Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE:
GTN) today announced financial results for the second
quarter ended June 30, 2020. The impact of the novel coronavirus
and its disease (collectively, “COVID-19”) on economic activity
significantly impacted our revenues and results for the second
quarter and first half of 2020. Nevertheless, despite these
macroeconomic challenges, over the first half of this year, we
increased our cash on hand by $167 million and repurchased $49
million of our common stock. Key financial results are as follows:
- Our revenue for the second quarter of 2020 was $451 million, a
decrease of $57 million, or 11%, from the second quarter of 2019.
The primary components of revenue were: combined local and national
broadcast advertising revenue of $198 million, political
advertising revenue of $21 million, and retransmission revenue of
$220 million.
- Net loss attributable to common stockholders for the second
quarter of 2020 was $2 million, or ($0.02) per share.
- Broadcast Cash Flow was $123 million for the second quarter of
2020, decreasing $62 million, or 34%, from the second quarter of
2019. Our Adjusted EBITDA for the second quarter of 2020 was $108
million, decreasing $60 million, or 36%, from the second quarter of
2019.
- As anticipated, Covid-19 had an adverse impact upon our
business in the second quarter of 2020, although the impact was
noticeably less severe than we had anticipated at the time of our
prior earnings release. In particular, while our total revenue
declined by 11%, our combined local and national broadcast revenue,
excluding political revenue (“Total Core Revenue”), for the second
quarter 2020 only decreased by approximately 30% compared to the
second quarter of 2019. In addition, the year-over-year declines in
Total Core Revenue improved sequentially through the second quarter
of 2020 as follows: April declined 38%, May declined 34% and June
declined by only 17%. Our total revenue performed better in the
second quarter than our Total Core Revenue on a year-over-year
basis, because of continuing growth of retransmission consent
revenue and political advertising revenue in the current “on-year”
of the two-year political advertising cycle.
- As of June 30, 2020, our total leverage ratio, as defined in
our senior credit facility, was 4.40 times on a trailing
eight-quarter basis, netting our total cash balance of $379 million
and giving effect to all Transaction Related Expenses (as defined
below). We have not drawn any funding from our $200 million
revolving credit facility, and, as a result, we are not subject to
any maintenance covenants in our credit facilities at this
time.
- During the second quarter of 2020, we repurchased approximately
3.3 million shares of our common stock at an average price of
$13.02 per share, including commissions, for a total cost of
approximately $43.4 million. During the first half of 2020, we
repurchased approximately 3.8 million shares of our common stock on
the open market at an average price of $12.81 per share, including
commissions, for a total cost of approximately $49.2 million. We
have not repurchased any shares since the close of the second
quarter. Currently we have approximately 89,740,619 common shares
and 7,048,006 Class A common shares outstanding, and we currently
have approximately $80 million remaining under our stock repurchase
authorization adopted in November 2019.
Government and private measures adopted to limit the spread of
COVID-19 have affected, and are continuing to affect, our
businesses in a number of ways. Although there has recently been a
gradual decline in certain government and private measures adopted
to limit the spread of COVID-19, we have generally experienced a
reduction in demand for advertising across our television stations
and digital platforms, a very significant reduction in demand in
the market for the video production of sporting and other events by
our production companies, and reductions in the supply of
programming, especially sports content, provided by television
networks. The extent to which some of the effects of the COVID-19
crisis continues to impact our business depends on numerous
evolving factors; we believe, however, that some of our programming
and production activities are beginning to rebound. Despite the
adverse developments, we have experienced significant increases in
viewership of our local newscasts and related digital assets. We
did not access any stimulus or relief grants or loans from any
governmental unit during the first half of 2020.
The net impact of these factors has had an adverse effect on our
financial and operational results during the past four months. The
ultimate duration and impact of these disruptions cannot be
predicted at this time. In light of this uncertainty, the Company
cannot provide guidance for the three-month period ending on
September 30, 2020, or calendar year 2020. Notwithstanding the
foregoing, however, we continue to anticipate that in calendar year
2020, our political advertising revenue will be between $250
million to $275 million and the Company will remain free cash flow
positive.
