gtn20200224_8k.htm
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) February 27, 2020 (February 27, 2020)

 

Gray Television, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Georgia

(State or Other Jurisdiction of Incorporation)

 

001-13796

 

58-0285030

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

4370 Peachtree Road, NE, Atlanta, Georgia

 

30319

(Address of Principal Executive Offices)

 

(Zip Code)

 

404-504-9828

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock (no par value)

GTN.A

New York Stock Exchange

common stock (no par value) GTN New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

 

Item 2.02 - Results of Operations and Financial Condition.

 

On February 27, 2020, Gray Television, Inc. (the “Company”) issued a press release reporting its financial results for the three months and year ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

 

The information set forth under this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)

Exhibits

 

99.1

Press release issued by Gray Television, Inc. – Financial Results, on February 27, 2020

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Gray Television, Inc.

 

 

 

 

February 27, 2020

By:  

 /s/ James C. Ryan

 

 

 

Name:  

James C. Ryan 

 

 

 

Title:  

Executive Vice President and

Chief Financial Officer

 

 

ex_174230.htm

Exhibit 99.1

 

 

NEWS RELEASE

 

Gray Reports Record Operating Results

 

Atlanta, Georgia February 27, 2020. . . Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announces record results of operations for the fourth quarter ended December 31, 2019.

 

Highlights and Recent Developments:

 

Record Fourth Quarter Results - Our revenue for the fourth quarter of 2019 was $579 million, increasing $251 million, or 77%, from the fourth quarter of 2018, marking our highest ever quarterly revenue. Our net income for the fourth quarter of 2019 was $94 million. Our Broadcast Cash Flow was $229 million, increasing $57 million, or 33%, from the fourth quarter of 2018, making it our highest ever quarterly Broadcast Cash Flow. Our Adjusted EBITDA for the fourth quarter of 2019 of $215 million significantly exceeded our expectations.

 

Record Annual Results - Our revenue for the full year 2019 was $2.1 billion, increasing $1.0 billion, or 96%, from 2018, marking our highest ever annual revenue. Our net income for 2019 was $179 million. Our Broadcast Cash Flow for the full year 2019 was $729 million, increasing $236 million, or 48%, from 2018, our highest ever annual Broadcast Cash Flow. Our Adjusted EBIDTA in 2019 was $714 million. Our Free Cash Flow for full year 2019 was $273 million, which was 4% higher than in 2018 and 59% higher than 2017, the last “off-year” of the two-year political advertising cycle. On a Combined Historical Basis (as defined herein), our Free Cash Flow for full year 2019 was $358 million, which was 19% higher than our free cash flow in 2017.  Furthermore, our 2019 free cash flow significantly exceeded our previously issued guidance range of between $315 million and $325 million on this adjusted basis.

 

Political Revenue – Our political advertising revenue was $38 million for the fourth quarter of 2019 (on both an As Reported Basis and on a Combined Historical Basis), significantly exceeding our previously issued guidance of $25 million to $26 million and, for full year 2019, our political advertising revenue was $68 million. In 2017, the most recent non election year, and on a Combined Historical Basis, our political advertising revenue was $14 million in the fourth quarter of 2017 and $31 million for the full year 2017. As a result, on a Combined Historical Basis our political advertising revenue for the fourth quarter of 2019 was approximately 171% greater than that of the fourth quarter of 2017, and for the year, it was 119% greater than the full year 2017.

 

Balance Sheet – During the fourth quarter of 2019, we repurchased slightly over one million shares of our common stock on the open market at an average price of $20.86 per share, including commissions, for a total cost of approximately $21 million, under a stock repurchase authorization adopted in November, 2019. During the fourth quarter of 2019, we made voluntary pre-payments totaling $200 million on the term loan outstanding under our senior credit facility, using cash on hand, that reduced the lenders’ total loan commitment for the senior credit facility by an equal amount. As of December 31, 2019, our total leverage ratio, as defined in our senior credit facility, was 4.35 times on a trailing eight-quarter basis after netting our total cash on hand of $212 million and after giving effect to all Transaction Related Expenses (as defined below).

