Salem Media Group, Inc. (the "company")(NASDAQ: SALM) released
its results for the three months ended March 31, 2023.
First Quarter 2023 Results
For the three months ended March 31, 2023 compared to the three
months ended March 31, 2022:
Consolidated
- Total revenue increased 1.4% to $63.5 million from $62.6
million;
- Total operating expenses increased 17.4% to $67.7 million from
$57.6 million;
- Operating expenses, excluding stock-based compensation expense,
debt modification costs, gains and losses on the sale or
disposition of assets, impairments, depreciation expense and
amortization expense (1) increased 11.4% to $62.1 million from
$55.8 million;
- The company had an operating loss of $4.2 million as compared
to operating income of $5.0 million;
- The company had a net loss of $5.2 million, or $0.19 net loss
per share, compared to net income of $1.7 million, or $0.06 net
income per diluted share;
- EBITDA (1) decreased 107.6% to $(0.6) million from $8.2
million; and
- Adjusted EBITDA (1) decreased 79.6% to $1.4 million from $6.8
million.
Broadcast
- Net broadcast revenue decreased 0.2% to $48.3 million from
$48.4 million;
- Station Operating Income (“SOI”) (1) decreased 46.4% to $5.5
million from $10.3 million;
- Same Station (1) net broadcast revenue decreased 0.5% to $48.1
million from $48.4 million; and
- Same Station SOI (1) decreased 41.6% to $6.0 million from $10.3
million.
Digital Media
- Digital media revenue increased 2.0% to $10.5 million from
$10.3 million; and
- Digital Media Operating Income (1) decreased 17.0% to $1.5
million from $1.8 million.
Publishing
- Publishing revenue increased 19.7% to $4.6 million from $3.9
million; and
- Publishing Operating Loss (1) increased 24.9% to $0.7 million
from $0.6 million.
Included in the results for the three months ended March 31,
2023 are:
- A $2.1 million ($1.6 million, net of tax, or $0.06 per share)
impairment charge to the value of broadcast license related to the
acquisition of radio station WMYM-AM in Miami, Florida;
- A $0.1 million loss on the early retirement of long-term debt
associated with the 2024 Notes; and
- A $0.1 million non-cash compensation charge related to the
expensing of stock options.
Included in the results for the three months ended March 31,
2022 are:
- A $1.7 million ($1.3 million, net of tax, or $0.05 per diluted
share) net gain on the disposition of assets related primarily to
the gain on sale of land in Phoenix, Arizona offset by various
fixed asset disposals; and
- A $0.2 million ($0.2 million, net of tax, or $0.01 per share)
charge for debt modification costs; and
- A $0.1 million non-cash compensation charge ($0.1 million, net
of tax) related to the expensing of stock options.
Per share numbers are calculated based on 27,216,787 diluted
weighted average shares for the three months ended March 31, 2023,
and 27,610,407 diluted weighted average shares for the three months
ended March 31, 2022.
Balance Sheet
As of March 31, 2023, the company had $159.4 million outstanding
on the 7.125% senior secured notes due 2028 (“2028 Notes”) and
$18.2 million outstanding on the ABL facility.
Acquisitions and Divestitures
The following transactions were completed since January 1,
2023:
- The company invested $1.5 million in a limited liability
company that will own, distribute, and market a motion
picture.
- On March 24, 2023, the company closed on the acquisition of
Digital Felt Productions and its digital content library for
$25,000 in cash.
- On February 1, 2023, the company acquired the George Gilder
Report and other digital newsletters and related website assets.
The company assumed the deferred subscription liabilities paying no
cash at the time of closing. The purchase price is 25% of net
revenue generated from sales of most Eagle Financial products
during the next year to subscribers who are on George Gilder
subscriber lists that are not already on Eagle Financial
lists.
- On January 10, 2023, the company closed on the acquisition of
radio stations WWFE-AM, WRHC-AM and two FM translators in Miami,
Florida for $3.0 million in cash. The Asset Purchase Agreement
(“APA”) was amended for the company to acquire only the radio
stations and translators for $3.0 million, a related party to
acquire the land directly from the seller for $2.0 million, and the
company to have an option to purchase the land from the related
party pursuant to an option to purchase real estate agreement. The
company’s executive officers, who have no relationship with the
related party, began negotiations for the related party lease
agreements and option agreements, subject to final approval by the
company’s Audit Committee pursuant to its related party transaction
policy. The option to purchase real estate agreement was approved
by the company’s Audit Committee on March 1, 2023.