Selected Operating Data (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
As-Reported
Basis |
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
|
2020
to |
|
|
|
2020
to |
|
|
2020 |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
|
|
|
|
(dollars in
millions) |
|
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
|
Broadcast |
$ |
449 |
|
$ |
499 |
|
|
(10 |
)% |
|
$ |
250 |
|
80 |
% |
|
Production companies |
|
2 |
|
|
9 |
|
|
|
|
|
- |
|
|
|
Total revenue |
$ |
451 |
|
$ |
508 |
|
|
(11 |
)% |
|
$ |
250 |
|
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Political |
$ |
21 |
|
$ |
5 |
|
|
320 |
% |
|
$ |
18 |
|
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
|
Broadcast |
$ |
324 |
|
$ |
314 |
|
|
3 |
% |
|
$ |
142 |
|
128 |
% |
|
Production companies |
$ |
5 |
|
$ |
9 |
|
|
|
|
$ |
- |
|
|
|
Corporate and administrative |
$ |
17 |
|
$ |
21 |
|
|
(19 |
)% |
|
$ |
11 |
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
11 |
|
$ |
44 |
|
|
(75 |
)% |
|
$ |
41 |
|
(73 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
cash flow (2): |
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
123 |
|
$ |
185 |
|
|
(34 |
)% |
|
$ |
108 |
|
14 |
% |
|
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
108 |
|
$ |
166 |
|
|
(35 |
)% |
|
$ |
98 |
|
10 |
% |
|
Free Cash Flow |
$ |
35 |
|
$ |
69 |
|
|
(49 |
)% |
|
$ |
59 |
|
(41 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
As-Reported
Basis |
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
%
Change |
|
|
|
%
Change |
|
|
|
|
|
|
2020
to |
|
|
|
2020
to |
|
|
2020 |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
|
(dollars in
millions) |
|
Revenue
(less agency commissions): |
|
|
|
|
|
|
|
|
|
|
Broadcast |
$ |
964 |
|
$ |
980 |
|
|
(2 |
)% |
|
$ |
477 |
|
102 |
% |
|
Production companies |
|
21 |
|
|
46 |
|
|
|
|
|
- |
|
|
|
Total revenue |
$ |
985 |
|
$ |
1,026 |
|
|
(4 |
)% |
|
$ |
477 |
|
106 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Political |
$ |
57 |
|
$ |
8 |
|
|
613 |
% |
|
$ |
24 |
|
138 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses (1): |
|
|
|
|
|
|
|
|
|
|
Broadcast |
$ |
659 |
|
$ |
670 |
|
|
(2 |
)% |
|
$ |
292 |
|
126 |
% |
|
Production companies |
$ |
24 |
|
$ |
44 |
|
|
|
|
$ |
- |
|
|
|
Corporate and administrative |
$ |
32 |
|
$ |
69 |
|
|
(54 |
)% |
|
$ |
19 |
|
68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
64 |
|
$ |
26 |
|
|
146 |
% |
|
$ |
61 |
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
cash flow (2): |
|
|
|
|
|
|
|
|
|
|
Broadcast Cash Flow |
$ |
304 |
|
$ |
308 |
|
|
(1 |
)% |
|
$ |
186 |
|
63 |
% |
|
Broadcast Cash Flow Less |
|
|
|
|
|
|
|
|
|
|
Cash Corporate Expenses |
$ |
276 |
|
$ |
244 |
|
|
13 |
% |
|
$ |
169 |
|
63 |
% |
|
Free Cash Flow |
$ |
120 |
|
$ |
73 |
|
|
64 |
% |
|
$ |
92 |
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes depreciation, amortization and (gain) loss on
disposal of assets.(2) See definition of non-GAAP terms and a
reconciliation of the non-GAAP amounts to net income included
elsewhere herein.
Results of Operations for the Second Quarter of
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
Amount |
|
Percent |
|
|
|
|
Percent |
|
|
|
Percent |
|
Increase |
|
Increase |
|
|
Amount |
|
of Total |
|
Amount |
|
of Total |
|
(Decrease) |
|
(Decrease) |
|
|
|
|
|
(dollars in
millions) |
Revenue (less agency commissions): |
|
|
|
|
|
|
|
|
|
|
|
|
Local (including internet/digital/mobile) |
|
$ |
162 |
|
35.9 |
% |
|
$ |
226 |
|
44.5 |
% |
|
$ |
(64 |
) |
|
(28 |
)% |
National |
|
|
36 |
|
8.0 |
% |
|
|
56 |
|
11.0 |
% |
|
|
(20 |
) |
|
(36 |
)% |
Political |
|
|
21 |
|
4.7 |
% |
|
|
5 |
|
1.0 |
% |
|
|
16 |
|
|
320 |
% |
Retransmission consent |
|
|
220 |
|
48.8 |
% |
|
|
201 |
|
39.6 |
% |
|
|
19 |
|
|
9 |
% |
Production companies |
|
|
2 |
|
0.4 |
% |
|
|
9 |
|
1.8 |
% |
|
|
(7 |
) |
|
(78 |
)% |
Other |
|
|
10 |
|
2.2 |
% |
|
|
11 |
|
2.1 |
% |
|
|
(1 |
) |
|
(9 |
)% |
Total |
|
$ |
451 |
|
100.0 |
% |
|
$ |
508 |
|
100.0 |
% |
|
$ |
(57 |
) |
|