 

Operational Update – We have essentially completed the integration of our operations with that of our 2019 Acquisitions (as defined herein) including our acquisition of Raycom Media, Inc. Our actions have resulted in annualized synergies of at least $85 million.

 

Transaction Related Expenses and Non-Cash Stock-Based Compensation - During our fourth quarter and year to date 2019 and 2018 periods, we incurred incremental expenses (“Transaction Related Expenses”) on an As-Reported Basis 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

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2019

   

2018

   

2019

   

2018

 

Transaction Related Expenses:

                               

Broadcast

  $ 7     $ -     $ 45     $ 3  

Corporate and administrative

    -       2       34       8  

Total Transaction Related Expenses

  $ 7     $ 2     $ 79     $ 11  
                                 

Total non-cash stock-based compensation

  $ 6     $ 2     $ 16     $ 7  

 

 

4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 F 404.261.9607 | www.gray.tv

 


 

Selected Statement of Operations Data – The following table presents certain operating data for the fourth quarter and year to date 2019 and 2018 periods (in millions, except for per share data):

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
   

2019

   

2018

   

2019

   

2018

 

As-Reported:

                               

Net income attributable to common stockholders

  $ 81     $ 88     $ 127     $ 211  

Net income attributable to common stockholders, diluted, per share

  $ 0.81     $ 1.00     $ 1.27     $ 2.37  

Adjusted EBITDA (1)

  $ 215     $ 161     $ 714     $ 465  
                                 

Excluding Transaction Related Expenses and non-cash stock-based comp:

                               

Net income attributable to common stockholders (1)

  $ 91     $ 91     $ 198     $ 224  

Net income attributable to common stockholders, diluted, per share (1)

  $ 0.91     $ 1.02     $ 1.98     $ 2.52  

 

(1) See reconciliation of non-GAAP amounts to net income, included elsewhere herein.

 

Selected Guidance Data - Based on our current forecasts and expectations, which include consistent macroeconomic and industry trends, immaterial stock repurchases and immaterial business acquisitions, we currently anticipate revenue and expenses within the following approximate ranges for the quarter ended March 31, 2020 (“first quarter of 2020”) and for year ended December 31, 2020 as set forth below (in millions):

 

   

Three Months Ended

   

Year Ended

 
   

March 31, 2020

   

December 31, 2020

 
   

Low

   

High

   

Low

   

High

 
   

Guidance

   

Guidance

   

Guidance

   

Guidance

 
                                 

Total revenue

  $ 540     $ 555     $ 2,375     $ 2,425  

Political Revenue

  $ 35     $ 40     $ 250     $ 275  
                                 

Operating expenses before depreciation, amortization and gain on disposal of assets, net:

  $ 384     $ 391     $ 1,530     $ 1,545  
                                 

Free Cash Flow

                          $ 500  

 

Subject to the foregoing qualifications and guidance, by year-end 2020, we currently expect that our total leverage ratio will continue to decline to a range of between 3.7 and 3.8 times, on a trailing eight-quarter basis, after netting our total cash, and after giving effect to all Transaction Related Expenses. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations.

 

Combined Historical Basis Information

 

