|
|
$
135,810
|
|
3 %
|
|
$
133,512
|
|
4 %
|
Corporate and
administrative
|
$
8,318
|
|
$
7,223
|
|
15 %
|
|
$
10,022
|
|
(17)%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
79,818
|
|
$
97,715
|
|
(18)%
|
|
$
76,549
|
|
4 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
72,676
|
|
$
91,464
|
|
(21)%
|
|
$
67,316
|
|
8 %
|
Operating Cash Flow
as defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
72,488
|
|
$
90,587
|
|
(20)%
|
|
$
69,300
|
|
5 %
|
Free Cash
Flow
|
$
37,963
|
|
$
45,868
|
|
(17)%
|
|
$
36,723
|
|
3 %
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2017
to
|
|
|
|
2017
to
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
661,472
|
|
$
670,473
|
|
(1)%
|
|
$
596,891
|
|
11 %
|
Political
|
$
9,074
|
|
$
54,169
|
|
(83)%
|
|
$
9,846
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
419,461
|
|
$
406,653
|
|
3 %
|
|
$
385,468
|
|
9 %
|
Corporate and
administrative
|
$
24,436
|
|
$
31,425
|
|
(22)%
|
|
$
23,313
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Cash Flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
246,043
|
|
$
270,909
|
|
(9)%
|
|
$
234,462
|
|
5 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
224,835
|
|
$
242,394
|
|
(7)%
|
|
$
213,479
|
|
5 %
|
Operating Cash Flow
as defined in
|
|
|
|
|
|
|
|
|
|
our Senior Credit
Agreement
|
$
224,873
|
|
$
247,209
|
|
(9)%
|
|
$
218,220
|
|
3 %
|
Free Cash
Flow
|
$
133,319
|
|
$
125,654
|
|
6 %
|
|
$
123,659
|
|
8 %
|
|
(1) Excludes
depreciation, amortization, and loss on disposal of
assets.
|
(2) See definition of
non-GAAP terms and reconciliation of the non-GAAP amounts to net
income included elsewhere herein.
|
Results of Operations for the Third Quarter of 2017
Revenue (less agency commissions) on As-Reported
Basis.
The table below presents our revenue (less agency commissions)
by type for the third quarter of 2017 and 2016 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
110,033
|
|
50.2%
|
|
$
102,172
|
|
50.0%
|
National
|
|
31,027
|
|
14.2%
|
|
25,426
|
|
12.4%
|
Political
|
|
4,005
|
|
1.8%
|
|
22,272
|
|
10.9%
|
Retransmission
consent
|
|
70,150
|
|
32.0%
|
|
51,096
|
|
25.0%
|
Other
|
|
3,762
|
|
1.8%
|
|
3,524
|
|
1.7%
|
Total
|
|
$
218,977
|
|
100.0%
|
|
$
204,490
|
|
100.0%
|
Total revenue increased $14.5
million, or 7%, to $219.0
million for the third quarter of 2017 compared to the third
quarter of 2016. Total revenue from the 2017 Acquisitions and the
2016 Acquisitions, collectively, accounted for approximately
$59.3 million of our total revenue in
the third quarter of 2017 compared to $37.1
million in the third quarter of 2016.
The changes in revenue for the third quarter of 2017 compared to
the third quarter of 2016 were approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $7.9 million, or 8%, to
$110.0 million.
- National advertising revenue increased $5.6 million, or 22%, to $31.0 million.
- Political advertising revenue decreased $18.3 million, or 82%, to $4.0 million.
- Retransmission consent revenue increased $19.1 million, or 37%, to $70.2 million.
- Other revenue increased $0.2
million, or 7%, to $3.8
million.
Excluding the revenue contributed by the 2017 Acquisitions and
2016 Acquisitions, our total revenue decreased by $7.7 million in the third quarter of 2017 as
compared to the third quarter of 2016. This was primarily the
result of a decrease in political advertising revenue of
approximately $14.2 million due to
2017 being the "off-year" of the two-year election cycle. These
decreases were partially offset by an increase in retransmission
consent revenue of approximately $10.0
million primarily due to higher retransmission consent
rates.
Local and national advertising revenue for the third quarter of
2017 decreased by approximately $3.3
million primarily because the third quarter of 2016 included
approximately $8.2 million of revenue
from the 2016 Olympic Games.
Revenue on Combined Historical Basis.
On a Combined Historical Basis, total revenue decreased
$14.8 million, or 6%, to $219.0 million in the third quarter of 2017
compared to the third quarter of 2016 as a result of the
following:
- Local advertising revenue (including internet/digital/mobile)
decreased $4.8 million, or 4%, to
$110.0 million.
