ATLANTA, Aug. 4, 2016 /PRNewswire/ -- Gray
Television, Inc. ("Gray," "we," "us" or "our") (NYSE: GTN and
GTN.A) today announces record-setting results of operations for
the period ended June 30, 2016,
including record revenue, record net income, and record Broadcast
Cash Flow. Moreover, adjusting for the impact of acquisitions, the
results reported today confirm that Gray continues to post organic
revenue growth while maintaining solid expense controls.
Financial Highlights
As-Reported Basis
Our total revenue for the three months ended June 30, 2016 (the "second quarter of 2016") was
$196.6 million, which was the highest
for any quarter in our history. Moreover, total revenue increased
$53.2 million, or 37%, for the second
quarter of 2016 when compared to the three months ended
June 30, 2015 (the "second quarter of
2015"). Our net income was $17.7
million for the second quarter of 2016, which was the
highest for any second quarter in our history and a 46% increase
from the second quarter of 2015. Our Broadcast Cash Flow was
$79.3 million for the second quarter
of 2016, which was also the highest for any second quarter in our
history and a 38% increase from the second quarter of 2015. We
earned $9.6 million in political
advertising revenue during the second quarter of 2016, consistent
with our previous guidance. Our record-setting performance in the
second quarter of 2016 resulted in basic net income per share of
$0.25.
Combined Historical Basis
The results reported today also reflect organic revenue growth
at Gray. On a Combined Historical Basis, as defined herein, total
revenue increased 8%, net income increased 6% and Broadcast Cash
Flow increased 4% in the second quarter of 2016 compared to the
second quarter of 2015. In addition, on a Combined Historical
Basis, our broadcast operating expenses, excluding network
compensation fees, were virtually unchanged in the second quarter
of 2016, when compared to the second quarter of 2015.
Significantly, the expected increases in network compensation fees
were offset by increases in gross retransmission revenue. Also
noteworthy is that in the first six-months of 2016, when compared
to the first six months of 2015 on a Combined Historical Basis, our
national sales commission expenses decreased over $2.0 million as a result of our termination of
substantially all of our national sales representation agreements
at the beginning of 2016. We have reduced our national sales
commission expenses while building a positive and direct
relationship with our national sales customers.
Other Highlights
The financial results demonstrate the success of our recent
acquisitions, organic revenue growth and prudent operational cost
controls across our entire portfolio of television stations. In
addition, we achieved additional milestones during the second
quarter of 2016 as we continue to execute prudent and opportunistic
transactions.
- On June 14, 2016, we completed
the private placement of $500.0
million of 5.875% senior notes due 2026 (the "2026 Notes"),
at par. The 2026 Notes represented the lowest cost, as well as the
longest tenor, of any bond issuance in Gray's history. Concurrent
with the issuance of these bonds, both S&P and Moody's raised
their ratings on Gray's credit facilities.
- On June 3, 2016, we announced
that we agreed to acquire, for $270.0
million in cash, television stations WBAY-TV (ABC) in the
Green Bay, Wisconsin television
market and KWQC-TV (NBC) in the Davenport, Iowa television market as part of
the divestiture of stations resulting from the pending merger of
Nexstar Broadcasting Group, Inc. ("Nexstar") and Media General,
Inc. We anticipate that this transaction will be completed late in
2016.
- On June 1, 2016, we made an
initial payment of $16.5 million and
acquired the non-license assets of television stations WDTV-TV
(CBS) and WVFX-TV (FOX/CW), a legal duopoly in the Clarksburg-Weston,
West Virginia television market (the "Clarksburg
Acquisition"). Also, on June 1, 2016
we began to operate the stations, subject to the control of the
stations' current licensees, under a local programming and
marketing agreement (or "LMA"). We anticipate that this acquisition
will be completed late in 2016.
- On April 14, 2016, we made a
$3.0 million strategic equity
investment in Syncbak, a technology company that replicates
over-the-air broadcasts for delivery over-the-top of the
Internet.
- On June 27, 2016, we closed the
previously announced acquisition of KYES-TV (MY, Ant.) in the
Anchorage, Alaska television
market (the "KYES-TV Acquisition"), for $0.5
million.
In connection with our various acquisition transactions, we
incurred professional fees of approximately $0.5 million and $7.2
million in the second quarter of 2016 and the six-months
ended June 30, 2016, respectively;
and $0.3 million and $0.7 million in the second quarter of 2015 and
the six-months ended June 30, 2015,
respectively. These expenses are included in our corporate and
administrative operating expenses.
As of June 30, 2016, our Total
Leverage Ratio, Net of All Cash, as defined herein, was 5.25 times
on a trailing eight-quarter basis, netting all $176.3 million of cash on our balance sheet
against our debt balance. We maintain our previously issued
guidance regarding our 2016 year-end net leverage ratio.
Effects of Acquisitions and Divestitures on Our Results of
Operations
From October 31, 2013 through
June 30, 2016, we completed 19
acquisition transactions and three divestiture transactions. These
transactions added a net total of 43 television stations in 25
television markets to our operations, including 20 new television
markets. During February 2016, we
completed the acquisition of several television and radio stations
from Schurz Communications, Inc. ("Schurz"); divested the assets of
the Schurz radio stations; exchanged KAKE-TV for WBXX-TV and cash; and exchanged
WSBT-TV for WLUC-TV (collectively the "Schurz Acquisition and
Related Transactions"). During June
2016, we entered into the Clarksburg Acquisition and
completed the KYES-TV Acquisition. The transactions completed
during the six-months ended June 30,
2016 added the following 13 television stations to our
operations:
Station
|
|
Primary Network
Affiliation
|
|
Market
|
|
WBXX-TV
|
|
|
CW
|
|
|
Knoxville,
TN
|
|
KWCH-TV(1)
|
|
|
CBS
|
|
|
Wichita-Hutchinson,
KS
|
|
WDBJ-TV
|
|
|
CBS
|
|
|
Roanoke, VA
|
|
KYTV-DT, KCZ,
KSPR-TV(2)
|
|
|
NBC, CW,
ABC
|
|
|
Springfield,
MO
|
|
WAGT-TV
|
|
|
NBC
|
|
|
Augusta, GA
|
|
KTUU-TV,
KYES-TV
|
|
|
NBC, MY
|
|
|
Anchorage,
AK
|
|
WDTV-TV(3),
WVFX-TV(3)
|
|
|
CBS, FOX
|
|
|
Clarksburg-Weston,
WV
|
|
KOTA-TV(4)
|
|
|
ABC
|
|
|
Rapid City,
SD
|
|
WLUC-TV
|
|
|
NBC/FOX
|
|
|
Marquette,
MI
|
|
|
|
|
|
|
|
|
(1) The
acquired station includes three satellite stations re-broadcasting
the programming associated with the primary (CBS) network
affiliation.
|
(2) Gray
provides certain non-sales, back-office services to KSPR-TV. KSPR
is owned by Schurz.
|
(3) On June 1,
2016, we acquired the non-license assets of the television station
and entered into an LMA, under which we operate the station,
subject to the control of the
licensees. Our ultimate acquisition of the station's Federal
Communications Commission license and license
related assets is pending
regulatory and other approvals.
|
(4) We have
acquired the indicated program stream in this market and are
broadcasting this program stream on our previously existing
station
in this market, which has
changed its call letters to KOTA-TV (ABC), as well as two satellite
stations that we also acquired in the Schurz
Acquisition and Related
Transactions.
|
We refer to the stations acquired and retained and to those we
operate under an LMA entered into in 2016 as the "2016 Acquired
Stations." During 2015, we completed six acquisitions, which
collectively added seven television stations in six markets (four
new markets) to our operations at various times during that year,
and we refer to the stations acquired in those acquisitions as the
"2015 Acquired Stations." During 2014, we completed seven
acquisitions, which collectively added 22 television stations in 12
markets (10 new markets) to our operations at various times during
that year, and we refer to the stations acquired in those
acquisitions as the "2014 Acquired Stations." Unless the context of
the following discussions requires otherwise, we refer to the 2016
Acquired Stations, the 2015 Acquired Stations and the 2014 Acquired
Stations, collectively, as the "Acquired Stations."
