false 0000043196 0000043196 2022-08-05 2022-08-05 0000043196 gtn:ClassACommonStockCustomMember 2022-08-05 2022-08-05 0000043196 gtn:CommonStockCustomMember 2022-08-05 2022-08-05

 

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) August 5, 2022 (August 5, 2022)

 

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 August 5, 2022, Gray Television, Inc. issued a press release reporting its financial results for the three-months and six-months ended June 30, 2022. 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 August 5, 2022

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.
August 5, 2022	By:	/s/ James C. Ryan
		Name:	James C. Ryan
		Title:	Executive Vice President and Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

NEWS RELEASE

 

Gray Television Delivers Solid Second Quarter Operating Results

 

Atlanta, Georgia –August 5, 2022. . . Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announced its strong financial results for the second quarter ended June 30, 2022, including a 231% increase in net income attributable to common stockholders, compared to the second quarter of 2021. Overall, the second quarter of 2022 produced record results, including $868 million in total revenue, due to the combination of recent acquisitions, added scale, increasingly efficient integrated operations, and the “on-year” of the two-year political advertising cycle. We anticipate continued strong financial results for the remainder of the year, especially political advertising revenue. Based on our current forecasts, we now anticipate that our political advertising revenue for calendar year 2022 will match the $652 million of political advertising revenue that our current portfolio of stations recorded in 2020, a presidential election year.

 

Gray’s strong cash flow in the second quarter of 2022 enabled us to return $125 million of capital to our shareholders during the second quarter by, paying down $54 million of outstanding debt; repurchasing $50 million of our common stock in the open market; and paying $21 million of cash dividends to our preferred and common shareholders. Even after these actions, Gray ended the quarter with $162 million of cash on hand. Strong operating results and political advertising revenue are expected to enable Gray to fund additional de-leveraging and cash dividend payments during the remainder of the year.

 

Due to the significant effect that material transactions have had on our results of our operations, we present the financial information herein consistent with both U.S. Generally Accepted Accounting Principles (“GAAP” or “As Reported Basis”) and on a Combined Historical Basis (“CHB”), which incorporates certain historical results of acquired businesses, less the historical results of divested businesses. We also furnish certain other detailed non-GAAP metrics to provide more meaningful period-over-period comparisons to assist the public in its analysis and valuation of the Company. This additional information includes a summary of incremental expenses that were specific to our acquisitions, divestitures, and related financing activities (“Transaction Related Expenses”), non-cash stock-based compensation expenses and certain non-GAAP terms common in our industry. Please refer to the detailed discussion of the foregoing terms and concepts included elsewhere herein.

 

---

Summary of Second Quarter Operating Results

---

 

As Reported Basis (the respective 2021 periods reflect the “off-year” of the two-year political advertising cycle):

 

●

Total revenue was $868 million, an increase of 59% from the second quarter of 2021.

 

●

Net income attributable to common stockholders was $86 million, or $0.91 per fully diluted share, an increase of 231% from the second quarter of 2021.

 

●

Broadcast Cash Flow was $327 million, an increase of 79% from the second quarter of 2021.

 

●

Adjusted EBITDA was $309 million, an increase of 82% from the second quarter of 2021.

 

Combined Historical Basis (the respective 2021 periods reflect the “off-year” of the two year political advertising cycle):

 

●

Revenue was $868 million, an increase of 15% from the second quarter of 2021.

 

●

Core Advertising Revenue decreased less than 1% from the second quarter of 2021.

 

●

Broadcast Cash Flow was $330 million, an increase of 25% from the second quarter of 2021.

 

Other Key Metrics

 

●	As of June 30, 2022, our Total Leverage Ratio, Net of all Cash, was 5.16 times on a trailing eight-quarter basis, netting our total cash balance of $162 million and giving effect to all Transaction Related Expenses, which is calculated as set forth in our Senior Credit Facility.