(11 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total local
and national revenue |
|
|
|
|
|
|
|
|
|
|
|
|
combined ("Total Core Revenue") |
|
$ |
198 |
|
43.9 |
% |
|
$ |
282 |
|
55.5 |
% |
|
$ |
(84 |
) |
|
(30 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (before |
|
|
|
|
|
|
|
|
|
|
|
depreciation, amortization and |
|
|
|
|
|
|
|
|
|
|
|
(gain) loss on disposal of assets): |
|
|
|
|
|
|
|
|
|
|
|
Broadcast: |
|
|
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
199 |
|
61.4 |
% |
|
$ |
208 |
|
66.3 |
% |
|
$ |
(9 |
) |
|
(4 |
)% |
Retransmission expense |
|
124 |
|
38.3 |
% |
|
|
104 |
|
33.1 |
% |
|
|
20 |
|
|
19 |
% |
Transaction Related Expenses |
|
- |
|
0.0 |
% |
|
|
1 |
|
0.3 |
% |
|
|
(1 |
) |
|
|
Non-cash stock-based compensation |
|
1 |
|
0.3 |
% |
|
|
1 |
|
0.3 |
% |
|
|
- |
|
|
|
Total broadcast expense |
$ |
324 |
|
100.0 |
% |
|
$ |
314 |
|
100.0 |
% |
|
$ |
10 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Production companies expense |
$ |
5 |
|
|
|
$ |
9 |
|
|
|
$ |
(4 |
) |
|
(44 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and administrative: |
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
15 |
|
88.2 |
% |
|
$ |
18 |
|
85.7 |
% |
|
$ |
(3 |
) |
|
(17 |
)% |
Transaction Related Expenses |
|
- |
|
0.0 |
% |
|
|
1 |
|
4.8 |
% |
|
|
(1 |
) |
|
|
Non-cash stock-based compensation |
|
2 |
|
11.8 |
% |
|
|
2 |
|
9.5 |
% |
|
|
- |
|
|
0 |
% |
Total corporate and |
|
|
|
|
|
|
|
|
|
|
|
administrative expense |
$ |
17 |
|
100.0 |
% |
|
$ |
21 |
|
100.0 |
% |
|
$ |
(4 |
) |
|
(19 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Results of Operations for the Six-Month Period
Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
Amount |
|
Percent |
|
|
|
|
Percent |
|
|
|
Percent |
|
Increase |
|
Increase |
|
|
Amount |
|
of Total |
|
Amount |
|
of Total |
|
(Decrease) |
|
(Decrease) |
|
|
(dollars in
millions) |
Revenue (less agency commissions): |
|
|
|
|
|
|
|
|
|
|
|
|
Local (including internet/digital/mobile) |
|
$ |
361 |
|
36.6 |
% |
|
$ |
437 |
|
42.6 |
% |
|
$ |
(76 |
) |
|
(17 |
)% |
National |
|
|
87 |
|
8.8 |
% |
|
|
106 |
|
10.3 |
% |
|
|
(19 |
) |
|
(18 |
)% |
Political |
|
|
57 |
|
5.8 |
% |
|
|
8 |
|
0.8 |
% |
|
|
49 |
|
|
613 |
% |
Retransmission consent |
|
|
433 |
|
44.0 |
% |
|
|
405 |
|
39.5 |
% |
|
|
28 |
|
|
7 |
% |
Production companies |
|
|
21 |
|
2.1 |
% |
|
|
46 |
|
4.5 |
% |
|
|
(25 |
) |
|
(54 |
)% |
Other |
|
|
26 |
|
2.7 |
% |
|
|
24 |
|
2.3 |
% |
|
|
2 |
|
|
8 |
% |
Total |
|
$ |
985 |
|
100.0 |
% |
|
$ |
1,026 |
|
100.0 |
% |
|
$ |
(41 |
) |
|
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total local
and national revenue |
|
|
|
|
|
|
|
|
|
|
|
|
combined ("Total Core Revenue") |
|
$ |
448 |
|
45.5 |
% |
|
$ |
543 |
|
52.9 |
% |
|
$ |
(95 |
) |
|
(17 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (before |
|
|
|
|
|
|
|
|
|
|
|
depreciation, amortization and |
|
|
|
|
|
|
|
|
|
|
|
(gain) loss on disposal of assets): |
|
|
|
|
|
|
|
|
|
|
|
Broadcast: |
|
|
|
|
|
|
|
|
|
|
|
Station expenses |
$ |
410 |
|
62.2 |
% |
|
$ |
424 |
|
63.3 |
% |
|
$ |
(14 |
) |
|
(3 |
)% |
Retransmission expense |
|
246 |
|
37.3 |
% |
|
|
208 |
|
31.0 |
% |
|
|
38 |
|
|
18 |
% |
Transaction Related Expenses |
|
- |
|
0.0 |
% |
|
|
37 |
|
5.5 |
% |
|
|
(37 |
) |
|
|
Non-cash stock-based compensation |
|
3 |
|
0.5 |
% |
|
|
1 |
|
0.2 |
% |
|
|
2 |
|
|
|
Total broadcast expense |
$ |
659 |
|
100.0 |
% |
|
$ |
670 |
|
100.0 |
% |
|
$ |
(11 |
) |
|
(2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Production companies expense |
$ |
24 |
|
|
|
$ |
44 |
|
|
|
$ |
(20 |
) |
|
(45 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and administrative: |
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses |
$ |
28 |
|
87.5 |
% |
|
$ |
31 |
|
44.9 |
% |
|
$ |
(3 |
) |
|
(10 |
)% |
Transaction Related Expenses |
|
- |
|
0.0 |
% |
|
|
33 |
|
47.8 |
% |
|
|
(33 |
) |
|
|
Non-cash stock-based compensation |
|
4 |
|
12.5 |
% |
|
|
5 |
|
7.3 |
% |
|
|
(1 |
) |
|
(20 |
)% |
Total corporate and |
|
|
|
|
|
|
|
|
|
|
|
administrative expense |