Due to the significant effect that our acquisitions and
divestitures have had on our results of operations, and in order to
provide more meaningful period over period comparisons, we also
present herein certain financial information on a "Combined
Historical Basis." Unless otherwise defined, Combined Historical
Basis reflects financial results that have been compiled by adding
Gray's historical revenue and broadcast expenses to the historical
revenue and broadcast expenses of the Acquired Stations and
removing the historical revenues and historical broadcast expenses
of divested stations as if they had been acquired or divested,
respectively, on January 1, 2014 (the
beginning of the earliest period presented). In addition, our
Combined Historical Basis non-GAAP terms "Broadcast Cash Flow,"
"Broadcast Cash Flow Less Cash Corporate Expenses," "Operating Cash
Flow as Defined in our Senior Credit Agreement" and "Free Cash
Flow" give effect to the financings related to the acquisition of
the Acquired Stations, as if these financings occurred on
January 1, 2014, and certain
anticipated net expense savings resulting from the completed
acquisitions. Free Cash Flow presented on a Combined Historical
Basis also includes adjustments to the purchase of property and
equipment and income taxes paid, net of refunds as if the
acquisition of the Acquired Stations occurred on January 1, 2014. Combined Historical Basis
financial information for acquisitions does not reflect all
purchase accounting and other adjustments required for Regulation
S-X pro forma financial statements.
Selected Operating
Data on As-Reported Basis
|
|
|
Three-Months Ended
June 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2016
to
|
|
|
|
2016
to
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
(dollars in
thousands, except per share data)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
196,633
|
|
$
143,464
|
|
37 %
|
|
$
107,249
|
|
83 %
|
Political
|
$
9,649
|
|
$
2,197
|
|
339 %
|
|
$
8,616
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
117,335
|
|
$
86,445
|
|
36 %
|
|
$
66,002
|
|
78 %
|
Corporate and
administrative
|
$
8,524
|
|
$
6,444
|
|
32 %
|
|
$
9,848
|
|
(13)%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
17,662
|
|
$
12,110
|
|
46 %
|
|
$
1,591
|
|
1010 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP cash flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
79,267
|
|
$
57,244
|
|
38 %
|
|
$
40,530
|
|
96 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
71,713
|
|
$
51,591
|
|
39 %
|
|
$
31,408
|
|
128 %
|
Free Cash Flow
(3)
|
$
25,928
|
|
$
27,388
|
|
(5)%
|
|
$
8,881
|
|
192 %
|
|
|
|
|
|
|
|
|
|
|
|
Six-Months Ended
June 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2016
to
|
|
|
|
2016
to
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
(dollars in
thousands, except per share data)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
370,356
|
|
$
276,767
|
|
34 %
|
|
$
198,546
|
|
87 %
|
Political
|
$
19,304
|
|
$
3,356
|
|
475 %
|
|
$
11,408
|
|
69 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
225,903
|
|
$
173,292
|
|
30 %
|
|
$
126,386
|
|
79 %
|
Corporate and
administrative
|
$
24,202
|
|
$
13,291
|
|
82 %
|
|
$
16,347
|
|
48 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
26,652
|
|
$
17,705
|
|
51 %
|
|
$
2,868
|
|
829 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP cash flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
145,164
|
|
$
103,968
|
|
40 %
|
|
$
71,149
|
|
104 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
122,900
|
|
$
92,218
|
|
33 %
|
|
$
56,881
|
|
116 %
|
Free Cash Flow
(3)
|
$
50,144
|
|
$
49,379
|
|
2 %
|
|
$
16,334
|
|
207 %
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss on disposal of
assets.
|
(2) See definition of
non-GAAP terms and reconciliation of the non-GAAP amounts to net
income included elsewhere herein.
|
(3) 2016 periods
reflect increase in cash tax payments due to anticipated use of
remaining net operating loss carry-forwards in
|
2016. See further
discussion of cash tax payments on pages 8, 11 and 15
herein.
|
Selected Operating
Data on Combined Historical Basis
|
|
|
Three-Months Ended
June 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2016
to
|
|
|
|
2016
to
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
(dollars in
thousands, except per share data)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
198,031
|
|
$
182,874
|
|
8 %
|
|
$
172,384
|
|
15 %
|
Political
|
$
10,064
|
|
$
2,572
|
|
291 %
|
|
$
14,688
|
|
(31)%
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
118,203
|
|
$
112,591
|
|
5 %
|
|
$
103,687
|
|
14 %
|
Corporate and
administrative
|
$
8,524
|
|
$
6,444
|
|
32 %
|
|
$
9,848
|
|
(13)%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
18,108
|
|
$
17,065
|
|
6 %
|
|
$
18,003
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP cash flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
80,046
|
|
$
77,031
|
|
4 %
|
|
$
76,018
|
|
5 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
72,490
|
|
$
71,378
|
|
2 %
|
|
$
66,896
|
|
8 %
|
Operating Cash Flow as
defined in
|
|
|
|
|
|
|
|
|
|
the Senior Credit
Facility
|
$
71,927
|
|
$
71,734
|
|
0 %
|
|
$
71,855
|
|
0 %
|
Free Cash Flow
(3)
|
$
28,280
|
|
$
41,340
|
|
(32)%
|
|
$
40,904
|
|
(31)%
|
|
|
|
|
|
|
|
|
|
|
|
Six-Months Ended
June 30,
|
|
|
|
|
|
%
Change
|
|
|
|
%
Change
|
|
|
|
|
|
2016
to
|
|
|
|
2016
to
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
(dollars in
thousands, except per share data)
|
Revenue (less agency
commissions):
|
|
|
|
|
|
|
|
|
|
Total
|
$
387,097
|
|
$
351,972
|
|
10 %
|
|
$
325,612
|
|
19 %
|
Political
|
$
19,971
|
|
$
3,810
|
|
424 %
|
|
$
19,570
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(1):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$
240,416
|
|
$
225,101
|
|
7 %
|
|
$
203,891
|
|
18 %
|
Corporate and
administrative
|
$
24,202
|
|
$
13,291
|
|
82 %
|
|
$
16,347
|
|
48 %
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
24,922
|
|
$
24,159
|
|
3 %
|
|
$
29,030
|
|
(14)%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP cash flow
(2):
|
|
|
|
|
|
|
|
|
|
Broadcast Cash
Flow
|
$
150,140
|
|
$
140,367
|
|
7 %
|
|
$
133,871
|
|
12 %
|
Broadcast Cash Flow
Less
|
|
|
|
|
|
|
|
|
|
Cash Corporate
Expenses
|
$
127,876
|
|
$
128,617
|
|
(1)%
|
|
$
119,603
|
|
7 %
|
Operating Cash Flow as
defined in
|
|
|
|
|
|
|
|
|
|
the Senior Credit
Facility
|
$
133,568
|
|
$
131,374
|
|
2 %
|
|
$
125,173
|
|
7 %
|
Free Cash Flow
(3)
|
$
60,006
|
|
$
70,746
|
|
(15)%
|
|
$
61,488
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
depreciation, amortization, and loss on disposal of
assets.