 

 

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

●

During the three and six-months ended June 30, 2022 and 2021, we incurred Transaction Related Expenses on an As Reported Basis that included but were not limited to legal and professional fees, severance and incentive compensation and contract termination fees. In addition, we recorded certain non-cash stock-based compensation expenses. These expenses are summarized as follows:

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
		(in millions)
Transaction Related Expenses:
Broadcasting		$	2			$	-			$	4			$	-
Corporate and administrative			-				7				1				8
Miscellaneous expense, net			-				7				-				7
Total Transaction Related Expenses		$	2			$	14			$	5			$	15
Total non-cash stock-based compensation		$	6			$	4			$	11			$	7

 

Taxes

 

●

During the six-months ended June 30, 2022 and 2021, we made income tax payments of $119 million and $38 million, respectively. During the remainder of 2022, based on our current forecasts, we anticipate making income tax payments (net of our expected $21 million refund) within a range of $70 million to $90 million.

 

●	As of June 30, 2022, we have an aggregate of $337 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized.

 

FOX Network Affiliation Agreement Renewal

 

On August 4, 2022, we renewed the network affiliations for all of our FOX affiliated television stations across 27 markets, including Portland, Oregon; Cincinnati, Ohio; Greenville-Spartanburg, South Carolina; West Palm Beach, Florida; Las Vegas, Nevada; Birmingham, Alabama; and New Orleans, Louisiana.

 

---

Guidance for the Three-Months Ending September 30, 2022

---

 

Based on our current forecasts for the quarter ending September 30, 2022, we anticipate the following key financial results, as outlined below in approximate ranges. We present revenue net of agency commissions. We exclude depreciation, amortization and gain/loss on disposal of assets from our estimates of operating expenses.

 

●    Revenue:

o

Core advertising revenue of $345 million to $355 million.

o

Retransmission revenue of $365 million to $370 million.

o

Political revenue of $193 million to $195 million.

o

Production company revenue of $20 million to $21 million.

o

Total revenue of $940 million to $959 million.

 

●    Operating Expenses:

o

Broadcasting expenses of $545 million to $550 million, including retransmission expense of approximately $225 million and transaction related expenses of approximately $1 million and non-cash stock-based compensation expense of approximately $1 million.

o

Production company expenses of approximately $17 million.

o

Corporate expenses of $30 million to $35 million, including transaction related expenses of approximately $1 million and non-cash stock-based compensation expense of approximately $5 million.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on As Reported Basis (Unaudited)

---

 

		Three Months Ended June 30,
										% Change								% Change
										2022 to								2022 to
		2022				2021				2021				2020				2020
		(dollars in millions)
Revenue (less agency commissions):
Broadcasting		$	855			$	537				59	%		$	449				90	%
Production companies			13				10				30	%			2				550	%
Total revenue		$	868			$	547				59	%		$	451				92	%
Political advertising revenue		$	90			$	6				1400	%		$	21				329	%
Operating expenses (1):
Broadcasting		$	528			$	354				49	%		$	324				63	%
Production companies		$	14			$	9				56	%		$	5				180	%
Corporate and administrative		$	25			$	25				0	%		$	17				47	%
Net income		$	99			$	39				154	%		$	11				800	%
Non-GAAP cash flow (2):
Broadcast Cash Flow		$	327			$	183				79	%		$	123				166	%
Broadcast Cash Flow Less
Cash Corporate Expenses		$	306			$	161				90	%		$	108				183	%
Free Cash Flow		$	38			$	34				12	%		$	35				9	%

 

		Six Months Ended June 30,
										% Change								% Change
										2022 to								2022 to
		2022				2021				2021				2020				2020
		(dollars in millions)
Revenue (less agency commissions):
Broadcasting		$	1,659			$	1,067				55	%		$	964				72	%
Production companies			36				24				50	%			21				71	%
Total revenue		$	1,695			$	1,091				55	%		$	985				72	%
Political advertising revenue		$	116			$	15				673	%		$	57				104	%
Operating expenses (1):
Broadcasting		$	1,058			$	715				48	%		$	659				61	%
Production companies		$	40			$	26				54	%		$	24				67	%
Corporate and administrative		$	53			$	43				23	%		$	32				66	%
Net income		$	161			$	78				106	%		$	64				152	%
Non-GAAP cash flow (2):
Broadcast Cash Flow		$	598			$	351				70	%		$	304				97	%
Broadcast Cash Flow Less
Cash Corporate Expenses		$	554			$	314				76	%		$	276				101	%
Free Cash Flow		$	177			$	112				58	%		$	120				48	%

 

(1)	Excludes depreciation, amortization and gain on disposal of assets.