We define “2019 Acquisitions” as the businesses acquired, and stations divested in connection with the merger with Raycom Media, Inc. (the “Raycom Merger”) completed on January 2, 2019; the acquisition of the assets of WWNY-TV (CBS) and WNYF-CD (FOX) in Watertown, New York (DMA 181) and KEYC-TV (CBS/FOX) in Mankato, Minnesota (DMA 198) from United Communications Corporation (the “United Acquisition”) completed on May 1, 2019; the acquisition of KDLT-TV (NBC), in the Sioux Falls, South Dakota market (DMA 113) from Red River Broadcasting Co., LLC on September 25, 2019; the acquisition of WVIR-TV (NBC) in the Charlottesville, Virginia market (DMA 182) from Waterman Broadcasting Corporation on October 1, 2019; and the divestiture of our legacy stations in the Charlottesville, Virginia market, WCAV-TV (CBS/FOX) and WVAW-LD (ABC), also on October 1, 2019. Including the 2019 Acquisitions, from January 1, 2017 through December 31, 2019, we completed several acquisition and divestiture transactions, including some that had a material impact on our results of operations. In order to provide more meaningful period over period comparisons, we present certain financial information below on a “Combined Historical Basis” or “CHB.” Our Combined Historical Basis presentation reflects financial results that have been compiled by adding Gray’s historical revenue, broadcast expenses and corporate and administrative expenses to the historical revenue, broadcast expenses and corporate and administrative expenses of the net stations acquired in those acquisitions, and subtracting the historical revenues and broadcast expenses of the divested stations as if all stations had been acquired or divested, respectively, on January 1, 2017, the beginning of the earliest period that CHB information is presented herein. For more information on CHB, see “Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms” at the end of this release.

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 2 of 21
 

 

Selected Operating Data on As-Reported Basis (unaudited):

 

   

Three Months Ended December 31,

 
   

2019

   

2018

   

% Change

2019 to

2018

   

2017

   

% Change

2019 to

2017

 
   

(dollars in millions)

 

Revenue (less agency commissions):

                                           

Broadcast

  $ 554     $ 328       69 %     $ 234       137 %  

Production companies

  $ 25     $ -               $ -            

Total revenue

  $ 579     $ 328       77 %     $ 234       147 %  
                                             

Political

  $ 38     $ 83       (54 )%     $ 7       443 %  
                                             

Operating expenses (1)(3):

                                           

Broadcast

  $ 339     $ 160       112 %     $ 151       125 %  

Production companies

  $ 17     $ -               $ -            

Corporate and administrative

  $ 21     $ 11       91 %     $ 7       200 %  
                                             

Net income

  $ 94     $ 88       7 %     $ 166       (43 )%  
                                             

Non-GAAP Cash Flow (2):

                                           

Broadcast Cash Flow (3)

  $ 229     $ 172       33 %     $ 87       163 %  

Broadcast Cash Flow Less Cash Corporate Expenses (3)

  $ 212     $ 163       30 %     $ 81       162 %  

Free Cash Flow

  $ 108     $ 98       10 %     $ 41       163 %  
                                             

Transaction related expenses included in operating expenses (4):

                                           

Broadcast

  $ 7     $ -               $ 1            

Production companies

  $ -     $ -               $ -            

Corporate and administrative

  $ -     $ 2               $ -            

 

   

Year Ended December 31,

 
   

2019

   

2018

   

% Change

2019 to

2018

   

2017

   

% Change

2019 to

2017

 
   

(dollars in millions)

 

Revenue (less agency commissions):

                                           

Broadcast

  $ 2,035     $ 1,084       88 %     $ 883       130 %  

Production companies

  $ 87     $ -               $ -            

Total revenue

  $ 2,122     $ 1,084       96 %     $ 883       140 %  
                                             

Political

  $ 68     $ 155       (56 )%     $ 16       325 %  
                                             

Operating expenses (1)(3):

                                           

Broadcast

  $ 1,325     $ 596       122 %     $ 558       137 %  

Production companies

  $ 74     $ -               $ -            

Corporate and administrative

  $ 104     $ 41       154 %     $ 32       225 %  
                                             

Net income

  $ 179     $ 211       (15 )%     $ 262       (32 )%  
                                             

Non-GAAP Cash Flow (2):

                                           

Broadcast Cash Flow (3)

  $ 729     $ 493       48 %     $ 329       122 %  

Broadcast Cash Flow Less Cash Corporate Expenses (3)

  $ 636     $ 457       39 %     $ 302       111 %  

Free Cash Flow

  $ 273     $ 263       4 %     $ 171       60 %  
                                             

Transaction related expenses included in operating expenses (4):

                                           

Broadcast

  $ 45     $ 3               $ 3            

Production companies

  $ -     $ -               $ -            

Corporate and administrative

  $ 34     $ 8               $ 1            

 

(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 herein.

