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8-K - FORM 8-K - SAGA COMMUNICATIONS INCb87567e8vk.htm
Exhibit 99.1
Saga Communications, Inc.
Reports 2nd Quarter 2011 Results
2nd Quarter Free Cash Flow Increased 10.2%
Contact:
Samuel D. Bush
313/886-7070
Grosse Pointe Farms, MI — August 4, 2011 — Saga Communications, Inc. (NYSE Amex-SGA) today reported free cash flow increased 10.2% to $6.3 million for the quarter ended June 30, 2011 compared to $5.7 million for the same period in 2010. The Company’s net operating revenue increased 0.9% to $33.2 million while station operating expense increased 2.0% compared to the same period last year to $23.6 million (station operating expense includes depreciation and amortization attributable to the stations). Operating income was $7.6 million compared to $7.8 million for the same period last year and net income for the period was $3.2 million ($0.75 per fully diluted share compared to $0.87 per fully diluted share for the same period last year).
For the six month period ended June 30, 2011, free cash flow increased 19.3% to $9.5 million. Net operating revenue increased 1.7% from the comparable period in 2010 to $61.9 million with operating income of $11.6 million compared to $11.4 million for the same period last year. Net income was $4.8 million ($1.14 per fully diluted share compared to $1.66 per fully diluted share for the same period last year). For the same period, station operating expense increased 1.4% to $46.4 million (station operating expense includes depreciation and amortization attributable to the stations).
The increase in station operating expense for the quarter and six month period is primarily attributable to an increase in the company’s health insurance expense of $285 thousand and $775 thousand respectively. During the 2nd Quarter of 2011 the Company incurred $1.2 million in other expense which was primarily due to the write off of our previously unamortized bank fees due to the closing of our new credit facility. The company’s net income for the six month period ended June 30, 2010 included $3.6 million in other income that was primarily due to the one-time payment for a frequency coordination of one of its licensed facilities.
Capital expenditures in the second quarter of 2011 were $1.4 million compared to $1.3 million for the same period last year. The Company currently expects to spend approximately $5.5 million for capital expenditures during 2011.

 


 

The Company continues to maintain a solid balance sheet with $13.9 million in cash and marketable securities balances as of June 30, 2011. As of June 30, 2011, the Company’s outstanding bank debt was $88.0 million. The trailing 12 month leverage ratio calculated as a multiple of EBITDA was 2.5 times.
The Company closed on its new $120 million Credit Agreement on June 13, 2011. The facility includes a $60 million term loan and a $60 million revolving loan. Upon converting to a LIBOR based loan on June 16, 2011 the initial applicable margin will be LIBOR + 250 basis points which is a 50 basis point reduction to the rate that was being paid on the previous facility. The initial applicable margin allows for a decrease to LIBOR + 150 basis points when the multiple of EBITDA is below 1.75 times.
Saga Communications utilizes certain financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) to assess its financial performance. Such non-GAAP measures include free cash flow, trailing 12 month consolidated EBITDA, and leverage ratio. These non-GAAP measures are generally recognized by the broadcasting industry as measures of performance and are used by Saga to assess its financial performance including but not limited to evaluating individual station and market-level performance, evaluating overall operations, as a primary measure for incentive based compensation of executives and other members of management and as a measure of financial position. Saga’s management believes these non-GAAP measures are used by analysts who report on the industry and by investors to provide meaningful comparisons between broadcasting groups, as well as an indicator of their market value. These measures are not measures of liquidity or of performance in accordance with GAAP, and should be viewed as a supplement to and not as a substitute for the results of operations presented on a GAAP basis including net operating revenue, operating income, and net income. Reconciliations for all of the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the Selected Supplemental Financial Data table.
Saga Communications, Inc. is a broadcasting company whose business is devoted to acquiring, developing and operating broadcast properties. The Company owns or operates broadcast properties in 26 markets, including 61 FM and 30 AM radio stations, 3 state radio networks, 2 farm radio networks, 5 television stations and 4 low-power television stations. For additional information, contact us at (313) 886-7070 or visit our website at www.sagacommunications.com.
Saga’s 2nd Quarter 2011 conference call will be on Thursday, August 4, 2011 at 11:00 a.m. EDT. The dial-in number for all calls is (612) 234-9960. A transcript of the call will be posted to the Company’s web site.
The Company requests that all parties that have a question that they would like to submit to the Company to please email the inquiry by 10:00 a.m. EDT on August 4, 2011 to SagaIR@sagacom.com. The Company will discuss, during the limited period of the conference call, those inquiries it deems of general relevance and interest. Only inquiries made in compliance with the foregoing will be discussed during the call.