(2)	See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included elsewhere herein.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on As Reported Basis (Unaudited)

---

 

		Three Months Ended June 30,
		2022								2021								Amount				Percent
						Percent								Percent				Increase				Increase
		Amount				of Total				Amount				of Total				(Decrease)				(Decrease)
		(dollars in millions)
Revenue (less agency commissions):
Core advertising		$	366				42	%		$	279				51	%		$	87				31	%
Political			90				10	%			6				1	%			84				1400	%
Retransmission consent			382				44	%			242				44	%			140				58	%
Production companies			13				1	%			10				2	%			3				30	%
Other			17				3	%			10				2	%			7				70	%
Total		$	868				100	%		$	547				100	%		$	321				59	%

 

Operating expenses (before depreciation, amortization and gain on disposal of assets):
Broadcasting:
Station expenses		$	300				57	%		$	209				59	%		$	91				44	%
Retransmission expense			225				43	%			144				41	%			81				56	%
Transaction Related Expenses			2				0	%			-				0	%			2				100	%
Non-cash stock-based compensation			1				0	%			1				0	%			-				0	%
Total broadcasting expense		$	528				100	%		$	354				100	%		$	174				49	%
Production companies expense		$	14							$	9							$	5				56	%
Corporate and administrative:
Corporate expenses		$	20				80	%		$	15				60	%		$	5				33	%
Transaction Related Expenses			-				0	%			7				28	%			(7	)			(100	)%
Non-cash stock-based compensation			5				20	%			3				12	%			2				67	%
Total corporate and administrative expense		$	25				100	%		$	25				100	%		$	-				0	%

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on As Reported Basis (Unaudited)

---

 

		Six Months Ended June 30,
		2022								2021								Amount				Percent
						Percent								Percent				Increase				Increase
		Amount				of Total				Amount				of Total				(Decrease)				(Decrease)
		(dollars in millions)
Revenue (less agency commissions):
Core advertising		$	731				43	%		$	539				49	%		$	192				36	%
Political			116				7	%			15				1	%			101				673	%
Retransmission consent			775				46	%			489				45	%			286				58	%
Production companies			36				2	%			24				2	%			12				50	%
Other			37				2	%			24				3	%			13				54	%
Total		$	1,695				100	%		$	1,091				100	%		$	604				55	%

 

Operating expenses (before depreciation, amortization and gain on disposal of assets):
Broadcasting:
Station expenses		$	600				57	%		$	425				60	%		$	175				41	%
Retransmission expense			452				43	%			289				40	%			163				56	%
Transaction Related Expenses			4				0	%			-				0	%			4				100	%
Non-cash stock-based compensation			2				0	%			1				0	%			1				100	%
Total broadcasting expense		$	1,058				100	%		$	715				100	%		$	343				48	%
Production companies expense		$	40							$	26							$	14				54	%
Corporate and administrative:
Corporate expenses		$	43				81	%		$	29				67	%		$	14				48	%
Transaction Related Expenses			1				2	%			8				19	%			(7	)			(88	)%
Non-cash stock-based compensation			9				17	%			6				14	%			3				50	%
Total corporate and administrative expense		$	53				100	%		$	43				100	%		$	10				23	%

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Detail Table of Operating Results on As Reported Basis (Unaudited)