|
|
|
|
|
|
|
(2) See definition of
non-GAAP terms and reconciliation of the non-GAAP amounts to net
income included elsewhere herein.
|
(3) 2016 periods
reflect increase in cash tax payments due to anticipated use of
remaining net operating loss carry-forwards in
|
2016. See further
discussion of cash tax payments on pages 8, 11 and 15
herein.
|
|
|
|
|
Reclassification of Revenue
Through 2015, we reported our local television advertising
revenues and our internet/digital/mobile advertising revenues
separately. Beginning in 2016, we report a single line item
identified as "Local (including internet/digital/mobile)" that
combines both our local television advertising revenues and our
internet/digital/mobile advertising revenues. Because this revenue
originates within each local market in which we operate and is sold
by each local sales force, we believe this classification is more
consistent and more representative of our operating focus, to
maximize all aspects of local revenue. All prior periods presented
herein have been reclassified to reflect our current
presentation.
Results of Operations for the Second Quarter of 2016
Revenue (less agency commissions) on As-Reported
Basis
The table below presents our revenue (less agency commissions),
or revenue, by type for the second quarter of 2016 and 2015
(dollars in thousands):
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
|
|
Percent
|
|
|
|
Percent
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
$
104,727
|
|
53.3%
|
|
$
83,091
|
|
57.9%
|
National
|
26,070
|
|
13.3%
|
|
18,949
|
|
13.2%
|
Political
|
9,649
|
|
4.9%
|
|
2,197
|
|
1.5%
|
Retransmission
consent
|
50,549
|
|
25.7%
|
|
36,909
|
|
25.7%
|
Other
|
5,638
|
|
2.8%
|
|
2,318
|
|
1.7%
|
Total
|
$
196,633
|
|
100.0%
|
|
$
143,464
|
|
100.0%
|
Total revenue increased $53.2
million, or 37%, to $196.6
million for the second quarter of 2016 compared to the
second quarter of 2015. Total revenue from the 2016 Acquired
Stations and 2015 Acquired Stations, collectively, accounted for
approximately $46.8 million of our
total revenue, or 88% of the increase from the second quarter of
2015, with the remaining revenue increases resulting from our
stations owned since the start of 2015. The 2015 Acquired Stations
did not contribute any revenue during the second quarter of 2015
because all of the 2015 Acquired Stations were acquired after
June 30, 2015.
In addition to the total revenue contributed by the 2016
Acquired Stations and the 2015 Acquired Stations, our total revenue
increased in the second quarter of 2016, as compared to the second
quarter of 2015, primarily due to increases in retransmission
revenue, due primarily to increased retransmission consent rates;
and increases in political advertising revenue, due to 2016 being
the "on-year" of the two-year election cycle.
The principal types of revenue for the second quarter of 2016,
compared to the second quarter of 2015, were as follows:
- Local advertising revenue (including internet/digital/mobile)
increased $21.6 million, or 26%, to
$104.7 million;
- National advertising revenue increased $7.1 million, or 38%, to $26.1 million;
- Political advertising revenue increased $7.5 million, or 339%, to $9.6 million;
- Retransmission consent revenue increased $13.6 million, or 37%, to $50.5 million; and
- Other revenue increased $3.3
million, or 143%, to $5.6
million.
Within our local and national advertising revenue types, and
excluding revenue attributable to the 2016 Acquired Stations and
2015 Acquired Stations, our five largest customer categories
experienced the following approximate changes during the second
quarter of 2016 compared to the second quarter of 2015:
- Automotive increased 5%;
- Medical decreased 4%;
- Restaurant decreased 4%;
- Furniture and appliances increased 4%; and
- Communications decreased 15%.
Revenue on Combined Historical Basis
On a Combined Historical Basis, total revenue increased
$15.2 million, or 8%, to $198.0 million in the second quarter of 2016 as
compared to the second quarter of 2015. On a Combined Historical
Basis, the principal types of revenue for the second quarter of
2016, compared to the second quarter of 2015, were approximately as
follows:
- Local advertising revenue (including internet/digital/mobile)
was unchanged at $105.3 million;
- National advertising revenue decreased $0.8 million, or 3%, to $26.2 million;
- Political advertising revenue increased $7.5 million, or 288%, to $10.1 million;
- Retransmission consent revenue increased $8.1 million, or 19%, to $50.8 million; and
- Other revenue increased $0.5
million, or 9%, to $5.6
million.
Within our local and national advertising revenue types, and
including revenue from the 2016 Acquired Stations and 2015 Acquired
Stations, our five largest customer categories experienced the
following approximate changes during the second quarter of 2016,
compared to the second quarter of 2015:
- Automotive increased 5%;
- Medical decreased 3%;
- Restaurant decreased 1%;
- Furniture and appliances increased 6%; and
- Communications decreased 12%.
Broadcast Operating Expenses on As-Reported
Basis
Broadcast operating expenses (before depreciation, amortization
and loss on disposal of assets) increased $30.9 million, or 36%, to $117.3 million for the second quarter of 2016
compared to the second quarter of 2015. The 2016 Acquired Stations
and 2015 Acquired Stations, collectively, accounted for
approximately $28.0 million of our
broadcast operating expenses, or 91% of the increase from the
second quarter of 2015. The 2015 Acquired Stations had no effect on
our broadcast operating expenses for the second quarter of 2015
because all of the 2015 Acquired Stations were acquired after
June 30, 2015.
- Non-compensation expense increased $15.2
million in the second quarter of 2016. Non-compensation
expenses associated with the 2016 Acquired Stations and 2015
Acquired Stations totaled $12.4
million in the second quarter of 2016. Other network program
fees increased $2.7 million
reflecting increased fees payable to networks under our affiliation
agreements. National sales commissions decreased $0.8 million in the second quarter of 2016
primarily as a result of the termination of substantially all of
our national sales representation agreements at the beginning of
2016.
- Compensation expense increased $15.7
million in the second quarter of 2016 as a result of
compensation expenses attributable to the 2016 Acquired Stations
and 2015 Acquired Stations. Non-cash share based compensation
expenses were $0.3 million in the
second quarter of 2016 compared to $0.2
million in the second quarter of 2015.
Broadcast Operating Expenses on Combined Historical
Basis
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and loss on disposal of assets)
increased $5.6 million, or 5%, to
$118.2 million in the second quarter
of 2016 as compared to the second quarter of 2015. The increase
reflects, in part, the following:
- Non-compensation expense increased primarily as a result of
network program fees that increased $5.4
million consistent with the growth of retransmission consent
revenue.