$ |
32 |
|
100.0 |
% |
|
$ |
69 |
|
100.0 |
% |
|
$ |
(37 |
) |
|
(54 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Related Expenses
From time to time, we have incurred incremental expenses
(“Transaction Related Expenses”) that were specific to
acquisitions, divestitures and financing activities, including but
not limited to legal and professional fees, severance and incentive
compensation and contract termination fees. In addition, we have
recorded certain non-cash stock-based compensation expenses. These
expenses are summarized as follows (in millions):
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Transaction
Related Expenses: |
|
|
|
|
|
|
|
Broadcast |
$ |
- |
|
|
$ |
1 |
|
|
$ |
- |
|
|
$ |
37 |
|
Corporate and administrative |
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
33 |
|
Total Transaction Related Expenses |
$ |
- |
|
|
$ |
2 |
|
|
|
$ |
- |
|
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
Total
non-cash stock-based compensation |
$ |
3 |
|
|
$ |
2 |
|
|
$ |
7 |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
During the 2020 and 2019 six-month periods, we made aggregate
federal and state income tax payments of approximately $1 million
and $8 million, respectively. During the remainder of 2020, we
anticipate making income tax payments (net of refunds) of
approximately $57 million. We have approximately $438 million of
federal operating loss carryforwards, which expire during the years
2023 through 2037. We expect to have federal taxable income in the
carryforward periods. We therefore believe that these federal
operating loss carryforwards will be fully utilized. Additionally,
we have an aggregate of approximately $677 million of various state
operating loss carryforwards, of which we expect that approximately
half will be utilized. On March 27, 2020, the Coronavirus Aid,
Relief, and Economic Security Act (the “CARES Act”) was enacted in
response to the COVID-19 pandemic. We are currently evaluating the
impact of the CARES Act, but we do not believe it will have a
material effect on our estimated effective tax rate.
Gray
Television, Inc. |
Selected
Operating Data (Unaudited) |
(in millions, except
for per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Revenue
(less agency commissions) |
|
|
|
|
|
|
|
Broadcasting |
$ |
449 |
|
|
$ |
499 |
|
|
$ |
964 |
|
|
$ |
980 |
|
Production companies |
|
2 |
|
|
|
9 |
|
|
|
21 |
|
|
|
46 |
|
Total revenue (less agency commissions) |
|
451 |
|
|
|
508 |
|
|
|
985 |
|
|
|
1,026 |
|
Operating
expenses before depreciation, amortization |
|
|
|
|
|
|
|
and gain on disposal of assets, net: |
|
|
|
|
|
|
|
Broadcast |
|
324 |
|
|
|
314 |
|
|
|
659 |
|
|
|
670 |
|
Production companies |
|
5 |
|
|
|
9 |
|
|
|
24 |
|
|
|
44 |
|
Corporate and administrative |
|
17 |
|
|
|
21 |
|
|
|
32 |
|
|
|
69 |
|
Depreciation |
|
21 |
|
|
|
20 |
|
|
|
42 |
|
|
|
40 |
|
Amortization
of intangible assets |
|
26 |
|
|
|
28 |
|
|
|
52 |
|
|
|
57 |
|
Gain on
disposals of assets, net |
|
(7 |
) |
|
|
(3 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
Operating
expenses |
|
386 |
|
|
|
389 |
|
|
|
796 |
|
|
|
867 |
|
Operating
income |
|
65 |
|
|
|
119 |
|
|
|
189 |
|
|
|
159 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Miscellaneous (expense) income, net |
|
(2 |
) |
|
|
1 |
|
|
|
(3 |
) |
|
|
4 |
|
Interest expense |
|
(46 |
) |
|
|
(58 |
) |
|
|
(98 |
) |
|
|
(116 |
) |
Income
before income tax expense |
|
17 |
|
|
|
62 |
|
|
|
88 |
|
|
|
47 |
|
Income tax
expense |
|
6 |
|
|
|
18 |
|
|
|
24 |
|
|
|
21 |
|
Net
income |
|
11 |
|
|
|
44 |
|
|
|
64 |
|
|
|
26 |
|
Preferred
stock dividends |
|
13 |
|
|
|
13 |
|
|
|
26 |
|
|
|
26 |
|
Net (loss)
income attributable to common stockholders |
$ |
(2 |
) |
|
$ |
31 |
|
|
$ |
38 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
Basic per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.02 |
) |
|
$ |
0.31 |
|
|
$ |
0.39 |
|
|
$ |
- |
|
Weighted-average shares outstanding |
|
97 |
|
|
|
100 |
|
|
|
98 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