---

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
		(in millions, except for per share information)
Revenue (less agency commissions):
Broadcasting		$	855			$	537			$	1,659			$	1,067
Production companies			13				10				36				24
Total revenue (less agency commissions)			868				547				1,695				1,091
Operating expenses before depreciation, amortization and gain on disposal of assets, net:
Broadcasting			528				354				1,058				715
Production companies			14				9				40				26
Corporate and administrative			25				25				53				43
Depreciation			31				25				63				50
Amortization of intangible assets			52				27				104				53
Gain on disposal of assets, net			-				(1	)			(5	)			(5	)
Operating expenses			650				439				1,313				882
Operating income			218				108				382				209
Other expense:
Miscellaneous expense, net			-				(7	)			(2	)			(6	)
Interest expense			(81	)			(47	)			(160	)			(95	)
Income before income taxes			137				54				220				108
Income tax expense			38				15				59				30
Net income			99				39				161				78
Preferred stock dividends			13				13				26				26
Net income attributable to common stockholders		$	86			$	26			$	135			$	52
Basic per share information:
Net income attributable to common stockholders		$	0.92			$	0.27			$	1.45			$	0.55
Weighted-average shares outstanding			93				95				93				94
Diluted per share information:
Net income attributable to common stockholders		$	0.91			$	0.27			$	1.44			$	0.55
Weighted-average shares outstanding			94				95				94				95

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on Combined Historical Basis (Unaudited)

---

 

		Three Months Ended June 30,
										% Change								% Change
										2022 to								2022 to
		2022				2021				2021				2020				2020
		(dollars in millions)
Revenue (less agency commissions):
Broadcast		$	855			$	744				15	%		$	626				37	%
Production companies			13				10				30	%		$	2				550	%
Total		$	868			$	754				15	%		$	628				38	%
Operating expenses (1):
Broadcast		$	528			$	499				6	%		$	455				16	%
Production companies		$	14			$	9				56	%		$	5				180	%
Corporate and administrative		$	25			$	25				0	%		$	17				47	%
Non-GAAP cash flow (2):
Broadcast Cash Flow		$	330			$	264				25	%		$	186				77	%
Broadcast Cash Flow Less Cash Corporate Expenses		$	309			$	242				28	%		$	171				81	%
Operating Cash Flow as defined in the 2019 Senior Credit Facility		$	310			$	249				24	%		$	171				81	%
Free Cash Flow		$	43			$	75				(43	)%		$	57				(25	)%

 

		Six Months Ended June 30,
										% Change								% Change
										2022 to								2022 to
		2022				2021				2021				2020				2020
		(dollars in millions)
Revenue (less agency commissions):
Broadcast		$	1,659			$	1,483				12	%		$	1,351				23	%
Production companies			36				24				50	%		$	21				71	%
Total		$	1,695			$	1,507				12	%		$	1,372				24	%
Operating expenses (1):
Broadcast		$	1,058			$	1,004				5	%		$	932				14	%
Production companies		$	40			$	26				54	%		$	24				67	%
Corporate and administrative		$	53			$	44				20	%		$	32				66	%
Non-GAAP cash flow (2):
Broadcast Cash Flow		$	602			$	517				16	%		$	454				33	%
Broadcast Cash Flow Less Cash Corporate Expenses		$	558			$	480				16	%		$	426				31	%
Operating Cash Flow as defined in the 2019 Senior Credit Facility		$	561			$	488				15	%		$	426				32	%
Free Cash Flow		$	186			$	194				(4	)%		$	192				(3	)%

 

(1)	Excludes depreciation, amortization and gain on disposal of assets.

(2)	See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included elsewhere herein.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on Combined Historical Basis (Unaudited)

---

 

		Three Months Ended June 30,
		2022								2021								Amount				Percent
						Percent								Percent				Increase				Increase
		Amount				of Total				Amount				of Total				(Decrease)				(Decrease)
		(dollars in millions)
Revenue (less agency commissions):
Core advertising		$	366				42	%		$	369				49	%		$	(3	)			(1	)%
Political			90				10	%			8				1	%			82				1025	%
Retransmission consent			382				44	%			351				47	%			31				9	%
Production companies			13				1	%			10				1	%			3				30	%
Other			17				3	%			16				2	%			1				6	%
Total		$	868				100	%		$	754				100	%		$	114				15	%