- National advertising revenue increased $0.9 million, or 3%, to $31.0 million.
- Political advertising revenue decreased $24.2 million, or 86%, to $4.0 million.
- Retransmission consent revenue increased $13.2 million, or 23%, to $70.2 million.
- Other revenue was consistent at $3.8
million.
Local and national advertising revenue decreased primarily
because the third quarter of 2016 included approximately
$8.2 million of advertising revenue
from the 2016 Olympic Games.
Broadcast Operating Expenses on As-Reported
Basis.
Broadcast operating expenses (before depreciation, amortization
and loss on disposal of assets) increased $18.7 million, or 16%, to $139.4 million for the third quarter of 2017
compared to the third quarter of 2016. The 2017 Acquisitions and
2016 Acquisitions, collectively, accounted for approximately
$34.9 million of our broadcast
operating expenses in the third quarter of 2017, and the 2016
Acquisitions accounted for approximately $20.9 million of our broadcast operating expenses
in the third quarter of 2016. Including the impact of the 2017
Acquisitions and the 2016 Acquisitions, total retransmission
expense increased $9.7 million, or
39%, to $34.7 million in the third
quarter of 2017 compared to the third quarter of 2016.
Excluding the impact of the 2017 Acquisitions and the 2016
Acquisitions:
- Non-compensation expenses increased $5.9
million, or 10%, in the third quarter of 2017, primarily due
to retransmission expense increases of $5.3
million as well as net increases in programming, licensing
and professional fees and certain other items.
- Compensation expenses decreased $1.2
million, or 2%, in the third quarter of 2017.
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 $3.6 million, or 3%, to
$139.4 million for the third quarter
of 2017 compared to the third quarter of 2016. The increase
reflects, in part, the following:
- Retransmission expense increased $6.8
million, or 24%, to $34.7
million in the third quarter of 2017 compared to the third
quarter of 2016, consistent with increases in retransmission
consent revenue.
- Syndicated programming and licensing expenses decreased
$1.4 million, or 21%, in the third
quarter of 2017 compared to the third quarter of 2016.
- Professional fees increased $1.5
million, or 67%, in the third quarter of 2017 compared to
the third quarter of 2016.
- Compensation expenses decreased by approximately $1.9 million, or 3%, in the third quarter of 2017
compared to the third quarter of 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) increased
$1.1 million, or 15%, to $8.3 million in the third quarter of 2017 as
compared to the third quarter of 2016, primarily as a result of
increased professional services and promotional expenses. Non-cash
share based compensation expenses were $1.2
million and $1.0 million in
the third quarters of 2017 and 2016, respectively.
Loss from Early Extinguishment of Debt.
In the three-months ended September 30,
2016, we recorded a loss from early extinguishment of debt
of approximately $32.0 million, or
$19.5 million after tax, related to
the tender offer and redemption of our 7½% senior notes due
2020.
Taxes.
During the third quarter of 2017, the Company made aggregate
federal and state tax payments of $0.3
million compared to $0.5
million in the third quarter of 2016. During the remainder
of 2017, we anticipate making income tax payments (net of refunds)
of approximately $0.6 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.
Results of Operations for the Nine-Months Ended
September 30, 2017
Revenue (less agency commissions) on As-Reported
Basis.
The table below presents our revenue (less agency commissions)
by type for the nine-month periods ended September 30, 2017 and 2016 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
|
$
330,547
|
|
50.9%
|
|
$
296,253
|
|
51.5%
|
National
|
|
86,822
|
|
13.4%
|
|
73,575
|
|
12.8%
|
Political
|
|
9,034
|
|
1.4%
|
|
41,576
|
|
7.2%
|
Retransmission
consent
|
|
207,094
|
|
31.9%
|
|
148,914
|
|
25.9%
|
Other
|
|
15,622
|
|
2.4%
|
|
14,528
|
|
2.6%
|
Total
|
|
$
649,119
|
|
100.0%
|
|
$
574,846
|
|
100.0%
|
Total revenue increased $74.3
million, or 13%, to $649.1
million for the nine-months ended September 30, 2017 compared to the nine-months
ended September 30, 2016. Revenue
from the 2017 Acquisitions and 2016 Acquisitions, collectively,
accounted for approximately $167.9
million of our total revenue in the nine-months ended
September 30, 2017, compared to
$87.9 million in the nine-months
ended September 30, 2016.
The changes in revenue for the nine-months ended September 30, 2017 compared to the nine-months
ended September 30, 2016 were
approximately as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $34.3 million, or 12%, to
$330.5 million.
- National advertising revenue increased $13.2 million, or 18%, to $86.8 million.
