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Section 1: 8-K (FORM 8-K)

 

 

 

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): June 30, 2017

 

 

SAGA COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   1-11588   38-3042953
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification No.)

 

73 Kercheval Avenue    
Grosse Pointe Farms, MI   48236
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (313) 886-7070

 

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:

 

¨ 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))

 

Indicate by check mark whether the registrant is an emerging growth company 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 3, 2017, Saga Communications, Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2017. The press release, dated August 3, 2017, is attached as Exhibit 99.1 to this Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

  

  99.1 Press Release dated August 3, 2017.

 

 

 

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.

 

 

  SAGA COMMUNICATIONS, INC.
     
     
Dated: August 3, 2017 By: /s/ Samuel D. Bush
         Samuel D. Bush
         Senior Vice President and Chief Financial Officer

 

 

 

 

INDEX OF EXHIBITS

 

Exhibit No.   Description
     
99.1   Press Release dated August 3, 2017.

  

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Saga Communications, Inc. Reports 2nd Quarter 2017 Results



Radio Net Revenue of $30.3 Million from Continuing Operations and Television Net Revenue of $5.7 Million from Discontinued Operations

GROSSE POINTE FARMS, Mich., Aug. 3, 2017 /PRNewswire/ -- Saga Communications, Inc. (NYSE American: SGA) today reported earnings for the three and six months ended June 30, 2017. Continuing operations include the Company's radio stations. The Company's television stations are classified as held for sale and are being reported as discontinued operations due to the pending sale which is expected to close during the third quarter of 2017.

The Company announced net revenue of $30.3 million from continuing operations for the quarter ended June 30, 2017 compared to $30.9 million for the same period last year. Station operating expense decreased to $21.4 million for the quarter compared to $21.8 million last year and station operating income was $5.9 million for the quarter compared to $6.4 million last year.

The Company's net revenue included in discontinued operations for the quarter ended June 30, 2017 was $5.7 million compared to $5.6 million for the same period last year. Station operating expense and station operating income included in discontinued operations were flat for the comparable periods at $3.6 million and $2.0 million respectively.

Net income for the quarter ended June 30, 2017 was $4.5 million ($0.77 per fully diluted share) as compared to $4.8 million ($0.81 per fully diluted share) for the same period last year.

The Company's net revenue of $56.4 million from continuing operations for the six months ended June 30, 2017 compared to $58.3 million for the same period last year. Station operating expense decreased to $42.8 million for the six month period compared to $43.0 million last year and station operating income was $7.9 million for the six months compared to $10.0 million last year. Gross political revenue from continuing operations were $289 thousand for the six month period this year compared to $1.4 million last year.

The Company's net revenue included in discontinued operations for the six months ended June 30, 2017 was flat with the same period last year at $10.9 million. Station operating expense for the six month period was $7.4 million compared to $7.1 million last year and station operating income was $3.6 million this year compared to $3.7 million last year.

Net income for the six months ended June 30, 2017 was $6.5 million ($1.10 per fully diluted share) as compared to $7.8 million ($1.33 per fully diluted share) for the same period last year.

Capital expenditures were $2.0 million in the second quarter compared to $1.5 million for the same period last year. The Company expects to spend approximately $5.0 million to $5.5 million for capital expenditures during 2017.

The Company entered into agreements on May 9, 2017 to sell it's television stations for approximately $66.6 million and to purchase radio stations in Charleston and Hilton Head, SC for approximately $23.0 million. Both the sale and purchase are expected to occur during the third quarter. The Company plans on utilizing an Internal Revenue Code Section 1031 like-kind exchange for some of the specific assets being sold and acquired. This will allow the Company to defer taxes on a portion of the gain from the sale. The amount of the deferral will not be fully known until both the sale and purchase are closed and certain tax documents finalized.

The Company expects to use both it's existing cash on hand and the net cash remaining after the sale of the television stations and the purchase of the Charleston and Hilton Head radio stations for continued station acquisitions, debt reduction and other corporate purposes.

Saga's 2017 Second Quarter call will be on Thursday, August 3, 2017 at 11:00 a.m. EDT. The dial-in number for the call is (612) 288-0329. A transcript of the call will be posted to the Company's website as soon as it is available after the call.

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 3, 2017 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.

The attached Selected Supplemental Financial Data tables disclose "actual", "same station", and "discontinued operations" information as well as the Company's trailing 12 month consolidated EBITDA. The "actual" amounts reflect our historical financial results and include the results of operations for stations that we did not own for the entire comparable period. The "same station" amounts reflect only the results of operations for stations that we owned for the entire comparable period.

Saga 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 same station financial information, free cash flow, trailing 12 month consolidated EBITDA, and consolidated net 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 Consolidated and Supplemental Financial Data tables.

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 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 is a broadcasting company whose business is devoted to acquiring, developing and operating broadcast properties. Saga owns or operates broadcast properties in 26 markets, including 68 FM and 32 AM radio stations, 4 television stations and 5 low-power television stations. For additional information, contact us at (313) 886-7070 or visit our website at www.sagacom.com.

Saga Communications, Inc.