- On January 6, 2023 the company closed on the acquisition of
radio station WMYM-AM and an FM translator in Miami, Florida for
$3.2 million in cash. The company began operating the radio station
under a Time Brokerage Agreement (“TBA”) beginning on November 16,
2022. The APA was amended for the company to acquire only the radio
station and translator for $3.2 million, a related party to acquire
the land directly from the seller for $1.8 million, and the company
to have an option to purchase the land from the related party
pursuant to an option to purchase real estate agreement. The
company’s executive officers, who have no relationship with the
related party, began negotiations for the related party lease
agreements and option agreements, subject to final approval by the
company’s Audit Committee pursuant to its related party transaction
policy. The option to purchase real estate agreement was approved
by the company’s Audit Committee on March 1, 2023.
Pending transactions:
- In June 2022 the company entered into agreements to sell radio
stations KLFE-AM and KNTS-AM in Seattle, Washington for $0.7
million subject to approval of the Federal Communications
Commission. Radio station KLFE-AM is being programmed under a TBA
as of August 1, 2022.
Conference Call Information
The company will host a teleconference to discuss its results on
May 9, 2023 at 4:00 p.m. Central Time. To access the
teleconference, please dial (888) 770-7291, and then ask to be
joined into the Salem Media Group First Quarter 2023 call or listen
via the investor relations portion of the company’s website,
located at investor.salemmedia.com. A replay of the teleconference
will be available through May 23, 2023 and can be heard by dialing
(800) 770-2030, passcode 2413416 or on the investor relations
portion of the company’s website, located at
investor.salemmedia.com.
Follow us on Twitter @SalemMediaGrp.
Second Quarter 2023 Outlook
For the second quarter of 2023, the company is projecting total
revenue to decline between 5% and 7% from the second quarter 2022
total revenue of $68.7 million. The company is also projecting
operating expenses before gains or losses on the sale or disposal
of assets, stock-based compensation expense, legal settlement,
changes in the estimated fair value of contingent earn-out
consideration, impairments, depreciation expense and amortization
expense (“Recurring Operating Expenses”) to increase between 3% and
6% compared to the second quarter of 2022 Recurring Operating
Expenses of $60.0 million.
A reconciliation of Recurring Operating
Expenses (a non-GAAP measure) to the most directly comparable GAAP
measure is not available without unreasonable efforts on a
forward-looking basis due to the potential high variability,
complexity and low visibility with respect to the charges excluded
from this non-GAAP financial measure, in particular, the change in
the estimated fair value of earn-out consideration, impairments and
gains or losses from the disposition of fixed assets. The company
expects the variability of the above charges may have a
significant, and potentially unpredictable, impact on its future
GAAP financial results.
About Salem Media Group, Inc.
Salem Media Group is America’s leading multimedia company
specializing in Christian and conservative content, with media
properties comprising radio, digital media and book and newsletter
publishing. Each day Salem serves a loyal and dedicated audience of
listeners and readers numbering in the millions nationally. With
its unique programming focus, Salem provides compelling content,
fresh commentary and relevant information from some of the most
respected figures across the Christian and conservative media
landscape. Learn more about Salem Media Group, Inc. at
www.salemmedia.com, Facebook and Twitter.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, prospects or performance are
forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially
from those anticipated as a result of certain risks and
uncertainties, including but not limited to the ability of the
company to close and integrate announced transactions, market
acceptance of the company’s radio station formats, competition from
new technologies, inflation and other adverse economic conditions,
and other risks and uncertainties detailed from time to time in the
company’s reports on Forms 10-K, 10-Q, 8-K and other filings filed
with or furnished to the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
The company undertakes no obligation to update or revise any
forward-looking statements to reflect new information, changed
circumstances or unanticipated events.
(1) Regulation G
Management uses certain non-GAAP financial
measures defined below in communications with investors, analysts,
rating agencies, banks and others to assist such parties in
understanding the impact of various items on its financial
statements. The company uses these non-GAAP financial measures to
evaluate financial results, develop budgets, manage expenditures
and as a measure of performance under compensation programs.
The company’s presentation of these non-GAAP
financial measures should not be considered as a substitute for or
superior to the most directly comparable financial measures as
reported in accordance with GAAP.