(3)

Amounts in 2017 have been reclassified to give effect to the implementation of Accounting Standards Update 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Postretirement Benefit Cost (“ASU 2017-07”).

(4)

Transaction Related Expenses are 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.

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 3 of 21
 

 

Results of Operations for the Fourth Quarter of 2019 on an As-Reported basis:

 

Revenue (Less Agency Commissions).

 

The table below presents our revenue (less agency commissions) by type for the quarters ended December 31, 2019 and 2018 (dollars in millions):

 

   

Three Months Ended December 31,

 
   

2019

   

2018

   

Amount

   

Percent

 
           

Percent

           

Percent

   

Increase

   

Increase

 
   

Amount

   

of Total

   

Amount

   

of Total

   

(Decrease)

   

(Decrease)

 

Revenue (less agency commissions):

                                                     

Local (including internet/digital/mobile)

  $ 243       42.0 %     $ 117       35.7 %     $ 126       108 %  

National

    67       11.6 %       31       9.5 %       36       116 %  

Political

    38       6.6 %       83       25.3 %       (45 )     (54 )%  

Retransmission consent

    195       33.7 %       93       28.4 %       102       110 %  

Production companies

    25       4.3 %       -       0.0 %       25            

Other

    11       1.8 %       4       1.1 %       7       175 %  

Total

  $ 579       100.0 %     $ 328       100.0 %     $ 251       77 %  

 

 

Total revenue increased primarily as a result of the 2019 Acquisitions, but political advertising revenue decreased in 2019 due to 2019 being the “off-year” of the two-year election cycle. The 2019 Acquisitions accounted for $314 million of the increase in our total revenue for the fourth quarter of 2019 compared to the fourth quarter of 2018. Excluding the revenue attributable to the 2019 Acquisitions, revenue decreased by $63 million or 19% in the fourth quarter of 2019 as compared to the fourth quarter of 2018 solely as a result of decreased political advertising revenue.

 

Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets).

 

Broadcast operating expenses increased $179 million, or 112%, to $339 million for the fourth quarter of 2019 compared to 2018. The 2019 Acquisitions accounted for $174 million of the increase in broadcast operating expenses for the fourth quarter of 2019. The table below presents our operating expenses (before depreciation, amortization and gain or loss on disposal of assets) for the quarters ended December 31, 2019 and 2018, respectively:

 

   

Three Months Ended December 31,

 
   

2019

   

2018

   

Amount

   

Percent

 
           

Percent

           

Percent

   

Increase

   

Increase

 
   

Amount

   

of Total

   

Amount

   

of Total

   

(Decrease)

   

(Decrease)

 
    (dollars in millions)  

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):

                                                     

Broadcast:

                                                     

Station expenses

  $ 223       65.8 %     $ 117       73.1 %     $ 106       91 %  

Retransmission expense

    107       31.6 %       43       26.9 %       64       149 %  

Transaction Related Expenses

    7       2.1 %       -       0.0 %       7            

Non-cash stock-based compensation

    2       0.5 %       -       0.0 %       2            

Total broadcast expense

  $ 339       100.0 %     $ 160       100.0 %     $ 179       112 %  
                                                       

Production companies expense

  $ 17               $ -               $ 17            
                                                       

Corporate and administrative:

                                                     

Corporate expenses

  $ 17       81.0 %     $ 7       63.6 %     $ 10       143 %  

Transaction Related Expenses

    -       0.0 %       2       18.2 %       (2 )          

Non-cash stock-based compensation

    4       19.0 %       2       18.2 %       2            

Total corporate and administrative expense

  $ 21       100.0 %     $ 11       100.0 %     $ 10       91 %  

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 4 of 21
 

 

Results of Operations for the Year Ended December 31, 2019 on an As-Reported basis:

 

Revenue (Less Agency Commissions).