- Non-compensation expense increases were offset, in-part, by a
$1.2 million decrease in national
sales commissions in the second quarter of 2016 resulting from our
termination of substantially all of our national sales
representation agreements in the first quarter of 2016.
- Compensation expense increased by approximately $1.5 million in the second quarter of 2016
compared to the second quarter of 2015. Non-cash share based
compensation expenses were $0.3
million in the second quarter of 2016 compared to
$0.2 million in the second quarter of
2015.
Corporate and Administrative Operating Expenses on
As-Reported Basis
Corporate and administrative expenses (before depreciation,
amortization and loss on disposal of assets) increased $2.1 million, or 32%, to $8.5 million in the second quarter of 2016 as
compared to the second quarter of 2015. The increase reflects, in
part, the following:
- Non-compensation expense increased $1.6
million in the second quarter of 2016 primarily due to
$2.3 million of professional fees
related, in-part, to the acquisition of the 2016 Acquired Stations,
compared to $1.2 million of
professional fees incurred in the second quarter of 2015 related,
in-part, to the acquisition of the 2015 Acquired Stations.
- Compensation expense increased $0.5
million primarily due to increases in incentive compensation
and travel costs which were offset, in part, by reductions in
relocation expenses. Non-cash share based compensation expenses
were $1.0 million in the second
quarter of 2016 compared to $0.8
million in the second quarter of 2015.
Cash Tax Payments
As previously disclosed, Gray anticipates fully utilizing its
remaining federal net operating loss carryforwards ("NOLs") by
December 31, 2016. During the three
months ended June 30, 2016, the
Company made aggregate federal and state estimated tax payments
totaling $13.9 million compared to
$1.0 million for the three months
ended June 30, 2015. Based on our
current forecasts, we anticipate that our aggregate federal and
state tax payments for the entire year of 2016 will range between
$16.0 million and $21.0 million.
Results of Operations for the Six-Month Period Ended
June 30, 2016
Revenue (less agency commissions) on As-Reported
Basis
The table below presents our revenue (less agency commissions),
or revenue, by type for the six-month periods ended June 30, 2016 and 2015 (dollars in
thousands):
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
|
|
|
Percent
|
|
|
|
Percent
|
|
Amount
|
|
of
Total
|
|
Amount
|
|
of
Total
|
Revenue (less
agency commissions):
|
|
|
|
|
|
|
|
Local (including
internet/digital/mobile)
|
$
194,081
|
|
52.4%
|
|
$
157,956
|
|
57.1%
|
National
|
48,149
|
|
13.0%
|
|
36,716
|
|
13.3%
|
Political
|
19,304
|
|
5.2%
|
|
3,356
|
|
1.2%
|
Retransmission
consent
|
97,818
|
|
26.4%
|
|
73,160
|
|
26.4%
|
Other
|
11,004
|
|
3.0%
|
|
5,579
|
|
2.0%
|
Total
|
$
370,356
|
|
100.0%
|
|
$
276,767
|
|
100.0%
|
Total revenue increased $93.6
million, or 34%, to $370.4
million for the six-months ended June
30, 2016 compared to the six-months ended June 30, 2015. Revenue from the 2016 Acquired
Stations and 2015 Acquired Stations, collectively, accounted for
approximately $77.5 million of our
total revenue, or 83% of the increase from the six-months ended
June 30, 2015. The 2015 Acquired
Stations did not contribute any revenue during the six-months ended
June 30, 2015 because all of the 2015
Acquired Stations were acquired after June
30, 2015.
In addition to the total revenue contributed by the 2016
Acquired Stations and the 2015 Acquired Stations, our total revenue
increased in the six-months ended June 30,
2016, as compared to the six-months ended June 30, 2015, primarily due to increases in
retransmission revenue, due primarily to increased retransmission
consent rates; and increases in political advertising revenue, due
to 2016 being the "on-year" of the two-year election cycle. Local
and national advertising revenue also included approximately
$2.1 million of revenue from the
broadcast of the 2016 Super Bowl on our CBS channels, an increase
of approximately $0.6 million
compared to the $1.5 million of
revenue from the broadcast of the 2015 Super Bowl on our NBC
channels.
The principal types of revenue for the six-months ended
June 30, 2016 compared to the
six-months ended June 30, 2015 were
as follows:
- Local advertising revenue increased $36.1 million, or 23%, to $194.1 million;
- National advertising revenue increased $11.4 million, or 31%, to $48.1 million;
- Political advertising revenue increased $15.9 million, or 475%, to $19.3 million;
- Retransmission consent revenue increased $24.7 million, or 34%, to $97.8 million; and
- Other revenue increased $5.4
million, or 97%, to $11.0
million.
Within our local and national advertising revenue categories,
and excluding the 2016 Acquired Stations and 2015 Acquired
Stations, our five largest customer categories experienced the
following approximate changes during the six-months ended
June 30, 2016 compared to the
six-months ended June 30, 2015:
- Automotive increased 3%;
- Medical was unchanged;
- Restaurant decreased 1%;
- Furniture and appliances increased 4%; and
- Communications decreased 13%.
Revenue on Combined Historical Basis
On a Combined Historical Basis, total revenue increased
$35.1 million, or 10%, to
$387.1 million in the six-months
ended June 30, 2016 as compared to
the six-months ended June 30, 2015.
The Combined Historical Basis components of revenue for the
six-months ended June 30, 2016
compared to the six-months ended June 30,
2015 were approximately as follows:
- Local advertising revenue increased $2.9
million, or 1%, to $203.2
million;
- National advertising revenue decreased $1.6 million, or 3%, to $50.5 million;
- Political advertising revenue increased $16.1 million, or 420%, to $20.0 million;
- Retransmission consent revenue increased $17.0 million, or 20%, to $101.5 million; and
- Other revenue increased $0.8
million, or 7%, to $11.9
million.
Within our local and national advertising revenue categories,
and including revenue attributable to the 2016 Acquired Stations
and 2015 Acquired Stations, our five largest customer categories
experienced the following approximate changes in revenue during the
six-months ended June 30, 2016
compared to the six-months ended June 30,
2015:
- Automotive increased 3%;
- Medical was unchanged;
- Restaurant increased 2%;
- Furniture and appliances increased 8%; and
- Communications decreased 9%.
Broadcast Operating Expenses on As-Reported
Basis
Broadcast operating expenses (before depreciation, amortization
and loss (gain) on disposal of assets) increased $52.6 million, or 30%, to $225.9 million for the six-months ended
June 30, 2016 compared to the
six-months ended June 30, 2015. The
2016 Acquired Stations and 2015 Acquired Stations, collectively,
accounted for approximately $46.3
million of our total broadcast operating expenses, or 88% of
the increase from the six-months ended June
30, 2015. The 2015 Acquired Stations had no effect on our
broadcast operating expenses for the six-months ended June 30, 2015 as the 2015 Acquired Stations were
acquired after June 30, 2015.
- Non-compensation expense increased $26.3
million for the six-months ended June
30, 2016. Non-compensation expenses associated with the 2016
Acquired Stations and 2015 Acquired Stations totaled $20.5 million in the six-months ended
June 30, 2016. Other network program
fees increased $5.7 million,
reflecting increased fees payable to networks under our affiliation
agreements. National sales commissions decreased $1.8 million in the six-months ended June 30, 2016, primarily as a result of the
termination of substantially all of our national sales
representation agreements at the beginning of 2016.