Diluted per
share information: |
|
|
|
|
|
|
|
Net (loss) income attributable to common stockholders |
$ |
(0.02 |
) |
|
$ |
0.31 |
|
|
$ |
0.39 |
|
|
$ |
- |
|
Weighted-average shares outstanding |
|
97 |
|
|
|
101 |
|
|
|
98 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
Other Financial Data:
|
As of |
|
June
30, |
|
December
31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
(in millions) |
|
|
|
|
Cash |
$ |
379 |
|
|
$ |
212 |
|
Long-term
debt, including current portion |
$ |
3,703 |
|
|
$ |
3,697 |
|
Series A
perpetual preferred stock |
$ |
650 |
|
|
$ |
650 |
|
Borrowing
availability under our Senior Credit Facility |
$ |
200 |
|
|
$ |
200 |
|
|
|
|
|
|
Six Months
Ended June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
(in millions) |
|
|
|
|
Net cash
provided by operating activities |
$ |
307 |
|
|
$ |
105 |
|
Net cash
used in investing activities |
|
(59 |
) |
|
|
(2,599 |
) |
Net cash
(used in) provided by financing activities |
|
(81 |
) |
|
|
1,326 |
|
Net increase
(decrease) in cash |
$ |
167 |
|
|
$ |
(1,168 |
) |
|
|
|
|
The Company
We are a television broadcast company headquartered in Atlanta,
Georgia, that is the largest owner of top-rated local television
stations and digital assets in the United States (“U.S.”). Gray
currently owns and/or operates television stations and leading
digital properties in 94 television markets that collectively reach
approximately 24 percent of U.S. television households. Over
calendar year 2019, Gray’s stations were ranked first in 69
markets, and first and/or second in 87 markets, as calculated by
Comscore, Inc.’s audience measurement service. We also own video
program production, marketing, and digital businesses including
Raycom Sports, Tupelo-Raycom, and RTM Studios, the producer of
PowerNation programs and content, which we refer to collectively as
our “production companies.”
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 future periods, 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 the date hereof. 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, 2019,
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 second quarter
operating results on August 6, 2020. The call will begin at 10:00
AM Eastern Time. The live dial-in number is 1(855) 493-3489 and the
confirmation code is 6748868. 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(855) 859-2056, Confirmation
Code: 6748868 until September 6, 2020.
Gray Contacts
Web site: www.gray.tv
Hilton H. Howell, Jr., Executive Chairman and
Chief Executive Officer, 404-266-5512Pat
LaPlatney, President and Co-Chief Executive Officer,
334-206-1400Jim Ryan, Executive Vice President and
Chief Financial Officer, 404-504-9828Kevin P.
Latek, Executive Vice President, Chief Legal and
Development Officer, 404-266-8333
Effects of Acquisitions and Divestitures on Our Results
of Operations and Non-GAAP Terms
From time to time, Gray supplements its financial results
prepared in accordance with GAAP by disclosing the non-GAAP
financial measures Broadcast Cash Flow, Broadcast Cash Flow Less
Cash Corporate Expenses, Operating Cash Flow as defined in the
Senior Credit Agreement, Free Cash Flow, Adjusted EBITDA and Total
Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by
us to approximate amounts used to calculate key financial
performance covenants contained in our debt agreements and are used
with our GAAP data to evaluate our results and liquidity.
We define Broadcast Cash Flow as net income or loss plus loss
from early extinguishment of debt, non-cash corporate and
administrative expenses, non-cash stock-based compensation,
depreciation and amortization (including amortization of intangible
assets and program broadcast rights), any loss on disposal of
assets, any miscellaneous expense, interest expense, any income tax
expense, non-cash 401(k) expense, Broadcast Transactions Related
Expenses and broadcast other adjustments less any gain on disposal
of assets, any miscellaneous income, any income tax benefits and
payments for program broadcast rights.