 

The table below presents our revenue (less agency commissions) by type for the years ended December 31, 2019 and 2018, respectively (dollars in millions):

 

   

Year Ended December 31,

 
   

2019

   

2018

   

Amount

   

Percent

 
           

Percent

           

Percent

   

Increase

   

Increase

 
   

Amount

   

of Total

   

Amount

   

of Total

   

(Decrease)

   

(Decrease)

 

Revenue (less agency commissions):

                                                     

Local (including internet/digital/mobile)

  $ 898       42.3 %     $ 443       40.9 %     $ 455       103 %  

National

    229       10.8 %       114       10.5 %       115       101 %  

Political

    68       3.2 %       155       14.3 %       (87 )     (56 )%  

Retransmission consent

    796       37.5 %       355       32.7 %       441       124 %  

Production companies

    87       4.1 %       -       0.0 %       87            

Other

    44       2.1 %       17       1.6 %       27       159 %  

Total

  $ 2,122       100.0 %     $ 1,084       100.0 %     $ 1,038       96 %  

 

 

The stations and production companies acquired in the 2019 Acquisitions accounted for $1.1 billion of the increase in our total revenue during 2019. Excluding the revenue attributable to the 2019 Acquisitions, revenue decreased by $95 million due to decreases in political advertising revenue, resulting primarily from 2019 being an “off-year” of the two-year political advertising cycle, partially offset by increases in retransmission consent revenue resulting from increases in rates.

 

Operating Expenses (before depreciation, amortization and gain or loss on disposal of assets) on an As-Reported Basis.   

 

Broadcast operating expenses increased $729 million, or 122%, to $1.3 billion for 2019 compared to $596 million in 2018. The 2019 Acquisitions accounted $713 million of the increase in broadcast operating expenses in 2019. The table below presents our operating expenses (before depreciation, amortization and gain or loss on disposal of assets) for the years ended December 31, 2019 and 2018, respectively:

 

   

Year Ended December 31,

 
   

2019

   

2018

   

Amount

   

Percent

 
           

Percent

           

Percent

   

Increase

   

Increase

 
   

Amount

   

of Total

   

Amount

   

of Total

   

(Decrease)

   

(Decrease)

 
   

(dollars in millions)

 

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):

                                                     

Broadcast:

                                                     

Station expenses

  $ 855       64.5 %     $ 426       71.5 %     $ 429       101 %  

Retransmission expense

    420       31.7 %       165       27.7 %       255       155 %  

Transaction Related Expenses

    45       3.4 %       3       0.5 %       42            

Non-cash stock-based compensation

    5       0.4 %       2       0.3 %       3            

Total broadcast expense

  $ 1,325       100.0 %     $ 596       100.0 %     $ 729       122 %  
                                                       

Production companies expense

  $ 74               $ -               $ 74            
                                                       

Corporate and administrative:

                                                     

Corporate expenses

  $ 59       56.7 %     $ 28       68.3 %     $ 31       111 %  

Transaction Related Expenses

    34       32.7 %       8       19.5 %       26            

Non-cash stock-based compensation

    11       10.6 %       5       12.2 %       6            

Total corporate and administrative expense

  $ 104       100.0 %     $ 41       100.0 %     $ 63       154 %  

 

 

Taxes.

 

During 2019 and 2018, we made aggregate federal and state income tax payments (net of refunds) of approximately $23 million and $34 million, respectively. During 2020, we anticipate making income tax payments (net of refunds) within a range of approximately $79 million to $81 million. As of December 31, 2019, 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, therefore we believe that it is more likely than not 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.

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 5 of 21
 

 

Detailed table of operating results on As-Reported Basis:

 

Gray Television, Inc.