- Compensation expense increased $26.3
million in the six-months ended June
30, 2016, primarily as a result of $25.8 million compensation expenses attributable
to the 2016 Acquired Stations and 2015 Acquired Stations. Non-cash
share based compensation expenses were $0.6
million in the six-months ended June
30, 2016 compared to $0.5
million in the six-months ended June
30, 2015.
Broadcast Operating Expenses on Combined Historical
Basis
On a Combined Historical Basis, broadcast operating expenses
(before depreciation, amortization and loss (gain) on disposal of
assets) increased $15.3 million, or
7%, to $240.4 million in the
six-months ended June 30, 2016
compared to the six-months ended June 30,
2015. The increase reflects, in part, the following:
- Non-compensation expense increased primarily as a result of
network program fees that increased $10.9
million consistent with the growth of the related
retransmission consent revenue.
- Non-compensation expense increases were offset, in-part, by
decreases in national sales commissions of $2.2 million in the six-months ended June 30, 2016, resulting from our termination of
substantially all of our national sales representation agreements
in the first quarter of 2016.
- Compensation expense increased $5.3
million in the six-months ended June
30, 2016. Non-cash share based compensation expenses were
$0.6 million in the six-months ended
June 30, 2016 compared to
$0.5 million in the six-months ended
June 30, 2015.
Corporate and Administrative Operating Expenses on
As-Reported Basis
Corporate and administrative expenses (before depreciation,
amortization and loss (gain) on disposal of assets) increased
$10.9 million, or 82%, to
$24.2 million in the six-months ended
June 30, 2016 compared to the
six-months ended June 30, 2015. The
increase reflects, in part, the following:
- Non-compensation expense increased $10.1
million in the six-months ended June
30, 2016 due to $11.6 million
of professional fees, primarily related to the acquisition of the
2016 Acquired Stations compared to $2.3
million of professional fees incurred in the six-months
ended June 30, 2015, primarily
related to the acquisition of the 2015 Acquired Stations.
- Compensation expense increased $0.8
million primarily due to increases in incentive compensation
costs which were offset, in-part, by reductions in relocation
expenses. Non-cash share based compensation expenses were
$1.9 million in the six-months ended
June 30, 2016 compared to
$1.5 million in the six-months ended
June 30, 2015.
Cash Tax Payments
As previously disclosed, Gray anticipates fully utilizing its
remaining NOLs by December 31, 2016.
During the six months ended June 30,
2016, the Company made aggregate federal and state estimated
tax payments totaling $14.0 million
compared to $1.2 million for the six
months ended June 30, 2015. Based on
our current forecasts, we anticipate that our aggregate federal and
state tax payments for the entire year of 2016 will range between
$16.0 million and $21.0 million.
Detailed table of Operating Results
Gray Television,
Inc.
|
Selected Operating
Data (Unaudited)
|
(in thousands except
for per share data)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$
196,633
|
|
$
143,464
|
|
$
370,356
|
|
$ 276,767
|
Operating expenses
before depreciation, amortization
|
|
|
|
|
|
|
|
and loss (gain) on
disposal of assets, net:
|
|
|
|
|
|
|
|
Broadcast
|
117,335
|
|
86,445
|
|
225,903
|
|
173,292
|
Corporate and
administrative
|
8,524
|
|
6,444
|
|
24,202
|
|
13,291
|
Depreciation
|
11,617
|
|
8,754
|
|
22,743
|
|
17,552
|
Amortization of
intangible assets
|
4,242
|
|
2,731
|
|
8,130
|
|
5,502
|
Loss (gain) on
disposals of assets, net
|
1,228
|
|
332
|
|
(420)
|
|
314
|
Operating
expenses
|
142,946
|
|
104,706
|
|
280,558
|
|
209,951
|
Operating
income
|
53,687
|
|
38,758
|
|
89,798
|
|
66,816
|
Other income
(expense):
|
|
|
|
|
|
|
|
Miscellaneous income,
net
|
141
|
|
67
|
|
710
|
|
74
|
Interest
expense
|
(24,269)
|
|
(18,587)
|
|
(45,544)
|
|
(37,117)
|
Income before income
tax expense
|
29,559
|
|
20,238
|
|
44,964
|
|
29,773
|
Income tax
expense
|
11,897
|
|
8,128
|
|
18,312
|
|
12,068
|
Net income
|
$
17,662
|
|
$
12,110
|
|
$
26,652
|
|
$
17,705
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
0.25
|
|
$
0.17
|
|
$
0.37
|
|
$
0.27
|
Weighted-average shares
outstanding
|
71,878
|
|
71,637
|
|
71,835
|
|
64,968
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income
|
$
0.24
|
|
$
0.17
|
|
$
0.37
|
|
$
0.27
|
Weighted-average shares
outstanding
|
72,748
|
|
72,270
|
|
72,665
|
|
65,529
|
|
|
|
|
|
|
|
|
Political advertising
revenue (less agency commissions)
|
$
9,649
|
|
$
2,197
|
|
$
19,304
|
|
$
3,356
|
Other Financial Data
|
June 30,
2016
|
|
December 31,
2015
|
|
(in
thousands)
|
|
|
|
|
Cash
|
$
176,345
|
|
$
97,318
|
Long-term
debt
|
$
1,705,361
|
|
$
1,220,084
|
Borrowing
availability under our revolving credit facility
|
$
60,000
|
|
$
50,000
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
|
(in
thousands)
|
|
|
|
|
Net cash provided by
operating activities
|
$
44,023
|
|
$
32,470
|
Net cash used in
investing activities
|
(448,437)
|
|
(8,438)
|
Net cash provided by
financing activities
|
483,441
|
|
167,382
|
Net increase in
cash
|
$
79,027
|
|
$
191,414
|
Guidance for the Three-Months Ending September 30, 2016 (the "third quarter of
2016")
Based on our current forecasts for the third quarter of 2016, we
anticipate the changes from the three-months ended September 30, 2015 (the "third quarter of 2015")
as outlined below. Our estimates for the third quarter of 2016
include approximately $49.0 million
of revenue and $29.8 million of
broadcast operating expense estimated to be contributed by the 2016
Acquired Stations and 2015 Acquired Stations. The 2015 Acquired
Stations accounted for $8.3 million
of revenue and $4.6 million of
broadcast operating expense, which were included in our as-reported
third quarter of 2015 results of operations.