 

Operating expenses (before depreciation, amortization and gain on disposal of assets):
Broadcasting:
Station expenses		$	300				57	%		$	291				58	%		$	9				3	%
Retransmission expense			225				43	%			207				42	%			18				9	%
Transaction Related Expenses			2				0	%			-				0	%			2				100	%
Non-cash stock-based compensation			1				0	%			1				0	%			-				0	%
Total broadcasting expense		$	528				100	%		$	499				100	%		$	29				6	%
Production companies expense		$	14							$	9							$	5				56	%
Corporate and administrative:
Corporate expenses		$	20				80	%		$	15				60	%		$	5				33	%
Transaction Related Expenses			-				0	%			7				28	%			(7	)			(100	)%
Non-cash stock-based compensation			5				20	%			3				12	%			2				67	%
Total corporate and administrative expense		$	25				100	%		$	25				100	%		$	-				0	%

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Selected Operating Data on Combined Historical Basis (Unaudited)

---

 

		Six Months Ended June 30,
		2022								2021								Amount				Percent
						Percent								Percent				Increase				Increase
		Amount				of Total				Amount				of Total				(Decrease)				(Decrease)
		(dollars in millions)
Revenue (less agency commissions):
Core advertising		$	731				43	%		$	720				48	%		$	11				2	%
Political			116				7	%			21				1	%			95				452	%
Retransmission consent			775				46	%			707				47	%			68				10	%
Production companies			36				2	%			24				2	%			12				50	%
Other			37				2	%			35				2	%			2				6	%
Total		$	1,695				100	%		$	1,507				100	%		$	188				12	%

 

Operating expenses (before depreciation, amortization and gain on disposal of assets):
Broadcasting:
Station expenses		$	601				57	%		$	586				58	%		$	15				3	%
Retransmission expense			451				43	%			416				42	%			35				8	%
Transaction Related Expenses			4				0	%			-				0	%			4				100	%
Non-cash stock-based compensation			2				0	%			2				0	%			-				0	%
Total broadcasting expense		$	1,058				100	%		$	1,004				100	%		$	54				5	%
Production companies expense		$	40							$	26							$	14				54	%
Corporate and administrative:
Corporate expenses		$	43				81	%		$	30				68	%		$	13				43	%
Transaction Related Expenses			1				2	%			8				18	%			(7	)			(88	)%
Non-cash stock-based compensation			9				17	%			6				14	%			3				50	%
Total corporate and administrative expense		$	53				100	%		$	44				100	%		$	9				20	%

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Other Financial Data on As Reported Basis (Unaudited)

---

 

		Six Months Ended June 30,
		2022				2021
		(in millions)
Net cash provided by operating activities		$	330			$	238
Net cash used in investing activities			(201	)			(177	)
Net cash used in financing activities			(156	)			(49	)
Net (decrease) increase in cash		$	(27	)		$	12

 

		As of
		June 30,				December 31,
		2022				2021
		(in millions)
Cash		$	162			$	189
Long-term debt, including current portion, less deferred financing costs		$	6,705			$	6,755
Series A Perpetual Preferred Stock		$	650			$	650
Borrowing availability under Revolving Credit Facility		$	496			$	497

 

The Company

 

We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households.  This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo Media Group (formerly Tupelo Honey), PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios.

 

Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act

 

This press release contains certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by us. These statements are statements other than those of historical fact and may be identified by words such as “estimates,” “expect,” “anticipate,” “will,” “implied,” “assume” and similar expressions. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include our inability to achieve expected synergies from recent transactions on a timely basis or at all, the impact of recently completed transactions, estimates of future revenue, future expenses and other future events. We are subject to additional risks and uncertainties described in our quarterly and annual reports filed with the Securities and Exchange Commission from time to time, including in the “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained therein, which reports are made publicly available via our website, www.gray.tv. Any forward-looking statements in this press release should be evaluated in light of these important risk factors. This press release reflects management’s views as of the date hereof. Except to the extent required by applicable law, Gray undertakes no obligation to update or revise any information contained in this press release beyond the published date, whether as a result of new information, future events or otherwise. 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, 2021, and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission and available at www.sec.gov.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