Selected Consolidated Financial Data

For The Three and Six Months Ended

June 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)











Three Months Ended

Six Months Ended




June 30,

June 30,




2017

2016

2017

2016

Operating Results






Net operating revenue


$ 30,261

$ 30,866

$ 56,416

$ 58,330

Station operating expense


21,426

21,842

42,766

42,982

Corporate general and administrative


2,880

2,620

5,743

5,337

Other operating expense


79

8

58

5

Operating income


5,876

6,396

7,849

10,006

Interest expense


229

182

437

361

Income from continuing operations, before tax


5,647

6,214

7,412

9,645

Income tax expense


2,272

2,569

2,990

3,987

Income from continuing operations, net of tax


3,375

3,645

4,422

5,658

Income from discontinued operations, net of tax


1,159

1,166

2,050

2,177

Net income


$ 4,534

$ 4,811

$ 6,472

$ 7,835








Basic Earnings per share:







From continuing operations


$ 0.57

$ 0.62

$ 0.75

$ 0.97


From discontinued operations


0.20

0.20

$ 0.35

$ 0.37


Basic earnings per share


$ 0.77

$ 0.82

$ 1.10

$ 1.34








Diluted Earnings per share:







From continuing operations


$ 0.57

$ 0.61

$ 0.75

$ 0.96


From discontinued operations


0.20

0.20

$ 0.35

$ 0.37


Diluted earnings per share


$ 0.77

$ 0.81

$ 1.10

$ 1.33








Weighted average common shares


5,803

5,754

5,796

5,752

Weighted average common and common







equivalent shares


5,806

5,763

5,804

5,761








Free Cash Flow






Net income


$ 4,534

$ 4,811

$ 6,472

$ 7,835

Plus: Depreciation and amortization:







Station


1,372

1,406

2,730

2,752


Corporate


72

69

143

138


Discontinued operations


129

332

445

653

Deferred tax provision


1,255

915

1,680

1,490

Non-cash compensation


574

530

1,132

1,058

Other operating expense from continuing operations


79

8

58

5

Other operating expense from discontinued operations


-

-

31

3

Less: Capital expenditures from continuing operations


(1,974)

(1,064)

(3,315)

(1,969)


Capital expenditures from discontinued operations


(12)

(476)

(110)

(581)

Free cash flow


$ 6,029

$ 6,531

$ 9,266

$ 11,384













June 30,






2017

2016

Balance Sheet Data







Working capital




$ 56,574

$ 27,713


Net fixed assets




$ 49,865

$ 50,038


Net intangible assets and other assets




$ 102,658

$ 118,518


Total assets




$ 226,878

$ 212,907


Long-term debt including $1,078 and $1,078 of current liabilities






classified as discontinued operations, respectivley




$ 36,365

$ 36,365


Stockholders' equity




$ 139,319

$ 129,036

Saga Communications, Inc.

Selected Supplemental Financial Data

For The Three and Six Months Ended

June 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)












 Three Months Ended  

 Six Months Ended  



 June 30, 

 June 30, 



2017

2016

2017

2016

Results of Discontinued Operations






Net operating revenue


$     5,688

$     5,572

$     10,942

$     10,853

Station operating expense 


3,643

3,578

7,355

7,123

Other operating expense


-

-

31

3

Operating income


2,045

1,994

3,556

3,727

Interest expense 


8

7

16

17

Income before income taxes


2,037

1,987

3,540

3,710

Income tax expense 


878

821

1,490

1,533

Income from discontinued operations, net of tax


$     1,159

$     1,166

$       2,050

$       2,177

Saga Communications, Inc.

Selected Supplemental Financial Data

For the Three Months Ended

June 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)











Actual


Same Station (1)




Three Months Ended


Three Months Ended




June 30,


June 30,




2017

2016


2017

2016


Consolidated







Net operating revenue

$ 30,261

$ 30,866


$ 30,155

$ 30,866


Station operating expense

21,426

21,842


21,372

21,842


Corporate general and administrative

2,880

2,620


2,880

2,620


Other operating expense

79

8


79

8


Operating income

5,876

6,396


5,824

6,396


Interest expense

229

182





Income from continuing operations, before tax

5,647

6,214





Income tax expense

2,272

2,569





Income from continuing operations, net of tax

3,375

3,645





Income from discontinued operations, net of tax

1,159

1,166





Net income

$ 4,534

$ 4,811













Basic Earnings per share:








From continuing operations

$ 0.57

$ 0.62






From discontinued operations

0.20

0.20






Basic earnings per share

$ 0.77

$ 0.82













Diluted Earnings per share:








From continuing operations

$ 0.57

$ 0.61






From discontinued operations

0.20

0.20






Diluted earnings per share

$ 0.77

$ 0.81















Actual


Same Station (1)




Three Months Ended


Three Months Ended




June 30,


June 30,




2017

2016


2017

2016


Depreciation and amortization







Radio Stations

$ 1,372

$ 1,406


$ 1,370

$ 1,406


Discontinued Operations

129

332


129

332


Corporate and Other

72

69


72

69




$ 1,573

$ 1,807


$ 1,571

$ 1,807










(1)

Same station includes only the results of stations we owned and operated for the entire comparable period.