 


 

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “believes,” “expects,” “anticipates,” “guidance” and similar expressions are intended to identify forward-looking statements. Key risks, including risks associated with Saga’s ability to effectively integrate the stations it acquires and the impact of federal regulation on Saga’s business, are described in the reports Saga Communications, Inc. periodically files with the U.S. Securities and Exchange Commission, including Item 1A of our Annual Report on Form 10-K. Readers should note that these statements may be impacted by several factors, including national and local economic changes and changes in the radio and television broadcast industry in general, as well as Saga’s actual performance. Results may vary from those stated herein and Saga undertakes no obligation to update the information contained here.

 


 

Saga Communications, Inc.
Selected Consolidated Financial Data
For The Three and Six Months Ended
June 30, 2011 and 2010
(amounts in 000’s except per share data)
(Unaudited)
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2011   2010   2011   2010
     
Operating Results
                               
Net operating revenue
  $ 33,183     $ 32,887     $ 61,891     $ 60,874  
Station operating expense
    23,623       23,157       46,359       45,717  
Corporate general and administrative
    1,949       1,897       3,889       3,779  
     
Operating income
    7,611       7,833       11,643       11,378  
Interest expense
    1,034       1,468       2,191       2,987  
Write-off revolving credit facility debt issuance costs
    1,326             1,326        
Other (income) expense, net
    (95 )     185       (27 )     (3,411 )
     
Income before income tax
    5,346       6,180       8,153       11,802  
Income tax expense
    2,176       2,485       3,321       4,790  
     
Net income
  $ 3,170     $ 3,695     $ 4,832     $ 7,012  
     
Earnings per share
                               
Basic
  $ 0.75     $ 0.87     $ 1.14     $ 1.66  
     
Diluted
  $ 0.75     $ 0.87     $ 1.14     $ 1.66  
     
Weighted average common shares
    4,242       4,236       4,237       4,229  
Weighted average common and common
                               
equivalent shares
    4,245       4,237       4,242       4,229  
 
                               
Free Cash Flow
                               
Net income
  $ 3,170     $ 3,695     $ 4,832     $ 7,012  
Plus: Depreciation and amortization:
                               
Station
    1,762       1,853       3,513       3,698  
Corporate
    59       54       113       106  
Deferred tax provision
    1,395       1,015       2,050       2,195  
Non-cash compensation
    74       230       236       528  
Debt issuance cost write-off
    1,326             1,326        
Other (income) expense, net
    (95 )     185       (27 )     (3,411 )
Less: Capital expenditures
    (1,377 )     (1,301 )     (2,522 )     (2,146 )
     
Free cash flow
  $ 6,314     $ 5,731     $ 9,521     $ 7,982  
     
 
                               
Balance Sheet Data
                               
Working capital
                  $ 22,525     $ 10,694  
Net fixed assets
                  $ 64,545     $ 67,330  
Net intangible assets and other assets
                  $ 96,932     $ 96,954  
Total assets
                  $ 201,623     $ 206,405  
Long-term debt (including current
                               
portion of $3,000 and $17,278, respectively)
                  $ 89,078     $ 113,578  
Stockholders’ equity
                  $ 85,030     $ 71,555  

 


 

Saga Communications, Inc.
Selected Supplemental Financial Data
For the Three and Six Months Ended
June 30, 2011 and 2010
(amounts in 000’s)
(Unaudited)
                                 
