gtn20220804_8k.htm
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
 
 
 
 
 
ex_406625.htm

Exhibit 99.1

 

https://cdn.kscope.io/cfcaa78de1eb524bc1cdc79ed07210ba-graylogo01.jpg

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

Page 2 of 19

 


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

Page 3 of 19

 

 


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

Page 4 of 19

 


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

Page 5 of 19

 


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

Page 6 of 19

 


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

Page 7 of 19

 

 


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

Page 8 of 19

 


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

Page 9 of 19

 


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

Page 10 of 19

 

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

Page 11 of 19

 

 


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

Page 12 of 19

 

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

Page 13 of 19

 

 


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

Page 14 of 19

 


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

Page 15 of 19

 

 


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

Page 16 of 19

 


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

Page 17 of 19

 


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

Page 18 of 19

 

 


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

Page 19 of 19