|
Three Months
Ending September 30,
|
|
Low
End
|
|
% Change
From
|
|
High
End
|
|
% Change
From
|
|
|
|
Guidance
for
|
|
As-Reported
|
|
Guidance
for
|
|
As-Reported
|
|
As-Reported
|
|
the
Third
|
|
Third
|
|
the
Third
|
|
Third
|
|
Third
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
|
Quarter
of
|
Selected operating
data:
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2015
|
|
(dollars in
thousands)
|
OPERATING
REVENUE:
|
|
|
|
|
|
|
|
|
|
Revenue (less agency
commissions)
|
$ 223,000
|
|
48 %
|
|
$ 231,000
|
|
53 %
|
|
$ 151,102
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
(before depreciation,
amortization and
|
|
|
|
|
|
|
|
|
|
loss on disposals of
assets):
|
|
|
|
|
|
|
|
|
|
Broadcast
|
$ 123,000
|
|
24 %
|
|
$ 125,000
|
|
26 %
|
|
$
98,921
|
Corporate and
administrative
|
$
7,000
|
|
(30)%
|
|
$
8,000
|
|
(20)%
|
|
$
10,022
|
|
|
|
|
|
|
|
|
|
|
OTHER SELECTED
DATA:
|
|
|
|
|
|
|
|
|
|
Political advertising
revenue
|
|
|
|
|
|
|
|
|
|
(less agency
commissions)
|
$
40,000
|
|
771 %
|
|
$
46,000
|
|
901 %
|
|
$
4,594
|
Comments on Third Quarter of 2016 Guidance
Revenue on As-Reported Basis
Based on our current forecasts for the third quarter of 2016, we
anticipate the following changes from the third quarter of 2015, as
outlined below:
- We believe our third quarter of 2016 local advertising revenue
(including internet/digital/mobile) will increase within a range of
approximately 23% to 25%.
- We expect our third quarter of 2016 national advertising
revenue will increase within a range of approximately 24% to
29%.
- We believe our third quarter of 2016 political advertising
revenue will be within a range of approximately $40.0 million to $46.0 million. Our political
advertising revenue was approximately $4.6
million in the third quarter of 2015; approximately
$22.0 million in the third quarter of
2014; and approximately $24.5 million
in the third quarter of 2012.
- We believe our third quarter of 2016 retransmission consent
revenue will be within a range of approximately $50.0 million to $50.5 million.
- The 2016 Olympic broadcasts are anticipated to generate at
least $7.3 million of advertising
revenue for the Company. This amount is included in our overall
guidance for local advertising revenue (including
internet/digital/mobile) and national advertising revenue.
Broadcast Operating Expenses (before depreciation,
amortization and gain or loss on disposal of assets, net) on
As-Reported Basis
For the third quarter of 2016, we anticipate our broadcast
operating expenses will increase from the third quarter of 2015,
reflecting the $25.2 million
incremental impact of the 2016 Acquired Stations and the 2015
Acquired Stations as well as anticipated increases in payroll and
related employee benefits. We anticipate that our broadcast
operating expenses will also reflect an increase in network fees of
approximately $6.9 million (to total
approximately $24.9 million for the
third quarter of 2016).
Corporate and Administrative Operating Expenses (before
depreciation, amortization and gain on disposal of
assets) on As-Reported Basis
For the third quarter of 2016, we anticipate our corporate and
administrative operating expense will decrease to within a range of
approximately $7.0 million to $8.0
million, primarily attributable to decreases in professional
services fees related to acquisitions offset, in-part, by routine
increases in compensation and professional service fees.
Third Quarter of 2016 on Combined Historical
Basis
Based on our current forecasts for the third quarter of 2016, we
anticipate the following changes from the Combined Historical Basis
results for the third quarter of 2015 as outlined below. For the
purposes hereof, our Combined Historical Basis for the third
quarter of 2015 have been adjusted to give effect to both the 2016
Acquired Stations and 2015 Acquired Stations.
Revenue on Combined Historical Basis
- We believe our third quarter of 2016 total revenue will be
within a range of approximately $223.0
million to $231.0 million (or increase approximately +22% to
+26%).
- We believe our third quarter of 2016 local advertising revenue
(including internet/digital/mobile) will be within a range of
approximately $103.0 million to $105.0
million (or increase approximately +2% to +4%).
- We believe our third quarter of 2016 national advertising
revenue will be within a range of approximately $26.0 million to $27.0 million (or change
approximately -5% to -1%).
- We believe our third quarter of 2016 political advertising
revenue will be within a range of approximately $40.0 million to $46.0 million. Our political
advertising revenue was approximately $5.1
million in the third quarter of 2015; approximately
$33.7 million in the third quarter of
2014; and approximately $42.3 million
in the third quarter of 2012.
- We believe our third quarter of 2016 retransmission consent
revenue will be within a range of approximately $50.0 million to $50.5 million (or increase
approximately +13% to +14%).
Broadcast Operating Expenses (before depreciation,
amortization and gain or loss on disposal of assets) on Combined
Historical Basis
Our total broadcast operating expenses for the third quarter of
2016 are anticipated to increase from the third quarter of 2015 on
a Combined Historical Basis by a range of approximately
$2.5 million to $4.5 million (to
total within a range of approximately $123.0
million to $125.0 million). This increase reflects an
expected increase of $5.1 million in
network fees (expected to total approximately $24.9 million).
Cash Tax Payments
As previously disclosed, Gray anticipates fully utilizing its
remaining NOLs by December 31, 2016.
Based on our current forecasts, we anticipate that our aggregate
federal and state tax payments for the third quarter of 2016 will
range between $1.0 million and $3.5
million. During the six months ended June 30, 2016, the Company made aggregate federal
and state estimated tax payments totaling $14.0 million. Based on our current forecasts, we
anticipate that our aggregate federal and state tax payments for
the entire year of 2016 will range between $16.0 million and $21.0 million.
Non-GAAP Terms
From time to time, Gray supplements its financial results
prepared in accordance with accounting principles generally
accepted in the United States of
America ("GAAP") by disclosing the non-GAAP financial
measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash
Corporate Expenses, Operating Cash Flow as defined in Gray's Senior
Credit Agreement ("Operating Cash Flow"), Free Cash Flow and Total
Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by
us to approximate the amount 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. These
non-GAAP amounts may be provided on an As-Reported Basis as well as
a Combined Historical Basis.
We define Broadcast Cash Flow as net income plus loss from early
extinguishment of debt, corporate and administrative expenses,
broadcast 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 less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations and network compensation revenue.
We define Broadcast Cash Flow Less Cash Corporate Expenses as
net income plus loss from early extinguishment of debt, non-cash
stock based compensation, depreciation and amortization (including
amortization of intangible assets and program broadcast rights),
any loss on disposal of assets, any miscellaneous expense, interest
expense, any income tax expense, and non-cash 401(k) expense, less
any gain on disposal of assets, any miscellaneous income, any
income tax benefits, payments for program broadcast obligations and
network compensation revenue.
We define Operating Cash Flow as Combined Historical Basis net
income plus loss from early extinguishment of debt, non-cash stock
based compensation, depreciation and amortization (including
amortization of intangible assets and program broadcast rights),
any loss on disposal of assets, any miscellaneous expense, interest
expense, any income tax expense, non-cash 401(k) expense and
pension expenses less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations, network compensation revenue and cash
contributions to pension plans.
We define Free Cash Flow as net income plus loss from early
extinguishment of debt, non-cash stock based compensation,
depreciation and amortization (including amortization of intangible
assets and program broadcast rights), any loss on disposal of
assets, any miscellaneous expense, amortization of deferred
financing costs, any income tax expense, non-cash 401(k) expense
and pension expense, less any gain on disposal of assets, any
miscellaneous income, any income tax benefits, payments for program
broadcast obligations, network compensation revenue, contributions
to pension plans, amortization of original issue discount on our
debt, capital expenditures (net of any insurance proceeds) and the
payment of income taxes (net of any refunds received).