- Political advertising revenue decreased $32.5 million, or 78%, to $9.0 million.
- Retransmission consent revenue increased $58.2 million, or 39%, to $207.1 million.
- Other revenue increased $1.1
million, or 8%, to $15.6
million.
Excluding the total revenue contributed by the 2017 Acquisitions
and 2016 Acquisitions, our total revenue decreased by $5.7 million in the nine-months ended
September 30, 2017 as compared to the
nine-months ended September 30, 2016.
This was primarily the result of political advertising revenue that
decreased by $28.9 million due to
2017 being the "off-year" of the two-year election cycle, offset by
retransmission consent revenue that increased by $28.9 million primarily due to increased
retransmission consent rates.
Local and national advertising revenue declined $5.5 million, 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. Local and national advertising also declined because the
nine-months ended September 30, 2016
included approximately $8.2 million
of revenue from the 2016 Olympic Games.
Revenue on Combined Historical Basis.
On a Combined Historical Basis, total revenue decreased
$9.0 million, or 1%, to $661.5 million in the nine-months ended
September 30, 2017 compared to the
nine-months ended September 30, 2016,
as a result of the following:
- Local advertising revenue (including internet/digital/mobile)
decreased $5.9 million, or 2%, to
$338.9 million.
- National advertising revenue increased $0.1 million, or less than 1%, to $90.1 million.
- Political advertising revenue decreased $45.1 million, or 83%, to $9.1 million.
- Retransmission consent revenue increased $41.8 million, or 25%, to $210.3 million.
- Other revenue decreased $0.1
million, or less than 1%, to $13.1
million.
Local and national advertising revenue decreased, 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. Local and national advertising also
decreased because the nine-months ended September 30, 2016 included approximately
$8.2 million of revenue from the 2016
Olympic Games.
Broadcast Operating Expenses on As-Reported
Basis.
Broadcast operating expenses (before depreciation, amortization
and gain on disposal of assets) increased $59.8 million, or 17%, to $406.4 million for the nine-months ended
September 30, 2017 compared to the
nine-months ended September 30, 2016.
The 2017 Acquisitions and 2016 Acquisitions, collectively,
accounted for approximately $95.1
million of our broadcast operating expenses in the
nine-months ended September 30, 2017,
and the 2016 Acquisitions accounted for approximately $52.6 million of our broadcast operating expenses
for the nine-months ended September 30,
2016. Including the impact of the 2017 Acquisitions and the
2016 Acquisitions, total retransmission expense increased
$29.4 million, or 41%, to
$100.8 million in the nine-months
ended September 30, 2017 compared to
the nine-months ended September 30,
2016.
Excluding the impact of the 2017 Acquisitions and the 2016
Acquisitions:
- Non-compensation expenses increased by $18.5 million, or 11%, in the nine-months ended
September 30, 2017 primarily due to
retransmission expense increases of $15.7
million and professional fee increases of $5.2 million.
- Compensation expenses decreased $1.2
million, or 1%, in the nine-months ended September 30, 2017 compared to the nine-months
ended September 30, 2016.
Broadcast Operating Expenses on Combined Historical
Basis.
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and gain on disposal of assets)
increased $12.8 million, or 3%, to
$419.5 million for the nine-months
ended September 30, 2017 compared to
the nine-months ended September 30,
2016. The increase reflects, in part, the following:
- Retransmission expense increased $21.0
million, or 26%, to $103.2
million for the nine-months ended September 30, 2017 compared to the nine-months
ended September 30, 2016, consistent
with increases in retransmission consent revenue.
- Syndicated programming and licensing expenses decreased
$1.8 million, or 10%, in the
nine-months ended September 30, 2017
compared to the nine-months ended September
30, 2016.
- Professional fees increased $2.8
million, or 46%, in the nine-months ended September 30, 2017 compared to the nine-months
ended September 30, 2016.
- Compensation expense decreased by approximately $4.3 million, or 2%, for the nine-months ended
September 30, 2017 compared to the
nine-months ended September 30,
2016.
Corporate and Administrative Operating Expenses on
As-Reported Basis.
Corporate and administrative expenses (before depreciation,
amortization and loss (gain) on disposal of assets) decreased
$7.0 million, or 22%, to $24.4 million in the nine-months ended
September 30, 2017 compared to the
nine-months ended September 30, 2016.
The net decrease reflects, in part, the following:
- Non-compensation expenses decreased $6.3
million in the nine-months ended September 30, 2017 primarily due to decreases of
$7.7 million of professional fees
related to acquisition activities, partially offset by increases of
$1.0 million in promotional
expenses.
- Non-cash share based compensation expenses were $3.2 million in the nine-months ended
September 30, 2017 compared to
$2.9 million in the nine-months ended
September 30, 2016.