Regulation G defines and prescribes the
conditions under which certain non-GAAP financial information may
be presented in this earnings release. The company closely monitors
EBITDA, Adjusted EBITDA, Station Operating Income (“SOI”), Same
Station net broadcast revenue, Same Station broadcast operating
expenses, Same Station Operating Income, Digital Media Operating
Income, Publishing Operating Loss, and operating expenses excluding
gains or losses on the disposition of assets, stock-based
compensation, changes in the estimated fair value of contingent
earn-out consideration, impairments, depreciation and amortization,
all of which are non-GAAP financial measures. The company believes
that these non-GAAP financial measures provide useful information
about its core operating results, and thus, are appropriate to
enhance the overall understanding of its financial performance.
These non-GAAP financial measures are intended to provide
management and investors a more complete understanding of its
underlying operational results, trends and performance.
The company defines Station Operating Income
(“SOI”) as net broadcast revenue minus broadcast operating
expenses. The company defines Digital Media Operating Income as net
Digital Media Revenue minus Digital Media Operating Expenses. The
company defines Publishing Operating Loss as net Publishing Revenue
minus Publishing Operating Expenses. The company defines EBITDA as
net income before interest, taxes, depreciation, and amortization.
The company defines Adjusted EBITDA as EBITDA before gains or
losses on the disposition of assets, before debt modification
costs, before changes in the estimated fair value of contingent
earn-out consideration, before impairments, before net
miscellaneous income and expenses, before (gain) loss on early
retirement of long-term debt and before non-cash compensation
expense. SOI, Digital Media Operating Income, Publishing Operating
Loss, EBITDA and Adjusted EBITDA are commonly used by the broadcast
and media industry as important measures of performance and are
used by investors and analysts who report on the industry to
provide meaningful comparisons between broadcasters. SOI, Digital
Media Operating Income, Publishing Operating Loss, EBITDA and
Adjusted EBITDA are not measures of liquidity or of performance in
accordance with GAAP and should be viewed as a supplement to and
not a substitute for or superior to its results of operations and
financial condition presented in accordance with GAAP. The
company’s definitions of SOI, Digital Media Operating Income,
Publishing Operating Loss, EBITDA and Adjusted EBITDA are not
necessarily comparable to similarly titled measures reported by
other companies.
The company defines Same Station net
broadcast revenue as broadcast revenue from its radio stations and
networks that the company owns or operates in the same format on
the first and last day of each quarter, as well as the
corresponding quarter of the prior year. The company defines Same
Station broadcast operating expenses as broadcast operating
expenses from its radio stations and networks that the company owns
or operates in the same format on the first and last day of each
quarter, as well as the corresponding quarter of the prior year.
The company defines Same Station SOI as Same Station net broadcast
revenue less Same Station broadcast operating expenses. Same
Station operating results include those stations that the company
owns or operates in the same format on the first and last day of
each quarter, as well as the corresponding quarter of the prior
year. Same Station operating results for a full calendar year are
calculated as the sum of the Same Station operating results for
each of the four quarters of that year. The company uses Same
Station operating results, a non-GAAP financial measure, both in
presenting its results to stockholders and the investment
community, and in its internal evaluations and management of the
business. The company believes that Same Station operating results
provide a meaningful comparison of period over period performance
of its core broadcast operations as this measure excludes the
impact of new stations, the impact of stations the company no
longer owns or operates, and the impact of stations operating under
a new programming format. The company’s presentation of Same
Station operating results is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with GAAP. The company’s definition of
Same Station operating results is not necessarily comparable to
similarly titled measures reported by other companies.
For all non-GAAP financial measures,
investors should consider the limitations associated with these
metrics, including the potential lack of comparability of these
measures from one company to another.
The Supplemental Information tables that
follow the condensed consolidated financial statements provide
reconciliations of the non-GAAP financial measures that the company
uses in this earnings release to the most directly comparable
measures calculated in accordance with GAAP. The company uses
non-GAAP financial measures to evaluate financial performance,
develop budgets, manage expenditures, and determine employee
compensation. The company’s presentation of this additional
information is not to be considered as a substitute for or superior
to the directly comparable measures as reported in accordance with
GAAP.