Conference Call Information

 

We will host a conference call to discuss our second quarter operating results on August 5, 2022. The call will begin at 11:00 AM Eastern Time. The live dial-in number is 1-800-289-0720 and the confirmation code is 7144937. The call will be webcast live and available for replay at www.gray.tv. The taped replay of the conference call will be available at 1-888-203-1112 and the confirmation code is 7144937, until September 4, 2022.

 

Gray Contacts

 

Web site: www.gray.tv

 

 

Hilton H. Howell, Jr., Executive Chairman and Chief Executive Officer, (404) 266-5513

Pat LaPlatney, President and Co-Chief Executive Officer, (334) 206-1400

Jim Ryan, Executive Vice President and Chief Financial Officer, (404) 504-9828

Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, (404) 266-8333

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms

---

 

From January 1, 2020 through December 31, 2021, we completed several acquisition and divestiture transactions. As more fully described in our Form 10-Q to be filed with the Securities and Exchange Commission today and in our prior disclosures, these transactions materially affected our operations. We refer to all television stations acquired or divested from January 1, 2020 through December 31, 2021, as the “Acquisitions”.

 

Due to the significant effect that the Acquisitions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present herein certain financial information on a Combined Historical Basis (or “CHB”). Combined Historical Basis financial information does not include any adjustments for other events attributable to the Acquisitions unless otherwise described. Certain of the Combined Historical Basis financial information has been derived from, and adjusted based on unaudited, unreviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from the Combined Historical Basis financial information if the Acquisitions had been completed at the stated date. In addition, the presentation of Combined Historical Basis may not comply with United Stated Generally Accepted Accounting Principles (“GAAP”) or the requirements for proforma financial information under Regulation S-X under the Securities Act.

 

From time to time, we supplement our 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 on 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 on 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 on 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.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

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 July 1, 2020. 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 on 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 certain defined purchases) and income taxes paid (net of any refunds received and certain defined payments).

 

We define Adjusted EBITDA as net income or loss, plus loss on 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.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Non-GAAP Terms on As Reported Basis:

---

 

		Three Months Ended June 30,
		2022				2021				2020
		(in millions)
Net income		$	99			$	39			$	11
Adjustments to reconcile from net income to Free Cash Flow:
Depreciation			31				25				21
Amortization of intangible assets			52				27				26
Non-cash stock-based compensation			6				3				3
Gain on disposal of assets, net			-				(1	)			(7	)
Miscellaneous expense, net			-				7				2
Interest expense			81				47				46
Income tax expense			38				15				6
Amortization of program broadcast rights			12				8				10
Payments for program broadcast rights			(13	)			(9	)			(10	)
Corporate and administrative expenses before depreciation, amortization of intangible assets and non-cash stock-based compensation			21				22				15
Broadcast Cash Flow			327				183				123
Corporate and administrative expenses before depreciation, amortization of intangible assets and non-cash stock-based compensation			(21	)			(22	)			(15	)
Broadcast Cash Flow Less Cash Corporate Expenses			306				161				108
Pension benefit			(1	)			-				-
Interest expense			(81	)			(47	)			(46	)
Amortization of deferred financing costs			4				3				3
Preferred stock dividends			(13	)			(13	)			(13	)
Common stock dividends			(8	)			(7	)			-
Purchases of property and equipment (1)			(50	)			(28	)			(24	)
Reimbursements of property and equipment purchases			-				3				8
Income taxes paid, net of refunds			(119	)			(38	)			(1	)
Free Cash Flow		$	38			$	34			$	35

 

(1)	Excludes approximately $62 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Non-GAAP Terms on As Reported Basis:

---

 