We define Broadcast Cash Flow Less Cash Corporate Expenses as
net income or loss plus loss 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,
Transaction Related Expenses and other adjustments less any gain on
disposal of assets, any miscellaneous income, any income tax
benefits and payments for program broadcast rights.
We define Operating Cash Flow as defined in our Senior Credit
Agreement as net income or loss plus loss 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, Transaction Related Expenses, other
adjustments, certain pension expenses, synergies and other
adjustments less any gain on disposal of assets, any miscellaneous
income, any income tax benefits, payments for program broadcast
rights, pension income and contributions to pension plans.
Operating Cash Flow as defined in our Senior Credit Agreement
gives effect to the revenue and broadcast expenses of all completed
acquisitions and divestitures as if they had been acquired or
divested, respectively, on June 30, 2018. It also gives effect to
certain operating synergies expected from the acquisitions and
related financings and adds back professional fees incurred in
completing the acquisitions. Certain of the financial information
related to the acquisitions has been derived from, and adjusted
based on, unaudited, un-reviewed financial information prepared by
other entities, which Gray cannot independently verify. We cannot
assure you that such financial information would not be materially
different if such information were audited or reviewed and no
assurances can be provided as to the accuracy of such information,
or that our actual results would not differ materially from this
financial information if the Acquisitions had been completed on the
stated date. In addition, the presentation of Operating Cash Flow
as defined in the Senior Credit Agreement and the adjustments to
such information, including expected synergies resulting from such
transactions, may not comply with GAAP or the requirements for pro
forma financial information under Regulation S-X under the
Securities Act of 1933.
We define Free Cash Flow as net income or loss 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, any income tax expense, non-cash
401(k) expense, Transactions Related Expenses, broadcast other
adjustments, certain pension expenses, synergies, other adjustments
and amortization of deferred financing costs less any gain on
disposal of assets, any miscellaneous income, any income tax
benefits, payments for program broadcast rights, pension income,
contributions to pension plans, preferred dividends, purchase of
property and equipment (net of reimbursements) and income taxes
paid (net of any refunds received).
We define Adjusted EBITDA as net income or loss, plus loss from
early extinguishment of debt, non-cash stock-based compensation,
depreciation and amortization of intangible assets, any loss on
disposal of assets, any miscellaneous expense, interest expense,
any income tax expense, non-cash 401(k) expense, Transaction
Related Expenses less any gain on disposal of assets, any
miscellaneous income and any income tax benefits.
Our Total Leverage Ratio, Net of All Cash is determined by
dividing our Adjusted Total Indebtedness, Net of All Cash, by our
Operating Cash Flow as defined in our Senior Credit Agreement,
divided by two. Our Adjusted Total Indebtedness, Net of All Cash,
represents the total outstanding principal of our long-term debt,
plus certain other obligations as defined in our Senior Credit
Agreement, less all cash (excluding restricted cash). Our Operating
Cash Flow, as defined in our Senior Credit Agreement, divided by
two, represents our average annual Operating Cash Flow as defined
in our Senior Credit Agreement for the preceding eight
quarters.
We define Transaction Related Expenses as incremental expenses
incurred specific to acquisitions and divestitures, including, but
not limited to legal and professional fees, severance and incentive
compensation, and contract termination fees. We present certain
line-items from our selected operating data, net of Transaction
Related Expenses, in order to present a more meaningful comparison
between periods of our operating expenses and our results of
operations.
These non-GAAP terms are not defined in GAAP and our definitions
may differ from, and therefore may not be comparable to, similarly
titled measures used by other companies, thereby limiting their
usefulness. Such terms are used by management in addition to, and
in conjunction with, results presented in accordance with GAAP and
should be considered as supplements to, and not as substitutes for,
net income and cash flows reported in accordance with GAAP.