Salem Media Group,
Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share data)
Three Months Ended
March 31,
2022
2023
(Unaudited)
Net broadcast revenue
$
48,432
$
48,340
Net digital media revenue
10,300
10,510
Net publishing revenue
3,877
4,639
Total revenue
62,609
63,489
Operating expenses:
Broadcast operating expenses
38,121
42,809
Digital media operating expenses
8,473
8,994
Publishing operating expenses
4,467
5,376
Unallocated corporate expenses
4,810
4,996
Debt modification costs
228
—
Depreciation and amortization
3,276
3,393
Change in the estimated fair value of
contingent earn-out consideration
(5
)
(2
)
Impairment of indefinite-lived long-term
assets other than goodwill
—
2,124
Net (gain) loss on the disposition of
assets
(1,735
)
(21
)
Total operating expenses
57,635
67,669
Operating income (loss)
4,974
(4,180
)
Other income (expense):
Interest income
—
13
Interest expense
(3,394
)
(3,431
)
Gain (loss) on early retirement of
long-term debt
(53
)
(60
)
Earnings from equity method investment
—
8
Net miscellaneous income and
(expenses)
1
220
Net income (loss) before income taxes
1,528
(7,430
)
Benefit from income taxes
(211
)
(2,276
)
Net income (loss)
$
1,739
$
(5,154
)
Basic earnings (loss) per share Class A
and Class B common stock
$
0.06
$
(0.19
)
Diluted earnings (loss) per share Class A
and Class B common stock
$
0.06
$
(0.19
)
Basic weighted average Class A and Class B
common stock shares outstanding
27,177,375
27,216,787
Diluted weighted average Class A and Class
B common stock shares outstanding
27,610,407
27,216,787
Salem Media Group,
Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
December 31, 2022
March 31, 2023
(Unaudited)
Assets
Cash
$
—
$
3
Accounts receivable, net
30,756
28,468
Other current assets
14,301
15,479
Property and equipment, net
81,296
83,689
Operating and financing lease right-of-use
assets
43,734
44,328
Intangible assets, net
330,008
336,232
Deferred financing costs
681
56
Other assets
4,346
5,018
Total assets
$
505,122
$
513,273
Liabilities and Stockholders’
Equity
Current liabilities
$
64,610
$
76,003
Long-term debt
150,367
152,041
Operating and financing lease liabilities,
less current portion
42,445
42,540
Deferred income taxes
66,732
64,489
Other liabilities
5,611
7,922
Stockholders’ Equity
175,357
170,278
Total liabilities and stockholders’
equity
$
505,122
$
513,273
SALEM MEDIA GROUP,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share
and per share data)
Class A
Class B
Common Stock
Common Stock
Additional
Paid-In
Accumulated
Treasury
Shares
Amount
Shares
Amount
Capital
Deficit
Stock
Total
Stockholders’ equity, December 31,
2021
23,922,974
$ 232
5,553,696
$ 56
$ 248,438
$ (36,509)
$ (34,006)
$ 178,211
Stock-based compensation
—
—
—
—
106
—
—
106
Options exercised
40,913
—
—
—
94
—
—
94
Lapse of restricted shares
14,854
—
—
—
—
—
—
—
Net income
—
—
—
—
—
1,739
—
1,739
Stockholders’ equity, March 31,
2022
23,978,741
$ 232
5,553,696
$ 56
$ 248,638
$ (34,770)
$ (34,006)
$ 180,150
Class A
Class B
Common Stock
Common Stock
Additional
Paid-In
Accumulated
Treasury
Shares
Amount
Shares
Amount
Capital
Deficit
Stock
Total
Stockholders’ equity, December 31,
2022
23,980,741
$ 232
5,553,696
$ 56
$ 248,820
$ (39,745)
$ (34,006)
$ 175,357
Stock-based compensation
—
—
—
—
75
—
—
75
Net loss
—
—
—
—
—
(5,154)
—
(5,154)
Stockholders’ equity, March 31,
2023
23,980,741
$ 232
5,553,696
$ 56
$ 248,895
$ (44,899)
$ (34,006)
$ 170,278
Salem Media Group,
Inc.
Supplemental
Information
(in thousands)
Three Months Ended
March 31,
2022
2023
(Unaudited)
Reconciliation of Total Operating
Expenses to Operating Expenses excluding Debt Modification Costs,
Depreciation and Amortization Expense, Changes in the Estimated
Fair Value of Contingent Earn-out Consideration, Impairments, Gains
or Losses on the Disposition of Assets and Stock-based Compensation
Expense (Recurring Operating Expenses)
Operating Expenses
$
57,635
$
67,669
Less debt modification costs
(228
)
—
Less depreciation and amortization
expense
(3,276
)
(3,393
)
Less change in estimated fair value of
contingent earn-out Consideration
5
2
Less impairment of indefinite-lived
long-term assets other than goodwill
—
(2,124
)
Less net gain (loss) on the disposition of
assets
1,735
21
Less stock-based compensation expense
(106
)
(75
)
Total Recurring Operating
Expenses
$
55,765
$
62,100
Reconciliation of Net Broadcast Revenue
to Same Station Net Broadcast Revenue
Net broadcast revenue
$
48,432
$
48,340
Net broadcast revenue – acquisitions
—
(205
)
Net broadcast revenue – dispositions
(47
)
3
Net broadcast revenue – format change
—
—
Same Station net broadcast revenue
$
48,385
$
48,138
Reconciliation of Broadcast Operating
Expenses to Same Station Broadcast Operating Expenses
Broadcast operating expenses
$
38,121
$
42,809
Broadcast operating expenses –
acquisitions
(15
)
(659
)
Broadcast operating expenses –
dispositions
(25
)
(25
)
Broadcast operating expenses – format
change
—
—
Same Station broadcast operating
expenses
$
38,081
$
42,125
Reconciliation of SOI to Same Station
SOI
Station Operating Income
$
10,311
$
5,531
Station operating loss – acquisitions
15
454
Station operating (income) loss –
dispositions
(22
)
28
Station operating (income) loss – format
change
—
—
Same Station - Station Operating
Income
$
10,304
$
6,013
Salem Media Group,
Inc.