Our Total Leverage Ratio, Net of All Cash is calculated as our
Operating Cash Flow for the preceding eight quarters, divided by
two, which is then divided by our long term debt, excluding net
premiums and net deferred financing costs, but including any other
debt, net of all cash.
These non-GAAP terms are not defined in GAAP and our definitions
may differ from, and therefore not be comparable to, similarly
titled measures used by other companies, thereby limiting their
usefulness. Such terms are used by management in addition to and in
conjunction with results presented in accordance with GAAP and
should be considered as supplements to, and not as substitutes for,
net income and cash flows reported in accordance with GAAP.
Reconciliation on As-Reported Basis – Quarter
Reconciliation of net income to the non-GAAP terms, in
thousands
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Net income
|
$
17,662
|
|
$
12,110
|
|
$
1,591
|
Depreciation
|
11,617
|
|
8,754
|
|
6,986
|
Amortization of
intangible assets
|
4,242
|
|
2,731
|
|
1,179
|
Non-cash stock based
compensation
|
1,272
|
|
1,009
|
|
980
|
Loss on disposals of
assets, net
|
1,228
|
|
332
|
|
48
|
Miscellaneous income,
net
|
(141)
|
|
(67)
|
|
(3)
|
Interest
expense
|
24,269
|
|
18,587
|
|
15,825
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
4,897
|
Income tax
expense
|
11,897
|
|
8,128
|
|
876
|
Amortization of program
broadcast rights
|
4,813
|
|
3,553
|
|
3,005
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
7
|
|
7
|
|
6
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(113)
|
Payments for program
broadcast rights
|
(5,153)
|
|
(3,553)
|
|
(3,869)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
7,554
|
|
5,653
|
|
9,122
|
Broadcast Cash
Flow
|
79,267
|
|
57,244
|
|
40,530
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(7,554)
|
|
(5,653)
|
|
(9,122)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
71,713
|
|
51,591
|
|
31,408
|
Pension
expense
|
40
|
|
1,789
|
|
1,519
|
Contributions to
pension plans
|
(1,113)
|
|
(1,433)
|
|
(1,755)
|
Interest
expense
|
(24,269)
|
|
(18,587)
|
|
(15,825)
|
Amortization of
deferred financing costs
|
1,196
|
|
798
|
|
702
|
Amortization of net
original issue premium
|
|
|
|
|
|
on 7 1/2% senior notes
due 2020
|
(216)
|
|
(216)
|
|
(216)
|
Purchase of property
and equipment
|
(7,544)
|
|
(5,547)
|
|
(6,654)
|
Income taxes paid, net
of refunds
|
(13,879)
|
|
(1,007)
|
|
(298)
|
Free Cash
Flow
|
$
25,928
|
|
$
27,388
|
|
$
8,881
|
Reconciliation on As-Reported Basis – Year to Date
Reconciliation of net income to the non-GAAP terms, in
thousands
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Net income
|
$
26,652
|
|
$
17,705
|
|
$
2,868
|
Depreciation
|
22,743
|
|
17,552
|
|
13,370
|
Amortization of
intangible assets
|
8,130
|
|
5,502
|
|
1,468
|
Non-cash stock based
compensation
|
2,556
|
|
2,002
|
|
3,051
|
Loss (gain) on
disposals of assets, net
|
(420)
|
|
314
|
|
379
|
Miscellaneous income,
net
|
(710)
|
|
(74)
|
|
(3)
|
Interest
expense
|
45,544
|
|
37,117
|
|
31,099
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
4,897
|
Income tax
expense
|
18,312
|
|
12,068
|
|
1,735
|
Amortization of program
broadcast rights
|
9,209
|
|
7,160
|
|
5,918
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
14
|
|
13
|
|
12
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(221)
|
Payments for program
broadcast rights
|
(9,130)
|
|
(7,141)
|
|
(7,692)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
22,264
|
|
11,750
|
|
14,268
|
Broadcast Cash
Flow
|
145,164
|
|
103,968
|
|
71,149
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock based
compensation
|
(22,264)
|
|
(11,750)
|
|
(14,268)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
122,900
|
|
92,218
|
|
56,881
|
Pension
expense
|
80
|
|
4,190
|
|
3,092
|
Contributions to
pension plans
|
(1,633)
|
|
(1,433)
|
|
(2,717)
|
Interest
expense
|
(45,544)
|
|
(37,117)
|
|
(31,099)
|
Amortization of
deferred financing costs
|
2,267
|
|
1,597
|
|
1,394
|
Amortization of net
original issue premium
|
|
|
|
|
|
on 7 1/2% senior notes
due 2020
|
(432)
|
|
(432)
|
|
(432)
|
Purchase of property
and equipment
|
(13,475)
|
|
(8,396)
|
|
(10,456)
|
Income taxes paid, net
of refunds
|
(14,019)
|
|
(1,248)
|
|
(329)
|
Free Cash
Flow
|
$
50,144
|
|
$
49,379
|
|
$
16,334
|
Reconciliation on Combined Historical Basis – Quarter
Reconciliation of net income to the non-GAAP terms, in
thousands
|
Three Months
Ended
|
|
June
30,
|
|
2016
|
|
2015
|
|
2014
|
|
|
Net income
|
$
18,108
|
|
$
17,065
|
|
$
18,003
|
Depreciation
|
11,652
|
|
11,186
|
|
11,052
|
Amortization of
intangible assets
|
4,251
|
|
4,326
|
|
2,987
|
Non-cash stock-based
compensation
|
1,272
|
|
1,009
|
|
980
|
Loss (gain) on
disposals of assets, net
|
1,228
|
|
491
|
|
(19)
|
Miscellaneous income,
net
|
(145)
|
|
(141)
|
|
(19)
|
Interest
expense
|
24,314
|
|
23,476
|
|
21,437
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
4,897
|
Income tax
expense
|
11,874
|
|
7,434
|
|
1,371
|
Amortization of program
broadcast rights
|
4,813
|
|
3,553
|
|
3,077
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
8
|
|
7
|
|
6
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(113)
|
Payments for program
broadcast rights
|
(5,153)
|
|
(3,553)
|
|
(3,899)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
7,556
|
|
5,653
|
|
9,122
|
Other
|
268
|
|
6,525
|
|
7,136
|
Broadcast Cash
Flow
|
80,046
|
|
77,031
|
|
76,018
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(7,556)
|
|
(5,653)
|
|
(9,122)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
72,490
|
|
71,378
|
|
66,896
|
Pension
expense
|
40
|
|
1,789
|
|
1,519
|
Contributions to
pension plans
|
(1,113)
|
|
(1,433)
|
|
(1,755)
|
Other
|
510
|
|
-
|
|
5,195
|
Operating Cash
Flow as defined in Senior Credit Agreement
|
71,927
|
|
71,734
|
|
71,855
|
Interest
expense
|
(24,314)
|
|
(23,476)
|
|
(21,437)
|
Amortization of
deferred financing costs
|
1,196
|
|
798
|
|
702
|
Amortization of net
original issue premium
|
|
|
|
|
|
on 7 1/2% senior notes
due 2020
|
(216)
|
|
(216)
|
|
(216)
|
Purchase of property
and equipment
|
(7,544)
|
|
(6,250)
|
|
(8,750)
|
Income taxes paid, net
of refunds
|
(12,769)
|
|
(1,250)
|
|
(1,250)
|
Free Cash
Flow
|
$
28,280
|
|
$
41,340
|
|
$
40,904
|
Reconciliation on Combined Historical Basis – Year to