Reconciliation of Non-GAAP Terms, in
millions:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
11 |
|
|
$ |
44 |
|
|
$ |
41 |
|
|
Adjustments to reconcile from net income to |
|
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
|
Depreciation |
|
21 |
|
|
|
20 |
|
|
|
13 |
|
|
Amortization of intangible assets |
|
26 |
|
|
|
28 |
|
|
|
5 |
|
|
Non-cash stock-based compensation |
|
3 |
|
|
|
2 |
|
|
|
1 |
|
|
Gain on disposals of assets, net |
|
(7 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
|
Miscellaneous expense (income), net |
|
2 |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Interest expense |
|
46 |
|
|
|
58 |
|
|
|
25 |
|
|
Income tax expense |
|
6 |
|
|
|
18 |
|
|
|
15 |
|
|
Amortization of program broadcast rights |
|
10 |
|
|
|
10 |
|
|
|
5 |
|
|
Payments for program broadcast rights |
|
(10 |
) |
|
|
(10 |
) |
|
|
(5 |
) |
|
Corporate and administrative expenses excluding |
|
|
|
|
|
|
depreciation, amortization of intangible assets and |
|
|
|
|
|
|
non-cash stock-based compensation |
|
15 |
|
|
|
19 |
|
|
|
10 |
|
|
Broadcast Cash Flow |
|
123 |
|
|
|
185 |
|
|
|
108 |
|
|
Corporate and administrative expenses excluding |
|
|
|
|
|
|
depreciation, amortization of intangible assets and |
|
|
|
|
|
|
non-cash stock-based compensation |
|
(15 |
) |
|
|
(19 |
) |
|
|
(10 |
) |
|
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
108 |
|
|
|
166 |
|
|
|
98 |
|
|
Contributions to pension plans |
|
- |
|
|
|
- |
|
|
|
- |
|
|
Interest expense |
|
(46 |
) |
|
|
(58 |
) |
|
|
(25 |
) |
|
Amortization of deferred financing costs |
|
3 |
|
|
|
3 |
|
|
|
1 |
|
|
Preferred dividends |
|
(13 |
) |
|
|
(13 |
) |
|
|
- |
|
|
Purchases of property and equipment |
|
(24 |
) |
|
|
(26 |
) |
|
|
(13 |
) |
|
Reimbursements of property and equipment purchases |
|
8 |
|
|
|
5 |
|
|
|
1 |
|
|
Income taxes paid, net of refunds |
|
(1 |
) |
|
|
(8 |
) |
|
|
(3 |
) |
|
Free
Cash Flow |
$ |
35 |
|
|
$ |
69 |
|
|
$ |
59 |
|
|
Reconciliation of Non-GAAP Terms, in
millions:
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
Net
income |
$ |
64 |
|
|
$ |
26 |
|
|
$ |
61 |
|
Adjustments to reconcile from net income to |
|
|
|
|
|
Free Cash Flow: |
|
|
|
|
|
Depreciation |
|
42 |
|
|
|
40 |
|
|
|
27 |
|
Amortization of intangible assets |
|
52 |
|
|
|
57 |
|
|
|
11 |
|
Non-cash stock based compensation |
|
7 |
|
|
|
5 |
|
|
|
3 |
|
Gain on disposals of assets, net |
|
(13 |
) |
|
|
(13 |
) |
|
|
(2 |
) |
Miscellaneous expense (income), net |
|
3 |
|
|
|
(4 |
) |
|
|
(1 |
) |
Interest expense |
|
98 |
|
|
|
116 |
|
|
|
49 |
|
Income tax expense |
|
24 |
|
|
|
21 |
|
|
|
21 |
|
Amortization of program broadcast rights |
|
19 |
|
|
|
20 |
|
|
|
11 |
|
Payments for program broadcast rights |
|
(20 |
) |
|
|
(24 |
) |
|
|
(11 |
) |
Corporate and administrative expenses excluding |
|
|
|
|
|
depreciation, amortization of intangible assets and |
|
|
|
|
|
non-cash stock-based compensation |
|
28 |
|
|
|
64 |
|
|
|
17 |
|
Broadcast Cash Flow |
|
304 |
|
|
|
308 |
|
|
|
186 |
|
Corporate and administrative expenses excluding |
|
|
|
|
|
depreciation, amortization of intangible assets and |
|
|
|
|
|
non-cash stock-based compensation |
|
(28 |
) |
|
|
(64 |
) |
|
|
(17 |
) |
Broadcast Cash Flow Less Cash Corporate
Expenses |
|
276 |
|
|
|
244 |
|
|
|
169 |
|
Contributions to pension plans |
|
- |
|
|
|
- |
|
|
|
- |
|
Interest expense |
|
(98 |
) |
|
|
(116 |
) |
|
|
(49 |
) |
Amortization of deferred financing costs |
|
6 |
|
|
|
6 |
|
|
|
2 |
|
Preferred dividends |
|
(26 |
) |
|
|
(26 |
) |
|
|
- |
|
Purchases of property and equipment |
|
(51 |
) |
|
|
(44 |
) |
|
|
(20 |
) |
Reimbursements of property and equipment purchases |
|
14 |
|
|
|
17 |
|
|
|
2 |
|
Income taxes paid, net of refunds |
|
(1 |
) |
|
|
(8 |
) |
|
|
(12 |
) |
Free
Cash Flow |
$ |
120 |
|
|
$ |
73 |
|