		Six Months Ended June 30,
		2022				2021				2020
		(in millions)
Net income		$	161			$	78			$	64
Adjustments to reconcile from net income to Free Cash Flow:
Depreciation			63				50				42
Amortization of intangible assets			104				53				52
Non-cash stock-based compensation			11				7				7
Non-cash 401(k) expense			-				1				-
Gain on disposal of assets, net			(5	)			(5	)			(13	)
Miscellaneous expense, net			2				6				3
Interest expense			160				95				98
Income tax expense			59				30				24
Amortization of program broadcast rights			25				17				19
Payments for program broadcast rights			(26	)			(18	)			(20	)
Corporate and administrative expenses before depreciation, amortization of intangible assets and non-cash stock-based compensation			44				37				28
Broadcast Cash Flow			598				351				304
Corporate and administrative expenses before depreciation, amortization of intangible assets and non-cash stock-based compensation			(44	)			(37	)			(28	)
Broadcast Cash Flow Less Cash Corporate Expenses			554				314				276
Pension benefit			(2	)			-				-
Interest expense			(160	)			(95	)			(98	)
Amortization of deferred financing costs			8				6				6
Preferred stock dividends			(26	)			(26	)			(26	)
Common stock dividends			(16	)			(15	)			-
Purchases of property and equipment (1)			(67	)			(41	)			(51	)
Reimbursements of property and equipment purchases			5				7				14
Income taxes paid, net of refunds			(119	)			(38	)			(1	)
Free Cash Flow		$	177			$	112			$	120

 

(1)	Excludes approximately $92 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Non-GAAP Terms on Combined Historical Basis:

---

 

		Three Months Ended
		June 30,
		2022				2021				2020
		(in millions)
Net income		$	99			$	69			$	22
Adjustments to reconcile from net income to Free Cash Flow:
Depreciation			31				32				30
Amortization of intangible assets			52				28				28
Non-cash stock-based compensation			6				4				4
Gain on disposals of assets, net			-				(3	)			(7	)
Miscellaneous expense, net			-				7				2
Interest expense			81				77				77
Income tax expense (benefit)			38				9				(2	)
Amortization of program broadcast rights			12				13				15
Payments for program broadcast rights			(13	)			(14	)			(15	)
Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation			21				22				15
Broadcast Transaction Related Expenses			2				-				-
Broadcast other adjustments			1				20				17
Broadcast Cash Flow			330				264				186
Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation			(21	)			(22	)			(15	)
Broadcast Cash Flow Less Cash Corporate Expenses			309				242				171
Pension benefit			(1	)			-				-
Adjustments for unrestricted subsidiaries			2				-				-
Corporate Transaction Related Expenses			-				7				-
Operating Cash Flow as Defined in Senior Credit Agreement			310				249				171
Interest expense			(81	)			(77	)			(77	)
Amortization of deferred financing costs			4				3				3
Preferred dividends			(13	)			(13	)			(13	)
Common stock dividends			(8	)			(7	)			-
Purchases of property and equipment (1)			(50	)			(32	)			(27	)
Reimbursements of property and equipment purchases			-				4				9
Income taxes paid, net of refunds			(119	)			(52	)			(9	)
Free Cash Flow		$	43			$	75			$	57

 

(1)	Excludes approximately $62 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Non-GAAP Terms on Combined Historical Basis:

---

 