Selected Operating Data (Unaudited)

(in millions, except for net income per share data)

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

December 31,

 
                                 
   

2019

   

2018

   

2019

   

2018

 
                                 

Revenue (less agency commissions)

                               

Broadcasting

  $ 554     $ 328     $ 2,035     $ 1,084  

Production companies

    25       -       87       -  

Total revenue (less agency commissions)

    579       328       2,122       1,084  

Operating expenses before depreciation, amortization and gain on disposal of assets, net:

                               

Broadcast

    339       160       1,325       596  

Production companies

    17       -       74       -  

Corporate and administrative

    21       11       104       41  

Depreciation

    20       13       80       54  

Amortization of intangible assets

    29       5       115       21  

Gain on disposal of assets, net

    (27 )     (11 )     (54 )     (17 )

Operating expenses

    399       178       1,644       695  

Operating income

    180       150       478       389  

Other income (expense):

                               

Miscellaneous income, net

    -       3       4       6  

Interest expense

    (54 )     (32 )     (227 )     (107 )

Income before income tax

    126       121       255       288  

Income tax expense

    32       33       76       77  

Net income

    94       88       179       211  

Preferred stock dividends

    13       -       52       -  

Net income attributable to common stockholders

  $ 81     $ 88     $ 127     $ 211  
                                 

Basic per share information:

                               

Net income attributable to common stockholders

  $ 0.82     $ 1.01     $ 1.28     $ 2.39  

Weighted-average shares outstanding

    99       88       99       88  
                                 

Diluted per share information:

                               

Net income attributable to common stockholders

  $ 0.81     $ 1.00     $ 1.27     $ 2.37  

Weighted-average shares outstanding

    100       89       100       89  

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 6 of 21
 

 

Other Financial Data on an As-Reported Basis:

 

   

December 31, 2019

   

December 31, 2018

 
   

(in millions)

 
                 

Cash

  $ 212     $ 667  

Restricted cash

  $ -     $ 752  

Long-term debt, including current portion, net of deferred financing costs

  $ 3,697     $ 2,549  

Borrowing availability under our senior credit facility

  $ 200     $ 100  

 

 

   

Year Ended December 31,

 
   

2019

   

2018

 
   

(in millions)

 
                 

Net cash provided by operating activities

  $ 385     $ 323  

Net cash used in investing activities

    (2,656 )     (47 )

Net cash provided by financing activities

    1,064       681  

Net (decrease) increase in cash and restricted cash

  $ (1,207 )   $ 957  

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 7 of 21
 

 

Selected Operating Data on Combined Historical Basis (1) (unaudited):

 

   

Three Months Ended December 31,

 
   

2019

   

2018

   

% Change

2019 to

2018

   

2017

   

% Change

2019 to

2017

 
   

(dollars in millions)

 

Revenue (less agency commissions):

                                           

Broadcast

  $ 554     $ 625       (11 )%     $ 477       16 %  

Production companies

  $ 25     $ 22       14 %     $ 25       0 %  

Total revenue

  $ 579     $ 647       (11 )%     $ 502       15 %  
                                             

Political

  $ 38     $ 127       (70 )%     $ 14       171 %  
                                             

Operating expenses (2) (3):

                                           

Broadcast

  $ 339     $ 334       1 %     $ 312       9 %  

Production companies

  $ 17     $ 16       6 %     $ 18       (6 )%  

Corporate and administrative

  $ 21     $ 31       (32 )%     $ 21       0 %  
                                             

Non-GAAP Cash Flow (2):

                                           

Broadcast Cash Flow(3)

  $ 236     $ 306       (23 )%     $ 181       30 %  

Broadcast Cash Flow Less Cash Corporate Expenses

  $ 221     $ 279       (21 )%     $ 163       36 %  

Operating Cash Flow as Defined in our Senior Credit Agreement

  $ 221     $ 307       (28 )%     $ 180       23 %  

Free Cash Flow

  $ 119     $ 200       (41 )%     $ 70       70 %  
                                             

Transaction related expenses included in operating expenses (4):

                                           

Broadcast

  $ 7     $ -               $ 1            

Production companies

  $ -     $ -               $ -            

Corporate and administrative

  $ 1     $ 8               $ -            

 

   