Loss from Early Extinguishment of Debt.
In the nine-months ended September 30,
2017, we recorded a loss from early extinguishment of debt
of approximately $2.9 million, or
$1.7 million after tax, related to
the amendment and restatement of our senior credit facility. In the
nine-months ended September 30, 2016,
we recorded a loss from early extinguishment of debt of
approximately $32.0 million, or
$19.5 million after tax, related to
the tender offer and redemption of our 7½% senior notes due
2020.
Gain on Disposal of Assets.
We reported gains on disposals of assets of $75.1 million and $0.1
million in the nine-months ended September 30, 2017 and 2016 respectively. On
May 30, 2017, we tendered two of our
broadcast licenses and made other modifications to our broadcast
spectrum related to our participation in the FCC's reverse auction
for broadcast spectrum. Our proceeds from this auction, which were
received on August 7, 2017, were
$90.8 million while the combined cost
of the disposed assets was $13.1
million.
Taxes.
During the nine-months ended September
30, 2017, the Company made aggregate federal and state tax
payments totaling $1.2 million
compared to $14.6 million in the
nine-months ended September 30,
2016.
Detailed table of operating results
Gray Television,
Inc.
|
Selected Operating
Data (Unaudited)
|
(in thousands except
for net income per share data)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 218,977
|
|
$ 204,490
|
|
$ 649,119
|
|
$ 574,846
|
Operating expenses
before depreciation, amortization
|
|
|
|
|
|
|
|
and loss on disposal
of assets, net:
|
|
|
|
|
|
|
|
Broadcast
|
139,430
|
|
120,717
|
|
406,446
|
|
346,620
|
Corporate and
administrative
|
8,318
|
|
7,223
|
|
24,436
|
|
31,425
|
Depreciation
|
13,085
|
|
11,494
|
|
38,555
|
|
34,237
|
Amortization of
intangible assets
|
6,460
|
|
4,235
|
|
18,684
|
|
12,365
|
Loss (gain) on
disposal of assets, net
|
1,660
|
|
354
|
|
(75,139)
|
|
(66)
|
Operating
expenses
|
168,953
|
|
144,023
|
|
412,982
|
|
424,581
|
Operating
income
|
50,024
|
|
60,467
|
|
236,137
|
|
150,265
|
Other income
(expense):
|
|
|
|
|
|
|
|
Miscellaneous income,
net
|
28
|
|
30
|
|
36
|
|
740
|
Interest
expense
|
(24,207)
|
|
(27,926)
|
|
(71,189)
|
|
(73,470)
|
Loss from early
extinguishment of debt
|
-
|
|
(31,987)
|
|
(2,851)
|
|
(31,987)
|
Income before income
tax
|
25,845
|
|
584
|
|
162,133
|
|
45,548
|
Income tax
expense
|
10,529
|
|
797
|
|
65,751
|
|
19,109
|
Net (loss)
income
|
$
15,316
|
|
$
(213)
|
|
$
96,382
|
|
$
26,439
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
0.21
|
|
$
-
|
|
$
1.34
|
|
$
0.37
|
Weighted-average
shares outstanding
|
71,636
|
|
71,879
|
|
71,777
|
|
71,850
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
0.21
|
|
$
-
|
|
$
1.33
|
|
$
0.36
|
Weighted-average
shares outstanding
|
72,454
|
|
71,879
|
|
72,491
|
|
72,723
|
|
|
|
|
|
|
|
|
Political advertising
revenue (less agency commissions)
|
$
4,005
|
|
$
22,272
|
|
$
9,034
|
|
$
41,576
|
|
|
|
|
|
|
|
|
Revenue from
broadcast of Olympic games (less
|
|
|
|
|
|
|
|
agency
commissions)
|
$
-
|
|
$
8,192
|
|
$
-
|
|
$
8,192
|
Other Financial Data
|
September 30,
2017
|
|
December 31,
2016
|
|
(in
thousands)
|
|
|
|
|
Cash
|
$
172,854
|
|
$
325,189
|
Long-term debt
including current portion
|
$
1,838,027
|
|
$
1,756,747
|
Borrowing
availability under our senior credit facility
|
$
100,000
|
|
$
60,000
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
thousands)
|
|
|
|
|
Net cash provided by
operating activities
|
$
114,346
|
|
$
103,419
|
Net cash used in
investing activities
|
(336,334)
|
|
(469,504)
|
Net cash provided by
financing activities
|
69,653
|
|
499,165
|
Net increase in
cash
|
$
(152,335)
|
|
$
133,080
|
Guidance for the Three-Months Ending December 31,
2017
Based on our current forecasts for the fourth quarter of 2017,
we anticipate changes from the three-months ended December 31, 2016 as outlined below. Our
estimates for the fourth quarter of 2017 include approximately
$63.1 million of revenues and
$38.8 million of broadcast operating
expenses estimated to be contributed by the 2017 Acquired Stations
and 2016 Acquired Stations. Our as-reported results for the fourth
quarter of 2016 included approximately $42.5