		Six Months Ended
		June 30,
		2022				2021				2020
		(in millions)
Net income		$	161			$	142			$	91
Adjustments to reconcile from net income to Free Cash Flow:
Depreciation			63				64				59
Amortization of intangible assets			104				56				57
Non-cash stock-based compensation			11				8				9
Non-cash 401(k) expense			-				1				-
Gain on disposals of assets, net			(5	)			(7	)			(16	)
Miscellaneous expense, net			2				6				25
Interest expense			160				155				155
Income tax expense			59				17				12
Amortization of program broadcast rights			25				27				29
Payments for program broadcast rights			(26	)			(29	)			(30	)
Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation			44				37				28
Broadcast Transaction Related Expenses			4				-				-
Broadcast other adjustments			-				40				35
Broadcast Cash Flow			602				517				454
Corporate and administrative expenses excluding depreciation, amortization of intangible assets and non-cash stock-based compensation			(44	)			(37	)			(28	)
Broadcast Cash Flow Less Cash Corporate Expenses			558				480				426
Pension benefit			(2	)			-				-
Adjustments for unrestricted subsidiaries			4				-				-
Corporate Transaction Related Expenses			1				8				-
Operating Cash Flow as defined in Senior Credit Agreement			561				488				426
Interest expense			(160	)			(155	)			(155	)
Amortization of deferred financing costs			8				6				6
Preferred dividends			(26	)			(26	)			(26	)
Common stock dividends			(16	)			(15	)			-
Purchases of property and equipment (1)			(67	)			(47	)			(59	)
Reimbursements of property and equipment purchases			5				9				18
Income taxes paid, net of refunds			(119	)			(66	)			(18	)
Free Cash Flow		$	186			$	194			$	192

 

(1)	Excludes approximately $92 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Net Income to Adjusted EBITDA and the Effect of Transaction Related Expenses and Certain Non-Cash Expenses:

---

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
		(in millions, except for per share information)
Net income		$	99			$	39			$	161			$	78
Adjustments to reconcile from net income to Adjusted EBITDA:
Depreciation			31				25				63				50
Amortization of intangible assets			52				27				104				53
Non-cash stock-based compensation			6				4				11				7
Gain on disposal of assets, net			-				(1	)			(5	)			(5	)
Miscellaneous expense, net			-				7				2				6
Interest expense			81				47				160				95
Income tax expense			38				15				59				30
Total			307				163				555				314
Add: Transaction Related Expenses (1)			2				7				5				8
Adjusted EBITDA		$	309			$	170			$	560			$	322
Net income attributable to common stockholders		$	86			$	26			$	135			$	52
Add: Transaction Related Expenses and non-cash stock-based compensation			8				18				16				22
Less: Income tax expense related to Transaction Related Expenses and non-cash stock-based compensation			(2	)			(5	)			(4	)			(6	)
Net income attributable to common stockholders - excluding Transaction Related Expenses and non-cash stock-based compensation		$	92			$	39			$	147			$	68
Net income attributable to common stockholders common per share, diluted - excluding Transaction Related Expenses and non-cash stock-based compensation		$	0.98			$	0.41			$	1.56			$	0.72
Diluted weighted-average common shares outstanding			94				95				94				95

 

(1)	Excludes $7 million of Transaction Related Expenses included in miscellaneous expense, net for the three and six-month periods ended June 30, 2021, respectively.

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022

 

---

Reconciliation of Total Leverage Ratio, Net of All Cash:

---

 

		Eight Quarters
		Ended
		June 30, 2022
		(dollars in millions)
Net income		$	595
Adjustments to reconcile from net income to Operating Cash Flow as defined in our Senior Credit Agreement:
Depreciation			221
Amortization of intangible assets			274
Non-cash stock-based compensation			32
Gain on disposal of assets, net			21
Interest expense			457
Loss on early extinguishment of debt			12
Income tax expense			248
Amortization of program broadcast rights			81
Common stock contributed to 401(k) plan			15
Payments for program broadcast rights			(83	)
Pension benefit			(4	)
Contributions to pension plans			(7	)
Adjustments for unrestricted subsidiaries			8
Adjustments for stations acquired or divested, financings and expected synergies during the eight quarter period			606
Transaction Related Expenses			87
Other			2
Operating Cash Flow as defined in our Senior Credit Agreement		$	2,565
Operating Cash Flow as defined in our Senior Credit Agreement, divided by two		$	1,283

 

		June 30, 2022
Adjusted Total Indebtedness:
Total outstanding principal		$	6,778
Letters of credit outstanding			4
Cash			(162	)
Adjusted Total Indebtedness, Net of All Cash		$	6,620
Total Leverage Ratio, Net of All Cash			5.16

 

 

Gray Television, Inc.

Earnings Release for the three and six-month periods ended June 30, 2022