Year Ended December 31,

 
   

2019

   

2018

   

% Change

2019 to

2018

   

2017

   

% Change

2019 to

2017

 
   

(dollars in millions)

 

Revenue (less agency commissions):

                                           

Broadcast

  $ 2,044     $ 2,110       (3 )%     $ 1,813       13 %  

Production companies

  $ 87     $ 86       1 %     $ 85       2 %  

Total revenue

  $ 2,131     $ 2,196       (3 )%     $ 1,898       12 %  
                                             

Political

  $ 68     $ 235       (71 )%     $ 31       119 %  
                                             

Operating expenses (2) (3):

                                           

Broadcast

  $ 1,335     $ 1,248       7 %     $ 1,181       13 %  

Production companies

  $ 74     $ 74       0 %     $ 71       4 %  

Corporate and administrative

  $ 104     $ 85       22 %     $ 64       63 %  
                                             

Non-GAAP Cash Flow (2):

                                           

Broadcast Cash Flow(3)

  $ 779     $ 894       (13 )%     $ 666       17 %  

Broadcast Cash Flow Less Cash Corporate Expenses

  $ 687     $ 822       (16 )%     $ 612       12 %  

Operating Cash Flow as Defined in our Senior Credit Agreement

  $ 718     $ 914       (21 )%     $ 690       4 %  

Free Cash Flow

  $ 358     $ 534       (33 )%     $ 301       19 %  
                                             

Transaction related expenses included in operating expenses (4):

                                           

Broadcast

  $ 45     $ 3               $ 3            

Production companies

  $ -     $ -               $ -            

Corporate and administrative

  $ 34     $ 14               $ 1            

 

(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 herein.

(3)

Amounts in 2017 have been reclassified to give effect to the implementation of Accounting Standards Update 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Postretirement Benefit Cost (“ASU 2017-07”).

(4)

Transaction Related Expenses are 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.

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 8 of 21
 

 

Results of Operations for the Fourth Quarter of 2019 on the Combined Historical Basis:

 

   

Three Months Ended December 31,

 
                   

Amount

   

Percent

 
                   

Increase

   

Increase

 
   

2019

   

2018

   

(Decrease)

   

(Decrease)

 
   

(dollars in millions)

 

REVENUE (less agency commissions):

                                 

Broadcast:

                                 

Local (including internet/digital/mobile)

  $ 243     $ 244     $ (1 )     0 %  

National

    67       66       1       2 %  

Political

    38       127       (89 )     (70 )%  

Retransmission consent

    195       178       17       10 %  

Other

    11       10       1       10 %  

Total Broadcast revenue

    554       625       (71 )     (11 )%  

Production companies revenue

    25       22       3       14 %  

Total revenue

  $ 579     $ 647     $ (68 )     (11 )%  
                                   

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):

                                 

Broadcast:

                                 

Station expenses

  $ 223     $ 243     $ (20 )     (8 )%  

Retransmission expense

    107       91       16       18 %  

Transaction Related Expenses

    7       -       7            

Non-cash stock-based compensation

    2       -       2            

Total broadcast expense

  $ 339     $ 334     $ 5       1 %  
                                   

Production companies expense

  $ 17     $ 16     $ 1       6 %  
                                   

Corporate and administrative:

                                 

Corporate expenses

  $ 17     $ 19     $ (2 )     (11 )%  

Transaction Related Expenses

    -       8       (8 )          

Non-cash stock-based compensation

    4       4       -            

Total corporate and administrative expense

  $ 21     $ 31     $ (10 )     (32 )%  

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 9 of 21
 

 

Results of Operations for the Year Ended December 31, 2019 on the Combined Historical basis:

 

   

Year Ended December 31,

 
                   

Amount

   

Percent

 
                   

Increase

   

Increase

 
   

2019

   

2018

   

(Decrease)

   

(Decrease)

 
   

(dollars in millions)

 

REVENUE (less agency commissions):

                                 

Broadcast:

                                 

Local (including internet/digital/mobile)