million of revenues and approximately $22.0 million of broadcast operating expenses
contributed by the 2016 Acquired Stations:
|
|
Low
End
|
|
%
Change
|
|
High
End
|
|
%
Change
|
|
|
|
|
Guidance
for
|
|
From
|
|
Guidance
for
|
|
From
|
|
Actual
|
|
|
the
Fourth
|
|
Actual
Fourth
|
|
the
Fourth
|
|
Actual
Fourth
|
|
Fourth
|
|
|
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)
|
|
$
230,000
|
|
(3)%
|
|
$
233,000
|
|
(2)%
|
|
$ 237,619
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization and
|
|
|
|
|
|
|
|
|
|
gain on disposals of
assets):
|
|
|
|
|
|
|
|
|
|
|
Broadcast
|
|
$
150,000
|
|
17 %
|
|
$
153,000
|
|
19 %
|
|
$ 128,511
|
Corporate and
administrative
|
|
$
8,500
|
|
(5)%
|
|
$
9,000
|
|
1 %
|
|
$
8,922
|
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED
DATA:
|
|
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
|
|
|
(less agency
commissions)
|
|
$
5,000
|
|
(90)%
|
|
$
5,500
|
|
(89)%
|
|
$
48,519
|
Comments on Fourth Quarter of 2017 Guidance on As-Reported
Basis
Revenue on As-Reported Basis.
Based on our current forecasts for the fourth quarter of 2017,
we anticipate the following changes from the fourth quarter of
2016:
- We believe our fourth quarter of 2017 local advertising revenue
(including internet/digital/mobile) will increase by 12% to
14%.
- We expect our fourth quarter of 2017 national advertising
revenue will increase by 25% to 30%.
- We believe our fourth quarter of 2017 political advertising
revenue will decrease to within a range of approximately
$5.0 million to $5.5 million, due to
2017 being an off-year of the political advertising revenue
cycle.
- We believe our fourth quarter of 2017 retransmission consent
revenue will be approximately $70.0
million.
Broadcast Operating Expenses (before depreciation,
amortization and loss (gain) on disposal of assets) on As-Reported
Basis.
For the fourth quarter of 2017, we anticipate our broadcast
operating expenses will increase from the fourth quarter of 2016,
reflecting the additional broadcast operating expenses of the 2017
Acquired Stations and the 2016 Acquired Stations. We anticipate
that our broadcast operating expenses will also reflect an increase
in retransmission expense of approximately $10.0 million to approximately $36.0 million and an increase in non-cash stock
based compensation of approximately $2.6
million reflecting certain non-cash stock based compensation
awards made in October 2017 to
certain non-executive employees. Our fourth quarter 2017 operating
expenses will also include approximately $4.1 million of expense for discretionary company
contributions to our 401(k) plan.
Corporate and Administrative Operating Expenses (before
depreciation, amortization and loss (gain) on disposal of assets)
on As-Reported Basis.
For the fourth quarter of 2017, we anticipate our corporate and
administrative operating expense will decrease to within a range of
approximately $8.5 million to $9.0
million, primarily attributable to decreases in professional
services fees related to acquisitions.
Comments on Fourth Quarter of 2017 Guidance on Combined
Historical Basis
Based on our current forecasts for the fourth quarter of 2017,
we anticipate the following changes from the Combined Historical
Basis for the fourth quarter of 2016. For the purposes hereof, our
Combined Historical Basis for the fourth quarter of 2016 has been
adjusted to give effect to the 2017 Acquisitions and the 2016
Acquisitions as if they had been acquired in the first day of the
earliest period presented.
Revenue on Combined Historical Basis.
- We believe our fourth quarter of 2017 total revenue will
decrease in a mid-double digit percentage range, due primarily to
2017 being an off-year of the political advertising revenue
cycle.
- We believe our fourth quarter of 2017 local advertising revenue
will be consistent with, or increase in the low single digit
percentage range, when compared to the fourth quarter of 2016.
- We believe our fourth quarter of 2017 national advertising
revenue will increase in the mid to upper single digit percentage
range, when compared to the fourth quarter of 2016.
- We believe that our fourth quarter of 2017 combined local and
national advertising revenue will increase in the low single digit
percentage range, when compared to the fourth quarter of 2016.