Saga Communications, Inc.

Selected Supplemental Financial Data

For the Six Months Ended

June 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)











Actual


Same Station (1)




Six Months Ended


Six Months Ended




June 30,


June 30,




2017

2016


2017

2016


Consolidated







Net operating revenue

$      56,416

$      58,330


$      56,265

$      58,330


Station operating expense

42,766

42,982


42,655

42,982


Corporate general and administrative

5,743

5,337


5,743

5,337


Other operating expense

58

5


58

5


Operating income

7,849

10,006


7,809

10,006


Interest expense

437

361





Income from continuing operations, before tax

7,412

9,645





Income tax expense

2,990

3,987





Income from continuing operations, net of tax

4,422

5,658





Income from discontinued operations, net of tax

2,050

2,177





Net income 

$        6,472

$        7,835













Basic Earnings per share:








From continuing operations

$          0.75

$          0.97






From discontinued operations

0.35

0.37






Basic earnings per share

$          1.10

$          1.34













Diluted Earnings per share:








From continuing operations

$          0.75

$          0.96






From discontinued operations

0.35

0.37






Diluted earnings per share

$          1.10

$          1.33















Actual


Same Station (1)




Six Months Ended


Six Months Ended




June 30,


June 30,




2017

2016


2017

2016


Depreciation and amortization







Radio Stations

$        2,730

$        2,752


$        2,728

$        2,752


Discontinued Operations

445

653


445

653


Corporate and Other

143

138


143

138




$        3,318

$        3,543


$        3,316

$        3,543










(1)

Same station includes only the results of stations we owned and operated for the entire comparable period.

Saga Communications, Inc.

Selected Supplemental Financial Data

June 30, 2017

(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,



2016


2016


2017


2017

Trailing 12 Month Consolidated Earnings Before Interest,








  Taxes, Depreciation and Amortization ("EBITDA") (1)








Net income

$                  18,186


$                  7,835


$                  6,472


$                  16,823

Exclusions:









Gain (loss) on sale of assets

1,393


(8)


(89)


1,312


Other

298


215


279


362

Total exclusions

1,691


207


190


1,674

Consolidated adjusted net income (1)

16,495


7,628


6,282


15,149

Plus:  Interest expense

776


378


454


852


Income tax expense

12,500


5,520


4,480


11,460


Depreciation & amortization expense

7,263


3,543


3,318


7,038


Amortization of television syndicated programming contracts

628


312


316


632


Non-cash stock based compensation expense

2,101


1,058


1,132


2,175

Less: Cash television programming payments

(625)


(312)


(316)


(629)










Trailing twelve month consolidated EBITDA (1)

$                  39,138


$                 18,127


$                 15,666


$                  36,677










Total long-term debt, including current maturities







$                  36,365

Divided by trailing twelve month consolidated EBITDA (1)







36,677

Leverage ratio







0.99




























(1)

As defined in the Company's credit facility.









Saga Communications, Inc.


Selected Financial Data Non-GAAP Disclosures


For the Three and Six Months Ended


June 30, 2017 and 2016


(amounts in 000's)


(Unaudited)





























Reconciliation of Actual Information to Same Station Operating Income 



















Adjustment






Adjustment






Actual


For Acquisitions


Same Station


Actual


For Acquisitions


Same Station




Three Months


and Dispositions


Three Months


Three Months


and Dispositions


Three Months




Ended


Not Included in 


Ended


Ended


Not Included in 


Ended




June 30,


Entire Comparable


June 30,


June 30,


Entire Comparable


June 30,




2017


Period


2017


2016


Period


2016


Consolidated













Net operating revenue

$              30,261


$                 (106)


$              30,155


$              30,866


$                     -


$              30,866


Station operating expense

21,426


(54)


21,372


21,842


-


21,842


Corporate general and administrative

2,880


-


2,880


2,620


-


2,620


Other operating expense

79


-


79


8


-


8


Operating income

$                5,876


$                   (52)


$                5,824


$                6,396


$                     -


$                6,396
















Depreciation and amortization

$                1,573


$                     (2)


$                1,571


$                1,807


$                     -


$                1,807


































Adjustment






Adjustment






Actual


For Acquisitions


Same Station


Actual


For Acquisitions


Same Station




Six Months


and Dispositions


Six Months


Six Months


and Dispositions


Six Months




Ended


Not Included in 


Ended


Ended


Not Included in 


Ended




June 30,


Entire Comparable


June 30,


June 30,


Entire Comparable


June 30,




2017


Period


2017


2016


Period


2016


Consolidated













Net operating revenue

$              56,416


$                 (151)


$              56,265


$              58,330


-


$              58,330


Station operating expense

42,766


(111)


42,655


42,982


-


42,982


Corporate general and administrative

5,743


-


5,743


5,337


-


5,337


Other operating (income) expense

58


-


58


5


-


5


Operating income

$                7,849


$                   (40)


$                7,809


$              10,006


$                     -


$              10,006
















Depreciation and amortization

$                3,318


$                     (2)


$                3,316


$                3,543


$                     -


$                3,543




CONTACT: Samuel D. Bush, 313/886-7070

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