Supplemental
Information
(in thousands)
Three Months Ended
March 31,
2022
2023
(Unaudited)
Calculation of Station Operating
Income, Digital Media Operating Income and Publishing Operating
Loss
Net broadcast revenue
$
48,432
$
48,340
Less broadcast operating expenses
(38,121
)
(42,809
)
Station Operating Income
$
10,311
$
5,531
Net digital media revenue
$
10,300
$
10,510
Less digital media operating expenses
(8,473
)
(8,994
)
Digital Media Operating Income
$
1,827
$
1,516
Net publishing revenue
$
3,877
$
4,639
Less publishing operating expenses
(4,467
)
(5,376
)
Publishing Operating Loss
$
(590
)
$
(737
)
The company defines EBITDA (1) as net income before interest,
taxes, depreciation, and amortization. The table below presents a
reconciliation of EBITDA (1) to Net Income (Loss), the most
directly comparable GAAP measure. EBITDA (1) is a non-GAAP
financial performance measure that is not to be considered a
substitute for or superior to the directly comparable measures
reported in accordance with GAAP. The company defines Adjusted
EBITDA (1) as EBITDA (1) before gains or losses on the disposition
of assets, before debt modification costs, before changes in the
estimated fair value of contingent earn-out consideration, before
impairments, before net miscellaneous income and expenses, before
(gain) loss on early retirement of long-term debt, and before
non-cash compensation expense. The table below presents a
reconciliation of Adjusted EBITDA (1) to Net Income (Loss), the
most directly comparable GAAP measure. Adjusted EBITDA (1) is a
non-GAAP financial performance measure that is not to be considered
a substitute for or superior to the directly comparable measures
reported in accordance with GAAP.
Three Months Ended
March 31,
2022
2023
(Unaudited)
Reconciliation of EBITDA and Adjusted
EBITDA to Net Income (Loss)
Net income (loss)
$
1,739
$
(5,154
)
Plus interest expense, net of capitalized
interest
3,394
3,431
Plus benefit from income taxes
(211
)
(2,276
)
Plus depreciation and amortization
3,276
3,393
Less interest income
—
(13
)
EBITDA
$
8,198
$
(619
)
Plus net (gain) loss on the disposition of
assets
(1,735
)
(21
)
Plus change in the estimated fair value of
contingent earn-out consideration
(5
)
(2
)
Plus debt modification costs
228
—
Plus impairment of indefinite-lived
long-term assets other than goodwill
—
2,124
Plus net miscellaneous (income) and
expenses
(1
)
(220
)
Plus (gain) loss on early retirement of
long- term debt
53
60
Plus non-cash stock-based compensation
106
75
Adjusted EBITDA
$
6,844
$
1,397
Selected Debt Data
Outstanding at
Applicable Interest
Rate
March 31, 2023
Senior Secured Notes due 2028 (1)
$
159,416,000
7.125%
Asset-based revolving credit facility
(2)
$
18,183,987
6.742%
(1) $159.4 million notes with semi-annual
interest payments at an annual rate of 7.125%.
(2) Outstanding borrowings under the ABL
Facility, with interest payments due at LIBOR plus 1.5% to 2.0% per
annum with a LIBOR floor of 0.5% or prime rate plus 0.5% to 1.0%
per annum
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504006006/en/
Evan D. Masyr Executive Vice President and Chief Financial
Officer (805) 384-4512 evan@salemmedia.com
Salem Media (NASDAQ:SALM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Salem Media (NASDAQ:SALM)
Historical Stock Chart
From Apr 2023 to Apr 2024