  $ 903     $ 913     $ (10 )     (1 )%  

National

    230       242       (12 )     (5 )%  

Political

    68       235       (167 )     (71 )%  

Retransmission consent

    799       677       122       18 %  

Other

    44       43       1       2 %  

Total Broadcast revenue

    2,044       2,110       (66 )     (3 )%  

Production companies revenue

    87       86       1       1 %  

Total revenue

  $ 2,131     $ 2,196     $ (65 )     (3 )%  
                                   

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):

                                 

Broadcast:

                                 

Station expenses

  $ 863     $ 892     $ (29 )     (3 )%  

Retransmission expense

    422       351       71       20 %  

Transaction Related Expenses

    45       3       42            

Non-cash stock-based compensation

    5       2       3            

Total broadcast expense

  $ 1,335     $ 1,248     $ 87       7 %  
                                   

Production companies expense

  $ 74     $ 74     $ -       0 %  
                                   

Corporate and administrative:

                                 

Corporate expenses

  $ 59     $ 58     $ 1       2 %  

Transaction Related Expenses

    34       14       20            

Non-cash stock-based compensation

    11       13       (2 )          

Total corporate and administrative expense

  $ 104     $ 85     $ 19       22 %  

 

 

Gray Television, Inc.  
Earnings Release for the three-months and year ended December 31, 2019 Page 10 of 21
 

 

Guidance for the Three-Months Ending March 31, 2020:   

 

Based on our current forecasts for the quarter ending March 31, 2020 (the “first quarter of 2020”), we anticipate changes from the quarter ended March 31, 2019 (the “first quarter of 2019”), as outlined below:

 

   

As Reported Basis

 

Selected operating data:

 

Three Months Ending March 31,

 
   

Low End Guidance

   

High End Guidance

         
   

Low

   

Amount

   

Percentage

   

High

   

Amount

   

Percentage

         
   

Guidance for

   

Change From

   

Change From

   

Guidance for

   

Change From

   

Change From

         
   

the First

   

First

   

First

   

the First

   

First

   

First

   

First

 
   

Quarter of

   

Quarter of

   

Quarter of

   

Quarter of

   

Quarter of

   

Quarter of

   

Quarter of

 
   

2020

   

2019

   

2019

   

2020

   

2019

   

2019

   

2019

 
   

(dollars in millions)

 

REVENUE (less agency commissions):

                                                           

Broadcast:

                                                           

Local (including internet/digital/mobile)

  $ 205     $ (6 )     (3 )%     $ 209     $ (2 )     (1 )%     $ 211  

National

    52       2       4 %       54       4       8 %       50  

Political

    35       32       1067 %       40       37       1233 %       3  

Retransmission consent

    213       9       4 %       215       11       5 %       204  

Other

    15       2       15 %       16       3       23 %       13  

Total Broadcast revenue

    520       39       8 %       534       53       11 %       481  

Production companies revenue

    20       (17 )     (46 )%       21       (16 )     (43 )%       37  

Total revenue

  $ 540     $ 22       4 %     $ 555     $ 37       7 %     $ 518  
                                                             

OPERATING EXPENSES (before depreciation, amortization and (gain) loss on disposal of assets):

                                                           

Broadcast:

                                                           

Station expenses

  $ 221     $ 4       2 %     $ 224     $ 7       3 %     $ 217  

Retransmission expense

    123       19       18 %       124       20       19 %       104  

Transaction Related Expenses

    -       (35 )               -       (35 )               35  

Non-cash stock-based compensation

    2       2                 2       2                 -  

Total broadcast expense

  $ 346     $ (10 )     (3 )%     $ 350     $ (6 )     (2 )%     $ 356  
                                                             

Production companies expense

  $ 20     $ (15 )     (43 )%     $ 21     $ (14 )     (40 )%     $ 35  
                                                             

Corporate and administrative:

                                                           

Corporate expenses

  $ 16     $ 3       23 %     $ 18     $ 5       38 %     $ 13