- We believe our fourth quarter of 2017 political advertising
revenue will be within a range of approximately $5.0 million to $5.5 million, decreasing by
approximately $58.0 million to $59.0
million, due to 2017 being an off-year of the political
advertising revenue cycle.
- We believe our fourth quarter of 2017 retransmission consent
revenue will increase by approximately $12.0
million to approximately $70.0
million.
Broadcast Operating Expenses (before depreciation,
amortization and loss (gain) on disposal of assets) on Combined
Historical Basis.
Our total broadcast operating expenses for the fourth quarter of
2017 are anticipated to increase from the fourth quarter of 2016 on
a Combined Historical Basis by approximately 2% to 5%, or
$4.0 million to $7.0 million. This
increase reflects an expected increase of $6.0 million in retransmission expense to
approximately $36.0 million and an
increase in non-cash stock based compensation of approximately
$2.6 million reflecting certain
non-cash stock based compensation awards made in October 2017 to certain non-executive employees.
Our fourth quarter 2017 operating expenses will also include
approximately $4.1 million of expense
for discretionary company contributions to our 401(k) plan.
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 the Senior
Credit Agreement, Free Cash Flow and Total Leverage Ratio, Net of
All Cash. These non-GAAP amounts are used by us to approximate 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 defined in the Senior Credit
Agreement 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 the total
outstanding principal of our long-term debt and certain other
obligations as defined in the Senior Credit Agreement less all cash
divided by our average Operating Cash Flow as defined in the Senior
Credit Agreement for the preceding eight quarters. This average is
calculated by dividing the sum of our Operating Cash Flow as
defined in the Senior Credit Agreement for the preceding eight
quarters by two.
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 – Quarter
|
|
|
Three Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
2015
|
Net income
(loss)
|
$
15,316
|
|
$
(213)
|
|
$
6,609
|
Adjustments to
reconcile from net income (loss) to
|
|
|
|
|
|
Broadcast Cash
Flow Less Cash Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
13,085
|
|
11,494
|
|
9,354
|
Amortization of
intangible assets
|
6,460
|
|
4,235
|
|
3,213
|
Non-cash stock based
compensation
|
1,531
|
|
1,271
|
|
1,009
|
Loss on disposal of
assets, net
|
1,660
|
|
354
|
|
248
|
Miscellaneous income,
net
|
(28)
|
|
(30)
|
|
(28)
|
Interest
expense
|
24,207
|
|
27,926
|
|
18,645
|
Loss from early
extinguishment of debt
|
-
|
|
31,987
|
|
-
|
Income tax
expense
|
10,529
|
|
797
|
|
4,118
|
Amortization of
program broadcast rights
|
5,209
|
|
4,817
|
|
3,677
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
1
|
|
7
|
|
6
|
Payments for program
broadcast rights
|
(5,176)
|
|
(4,729)
|
|
(3,417)
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
7,142
|
|
6,254
|
|
9,233
|
Broadcast Cash
Flow
|
79,936
|
|
84,170
|
|
52,667
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(7,142)
|
|
(6,254)
|
|
(9,233)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
72,794
|
|
77,916
|
|
43,434
|
Pension (income)
expense
|
(124)
|
|
40
|
|
-
|
Contributions to
pension plans
|
-
|
|
(1,405)
|
|
(2,483)
|
Interest
expense
|
(24,207)
|
|
(27,926)
|
|
(18,645)
|
Amortization of
deferred financing costs
|
1,157
|
|
1,397
|
|
799
|
Amortization of
original issue premium
|
|
|
|
|
|
on senior
notes
|
(153)
|
|
(194)
|
|
(215)
|
Purchase of property
and equipment
|
(11,011)
|
|
(19,763)
|
|
(6,854)
|
Income taxes paid,
net of refunds
|
(311)
|
|
(570)
|
|
(427)
|
Free Cash
Flow
|
$
38,145
|
|
$
29,495
|
|
$
15,609
|
Reconciliation on
As-Reported Basis, in thousands – Year to Date
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
2015
|
Net income
|
$
96,382
|
|
$
26,439
|
|
$
24,314
|
Adjustments to
reconcile from net income to
|
|
|
|
|
|
Broadcast Cash
Flow Less Cash Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