|
$ |
92 |
|
Reconciliation of Net Income to Adjusted EBITDA and the
Effect of Transaction Related Expenses and Certain Non-cash
Expenses, in millions except for per share
information:
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
Net
income |
$ |
11 |
|
|
$ |
44 |
|
|
$ |
64 |
|
|
$ |
26 |
|
Adjustments to reconcile from net income to |
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
Depreciation |
|
21 |
|
|
|
20 |
|
|
|
42 |
|
|
|
40 |
|
Amortization of intangible assets |
|
26 |
|
|
|
28 |
|
|
|
52 |
|
|
|
57 |
|
Non-cash stock-based compensation |
|
3 |
|
|
|
2 |
|
|
|
7 |
|
|
|
5 |
|
Gain on disposals of assets, net |
|
(7 |
) |
|
|
(3 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
Miscellaneous expense (income), net |
|
2 |
|
|
|
(1 |
) |
|
|
3 |
|
|
|
(4 |
) |
Interest expense |
|
46 |
|
|
|
58 |
|
|
|
98 |
|
|
|
116 |
|
Income tax expense |
|
6 |
|
|
|
18 |
|
|
|
24 |
|
|
|
21 |
|
Total |
|
108 |
|
|
|
166 |
|
|
|
277 |
|
|
|
248 |
|
Add: Transaction Related Expenses |
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
70 |
|
Adjusted EBITDA |
$ |
108 |
|
|
$ |
168 |
|
|
$ |
277 |
|
|
$ |
318 |
|
|
|
|
|
|
|
|
|
Net (loss)
income attributable to common stockholders |
$ |
(2 |
) |
|
$ |
31 |
|
|
$ |
38 |
|
|
$ |
- |
|
Add: Transaction Related Expenses and non-cash |
|
|
|
|
|
|
|
stock-based compensation |
|
3 |
|
|
|
4 |
|
|
|
7 |
|
|
|
75 |
|
Less: Income tax expense related to Transaction Related |
|
|
|
|
|
|
|
Expenses and non-cash stock-based compensation |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(19 |
) |
Net income
attributable to common stockholders - excluding |
|
|
|
|
|
|
|
Transaction Related Expenses and non-cash stock-based |
|
|
|
|
|
|
|
compensation |
$ |
- |
|
|
$ |
34 |
|
|
$ |
43 |
|
|
$ |
56 |
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders per common share, |
|
|
|
|
|
|
|
diluted - excluding Transaction Related Expenses and non-cash |
|
|
|
|
|
|
|
stock-based compensation |
$ |
- |
|
|
$ |
0.34 |
|
|
$ |
0.44 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
Diluted weighted-average shares outstanding |
|
97 |
|
|
|
101 |
|
|
|
98 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
Reconciliation of Total Leverage
Ratio, Net of All Cash, in millions except for ratio:
|
|
|
|
|
|
|
|
|
|
Eight
Quarters |
|
|
|
Ended |
|
|
|
June 30, 2020 |
|
|
|
|
|
Net income |
|
$ |
394 |
|
|
Adjustments
to reconcile from net income to operating cash flow as |
|
|
|
defined in our Senior Credit Agreement: |
|
|
|
Depreciation |
|
|
149 |
|
|
Amortization of intangible assets |
|
|
178 |
|
|
Non-cash stock-based compensation |
|
|
27 |
|
|
Gain on disposal of assets, net |
|
|
(82 |
) |
|
Interest expense |
|
|
383 |
|
|
Income tax (benefit) expense |
|
|
155 |
|
|
Amortization of program broadcast rights |
|
|
69 |
|
|
Common stock contributed to 401(k) plan |
|
|
9 |
|
|
Payments for program broadcast rights |
|
|
(76 |
) |
|
Pension expense |
|
|
(1 |
) |
|
Contributions to pension plans |
|
|
(6 |
) |
|
Adjustments for stations acquired or divested, financings and
expected |
|
|
synergies during the eight quarter period |
|
|
252 |
|
|
Transaction Related Expenses |
|
|
84 |
|
|
Operating Cash Flow as defined in our Senior Credit
Agreement |
|
$ |
1,535 |
|
|
Operating Cash Flow as defined in our Senior Credit
Agreement, |
|
|
|
divided by two |
|
$ |
768 |
|
|
|
|
|
|
|
|
June 30, 2020 |
|
Adjusted Total Indebtedness: |
|
|
|
Total outstanding principal, including current portion |
|
$ |
3,760 |
|
|
Cash |
|
|
(379 |
) |
|
Adjusted Total Indebtedness, Net of All Cash |
|
$ |
3,381 |
|
|
|
|
|
|
Total Leverage Ratio, Net of All Cash |
|
|
4.40 |
|
|
|
|
|
|
Gray Television (NYSE:GTN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gray Television (NYSE:GTN)
Historical Stock Chart
From Apr 2023 to Apr 2024