                    Corporate        
    Radio     Television     and Other     Consolidated  
Three Months Ended June 30, 2011:
                               
Net operating revenue
  $ 28,611     $ 4,572     $     $ 33,183  
Station operating expense
    20,004       3,619             23,623  
Corporate G&A
                1,949       1,949  
 
                       
Operating income (loss)
  $ 8,607     $ 953     $ (1,949 )   $ 7,611  
 
                       
Depreciation and amortization
  $ 1,348     $ 414     $ 59     $ 1,821  
 
                       
 
                               
                                 
                    Corporate        
    Radio     Television     and Other     Consolidated  
Three Months Ended June 30, 2010:
                               
Net operating revenue
  $ 28,661     $ 4,226     $     $ 32,887  
Station operating expense
    19,827       3,330             23,157  
Corporate G&A
                1,897       1,897  
 
                       
Operating income (loss)
  $ 8,834     $ 896     $ (1,897 )   $ 7,833  
 
                       
Depreciation and amortization
  $ 1,444     $ 409     $ 54     $ 1,907  
 
                       
                                 
                    Corporate        
    Radio     Television     and Other     Consolidated  
Six Months Ended June 30, 2011:
                               
Net operating revenue
  $ 53,117     $ 8,774     $     $ 61,891  
Station operating expense
    39,282       7,077             46,359  
Corporate G&A
                3,889       3,889  
 
                       
Operating income (loss)
  $ 13,835     $ 1,697     $ (3,889 )   $ 11,643  
 
                       
Depreciation and amortization
  $ 2,687     $ 826     $ 113     $ 3,626  
 
                       
                                 
                    Corporate        
    Radio     Television     and Other     Consolidated  
Six Months Ended June 30, 2010:
                               
Net operating revenue
  $ 52,805     $ 8,069     $     $ 60,874  
Station operating expense
    39,050       6,667             45,717  
Corporate G&A
                3,779       3,779  
 
                       
Operating income (loss)
  $ 13,755     $ 1,402     $ (3,779 )   $ 11,378  
 
                       
Depreciation and amortization
  $ 2,865     $ 833     $ 106     $ 3,804  
 
                       

 


 

Saga Communications, Inc.
Selected Supplemental Financial Data
June 30, 2011
(amounts in 000’s except ratios)
(Unaudited)
                                 
            Less:     Plus:     Trailing  
    12 Mos Ended     6 Mos Ended     6 Mos Ended     12 Mos Ended  
    December 31,     June 30,     June 30,     June 30,  
    2010     2010     2011     2011  
Trailing 12 Month Consolidated EBITDA (1)
                               
Net income
  $ 15,136     $ 7,012     $ 4,832     $ 12,956  
Less: Loss on sale of assets
    (386 )     (336 )     (80 )     (130 )
Other gains
          186       105       (81 )
Gain on license downgrade
    3,756       3,561             195  
Loss on Write Off of Unamortized Debt Issuance Costs
                (1,326 )     (1,326 )
Other
    46       159       189       76  
 
                       
Total exclusions
    3,416       3,570       (1,112 )     (1,266 )
 
                       
Consolidated Adjusted Net Income (1)
    11,720       3,442       5,944       14,222  
Plus: Interest expense
    5,622       2,987       2,191       4,826  
Income tax expense
    10,400       4,790       3,321       8,931  
Depreciation & amortization expense
    7,718       3,806       3,626       7,538  
Amortization of television syndicated programming contracts
    732       361       236       607  
Non-cash stock based compensation expense
    927       528       370       769  
Less: Cash television programming payments
    (744 )     (366 )     (364 )     (742 )
 
                       
Trailing twelve month consolidated EBITDA (1)
  $ 36,375     $ 15,548     $ 15,324     $ 36,151  
 
                       
 
                               
Total long-term debt, including current maturities
                          $ 89,078  
Divided by trailing twelve month consolidated EBITDA (1)
                            36,151  
                             
Leverage ratio
                            2.5  
                             
(1) As defined in the Company’s credit facility.