Date
Reconciliation of net income to the non-GAAP terms, in
thousands
|
Six Months
Ended
|
|
June
30,
|
|
2016
|
|
2015
|
|
2014
|
|
|
Net income
|
$
24,922
|
|
$
24,159
|
|
$
29,030
|
Depreciation
|
23,489
|
|
22,597
|
|
21,934
|
Amortization of
intangible assets
|
8,972
|
|
8,822
|
|
4,910
|
Non-cash stock-based
compensation
|
2,556
|
|
2,002
|
|
3,051
|
(Gain) loss on
disposals of assets, net
|
(204)
|
|
526
|
|
(32)
|
Miscellaneous income,
net
|
(741)
|
|
(173)
|
|
(27)
|
Interest
expense
|
47,903
|
|
46,793
|
|
44,647
|
Loss from early
extinguishment of debt
|
-
|
|
-
|
|
4,897
|
Income tax
expense
|
18,127
|
|
10,856
|
|
1,477
|
Amortization of program
broadcast rights
|
9,209
|
|
7,160
|
|
5,990
|
Common stock
contributed to 401(k) plan
|
|
|
|
|
|
excluding corporate
401(k) contributions
|
14
|
|
13
|
|
12
|
Network compensation
revenue recognized
|
-
|
|
-
|
|
(221)
|
Payments for program
broadcast rights
|
(9,130)
|
|
(7,141)
|
|
(7,722)
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
22,264
|
|
11,750
|
|
14,268
|
Other
|
2,759
|
|
13,003
|
|
11,657
|
Broadcast Cash
Flow
|
150,140
|
|
140,367
|
|
133,871
|
Corporate and
administrative expenses excluding
|
|
|
|
|
|
depreciation,
amortization of intangible assets and
|
|
|
|
|
|
non-cash stock-based
compensation
|
(22,264)
|
|
(11,750)
|
|
(14,268)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
127,876
|
|
128,617
|
|
119,603
|
Pension
expense
|
80
|
|
4,190
|
|
3,092
|
Contributions to
pension plans
|
(1,633)
|
|
(1,433)
|
|
(2,717)
|
Other
|
7,245
|
|
-
|
|
5,195
|
Operating Cash
Flow as defined in Senior Credit Agreement
|
133,568
|
|
131,374
|
|
125,173
|
Interest
expense
|
(47,903)
|
|
(46,793)
|
|
(44,647)
|
Amortization of
deferred financing costs
|
2,267
|
|
1,597
|
|
1,394
|
Amortization of net
original issue premium
|
|
|
|
|
|
on 7 1/2% senior notes
due 2020
|
(432)
|
|
(432)
|
|
(432)
|
Purchase of property
and equipment
|
(13,475)
|
|
(12,500)
|
|
(17,500)
|
Income taxes paid, net
of refunds
|
(14,019)
|
|
(2,500)
|
|
(2,500)
|
Free Cash
Flow
|
$
60,006
|
|
$
70,746
|
|
$
61,488
|
Reconciliation of Total Leverage Ratio, Net of All
Cash
Reconciliation of net income to the non-GAAP term, in
thousands
Combined
Historical Basis Operating Cash Flow
|
Eight
Quarters Ended
|
as defined
in the Senior Credit Agreement:
|
June 30,
2016
|
|
|
Net income
|
$
148,423
|
Depreciation
|
91,589
|
Amortization of
intangible assets
|
38,151
|
Non-cash stock-based
compensation
|
8,537
|
(Gain) loss on
disposals of assets, net
|
1,461
|
Miscellaneous income,
net
|
(1,002)
|
Interest
expense
|
191,226
|
Loss from early
extinguishment of debt
|
189
|
Income tax
expense
|
69,125
|
Amortization of program
broadcast rights
|
31,183
|
Common stock
contributed to 401(k) plan
|
|
excluding corporate
401(k) contributions
|
53
|
Network compensation
revenue recognized
|
(235)
|
Payments for program
broadcast rights
|
(31,137)
|
Corporate and
administrative expenses excluding
|
|
depreciation,
amortization of intangible assets and
|
|
non-cash stock-based
compensation
|
64,890
|
Other
|
33,906
|
Broadcast Cash
Flow
|
646,359
|
Corporate and
administrative expenses excluding
|
|
depreciation,
amortization of intangible assets and
|
|
non-cash stock-based
compensation
|
(64,890)
|
Broadcast Cash
Flow Less Cash Corporate Expenses
|
581,469
|
Pension
expense
|
7,321
|
Contributions to
pension plans
|
(11,107)
|
Other
|
14,714
|
Operating Cash
Flow as defined in Senior Credit Agreement
|
$
592,397
|
Operating Cash
Flow as defined in Senior Credit
|
|
Agreement, divided
by two
|
$
296,199
|
|
|
|
June 30,
2016
|
Adjusted Total
Indebtedness:
|
|
Long term
debt
|
$
1,705,361
|
Capital leases and
other debt
|
644
|
Total deferred
financing costs, net
|
29,745
|
Premium on
subordinated debt, net
|
(3,668)
|
Cash
|
(176,345)
|
Adjusted Total
Indebtedness, Net of All Cash
|
$
1,555,737
|
Total Leverage
Ratio, Net of All Cash
|
5.25
|
The Company
We are a television broadcast company headquartered in
Atlanta, Georgia, that owns and
operates television stations and leading digital assets in markets
throughout the United States. We
own and/or operate television stations in 51 television markets
that broadcast over 185 separate program streams, including 36
channels affiliated with CBS, 27 channels affiliated with NBC, 19
channels affiliated with ABC and 14 channels affiliated with
FOX. We own the number-one or number-two ranked television
station operations in 50 of those 51 markets. Our stations
reach approximately 9.5 percent of total United States television households.
Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and the federal securities
laws. These "forward-looking statements" are not statements of
historical facts, and may include, among other things, statements
regarding our current expectations and beliefs of operating results
for the third quarter of 2016 or other periods, the impact of
recently completed transactions, future expenses and other future
events. Actual results are subject to a number of risks and
uncertainties and may differ materially from the current
expectations and beliefs discussed in this press release. All
information set forth in this release is as of August 4, 2016. We do not intend, and undertake
no duty, to update this information to reflect future events or
circumstances. Information about certain potential factors that
could affect our business and financial results and cause actual
results to differ materially from those expressed or implied in any
forward-looking statements are included under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," in our Annual Report on Form
10-K for the year ended December 31,
2015 and may be contained in reports subsequently filed with
the U.S. Securities and Exchange Commission (the "SEC") and
available at the SEC's website at www.sec.gov.
Conference Call Information
We will host a conference call to discuss our second quarter
operating results on August 4, 2016.
The call will begin at 11:00 AM Eastern
Time. The live dial-in number is 1 (866) 249-5224 and the
confirmation code is 3173477. 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, Confirmation
Code: 3173477 until September 3, 2016.
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SOURCE Gray Television, Inc.