38,555
|
|
34,237
|
|
26,906
|
Amortization of
intangible assets
|
18,684
|
|
12,365
|
|
8,715
|
Non-cash stock based
compensation
|
4,303
|
|
3,827
|
|
3,011
|
(Gain) loss on
disposal of assets, net
|
(75,139)
|
|
(66)
|
|
562
|
Miscellaneous income,
net
|
(36)
|
|
(739)
|
|
(102)
|
Interest
expense
|
71,189
|
|
73,470
|
|
55,762
|
Loss from early
extinguishment of debt
|
2,851
|
|
31,987
|
|
-
|
Income tax
expense
|
65,751
|
|
19,109
|
|
16,186
|
Amortization of
program broadcast rights
|
15,444
|
|
14,026
|
|
10,837
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
16
|
|
21
|
|
19
|
Payments for program
broadcast rights
|
(15,569)
|
|
(13,859)
|
|
(10,558)
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
21,208
|
|
28,515
|
|
20,983
|
Broadcast Cash
Flow
|
243,639
|
|
229,332
|
|
156,635
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(21,208)
|
|
(28,515)
|
|
(20,983)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
222,431
|
|
200,817
|
|
135,652
|
Pension (income)
expense
|
(371)
|
|
120
|
|
4,190
|
Contributions to
pension plans
|
(624)
|
|
(3,038)
|
|
(3,916)
|
Interest
expense
|
(71,189)
|
|
(73,470)
|
|
(55,762)
|
Amortization of
deferred financing costs
|
3,466
|
|
3,664
|
|
2,396
|
Amortization of
original issue premium
|
|
|
|
|
|
on senior
notes
|
(458)
|
|
(626)
|
|
(647)
|
Purchase of property
and equipment
|
(21,426)
|
|
(33,238)
|
|
(15,250)
|
Income taxes paid,
net of refunds
|
(1,207)
|
|
(14,589)
|
|
(1,675)
|
Free Cash
Flow
|
$
130,622
|
|
$
79,640
|
|
$
64,988
|
Reconciliation on
Combined Historical Basis, in thousands – Quarter
|
|
|
Three Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
2015
|
|
|
Net income
|
$
15,316
|
|
$
13,951
|
|
$
12,317
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
13,085
|
|
12,821
|
|
12,975
|
Amortization of
intangible assets
|
6,460
|
|
4,344
|
|
4,979
|
Non-cash stock-based
compensation
|
1,531
|
|
1,271
|
|
1,009
|
Loss on disposal of
assets, net
|
1,660
|
|
395
|
|
532
|
Miscellaneous income,
net
|
(28)
|
|
(36)
|
|
1,443
|
Interest
expense
|
24,207
|
|
25,589
|
|
24,161
|
Loss from early
extinguishment of debt
|
-
|
|
31,987
|
|
-
|
Income tax
expense
|
10,529
|
|
1,712
|
|
3,279
|
Amortization of
program broadcast rights
|
5,209
|
|
5,253
|
|
5,304
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
1
|
|
7
|
|
6
|
Payments for program
broadcast rights
|
(5,176)
|
|
(5,165)
|
|
(5,044)
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
7,142
|
|
6,251
|
|
9,233
|
Other
|
(118)
|
|
(665)
|
|
6,355
|
Broadcast Cash
Flow
|
79,818
|
|
97,715
|
|
76,549
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(7,142)
|
|
(6,251)
|
|
(9,233)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
72,676
|
|
91,464
|
|
67,316
|
Pension (income)
expense
|
(124)
|
|
40
|
|
-
|
Contributions to
pension plans
|
-
|
|
(1,405)
|
|
(2,483)
|
Other
|
(64)
|
|
488
|
|
4,467
|
Operating Cash
Flow as defined in the Senior Credit Agreement
|
72,488
|
|
90,587
|
|
69,300
|
Interest
expense
|
(24,207)
|
|
(25,589)
|
|
(24,161)
|
Amortization of
deferred financing costs
|
1,157
|
|
1,397
|
|
799
|
Amortization of net
original issue premium
|
|
|
|
|
|
on senior
notes
|
(153)
|
|
(194)
|
|
(215)
|
Purchase of property
and equipment
|
(11,011)
|
|
(19,763)
|
|
(7,750)
|
Income taxes paid,
net of refunds
|
(311)
|
|
(570)
|
|
(1,250)
|
Free Cash
Flow
|
$
37,963
|
|
$
45,868
|
|
$
36,723
|
Reconciliation on
Combined Historical Basis, in thousands – Year to
Date
|
|
|
Nine Months
Ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
2015
|
|
|
Net income
|
$
94,563
|
|
$
52,083
|
|
$
43,914
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
|
|
|
Depreciation
|
39,292
|
|
39,036
|
|
38,704
|
Amortization of
intangible assets
|
18,710
|
|
13,563
|
|
14,111
|
Non-cash stock-based
compensation
|
4,303
|
|
3,827
|
|
3,011
|
Loss on disposal of
assets, net
|
(75,189)
|
|
179
|
|
1,058
|
Miscellaneous
(income) expense, net
|
(45)
|
|
196
|
|
4,364
|
Interest
expense
|
71,929
|
|
76,766
|
|
72,310
|
Loss from early
extinguishment of debt
|
2,851
|
|
31,987
|
|
-
|
Income tax
expense
|
65,465
|
|
18,584
|
|
13,647
|
Amortization of
program broadcast rights
|
15,707
|
|
15,998
|
|
15,924
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
16
|
|
21
|
|
19
|
Payments for program
broadcast rights
|
(15,832)
|
|
(15,831)
|
|
(15,645)
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
21,208
|
|
28,515
|
|
20,983
|
Other
|
3,065
|
|
5,985
|
|
22,062
|
Broadcast Cash
Flow
|
246,043
|
|
270,909
|
|
234,462
|
Corporate and
administrative expenses before
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(21,208)
|
|
(28,515)
|
|
(20,983)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
224,835
|
|
242,394
|
|
213,479
|
Pension (income)
expense
|
(371)
|
|
120
|
|
4,190
|
Contributions to
pension plans
|
(624)
|
|
(3,038)
|
|
(3,916)
|
Other
|
1,033
|
|
7,733
|
|
4,467
|
Operating Cash
Flow as defined in the Senior Credit Agreement
|
224,873
|
|
247,209
|
|
218,220
|
Interest
expense
|
(71,929)
|
|
(76,766)
|
|
(72,310)
|
Amortization of
deferred financing costs
|
3,466
|
|
3,664
|
|
2,396
|
Amortization of net
original issue premium
|
|
|
|
|
|
on senior
notes
|
(458)
|
|
(626)
|
|
(647)
|
Purchase of property
and equipment
|
(21,426)
|
|
(33,238)
|
|
(20,250)
|
Income taxes paid,
net of refunds
|
(1,207)
|
|
(14,589)
|
|
(3,750)
|
Free Cash
Flow
|
$
133,319
|
|
$
125,654
|
|
$
123,659
|
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
Senior Credit Agreement:
|
|
September 30,
2017
|
Net income
|
|
$
221,374
|
Adjustments to
reconcile from net income to Broadcast Cash
|
|
|
Flow Less Cash
Corporate Expenses:
|
|
|
Depreciation
|
|
104,473
|
Amortization of
intangible assets
|
|
41,764
|
Non-cash stock-based
compensation
|
|
10,413
|
(Gain) loss on
disposals of assets, net
|
|
(73,916)
|
Miscellaneous income,
net
|
|
1,439
|
Interest
expense
|
|
198,570
|
Loss from early
extinguishment of debt
|
|
34,838
|
Income tax
expense
|
|
116,434
|
Amortization of
program broadcast rights
|
|
42,931
|
Common stock
contributed to 401(k) plan
|
|
|
excluding corporate
401(k) contributions
|
|
52
|
Payments for program
broadcast rights
|
|
(42,736)
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
of intangible assets
and non-cash stock-based compensation
|
|
67,917
|
Other
|
|
14,868
|
Broadcast Cash
Flow
|
|
738,421
|
Corporate and
administrative expenses before depreciation,
amortization
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
non-cash stock-based
compensation
|
|
(67,917)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
|
670,504
|
Pension
expense
|
|
(189)
|
Contributions to
pension plans
|
|
(5,177)
|
Other
|
|
11,496
|
Operating Cash
Flow as defined in the Senior Credit Agreement
|
|
$
676,634
|
Operating Cash
Flow as defined in the Senior Credit Agreement,
|
|
|
divided by
two
|
|
$
338,317
|
|
|
|
|
|
September 30,
2017
|
Adjusted Total
Indebtedness:
|
|
|
Long term debt,
including current portion
|
|
$
1,838,027
|
Capital leases and
other debt
|
|
607
|
Total deferred
financing costs, net
|
|
29,151
|
Premium on
subordinated debt, net
|
|
(5,339)
|
Cash
|
|
(172,854)
|
Adjusted Total
Indebtedness, Net of All Cash
|
|
$
1,689,592
|
Total Leverage
Ratio, Net of All Cash
|
|
4.99
|
The Company
We are a television broadcast company headquartered in
Atlanta, Georgia, that owns and
operates over 100 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 57 television markets that broadcast
more than 200 separate program streams, including over 100 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 10.4 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 fourth quarter of 2017 or other periods, the impact of
recently completed transactions, 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 November 6, 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 third quarter
operating results on November 6,
2017. The call will begin at 11:00 AM
Eastern Time. The live dial-in number is 1 (888) 259-8544
and the confirmation code is 2354575. 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: 2354575 until December 6,
2017.
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SOURCE Gray Television