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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): September 30, 2017

 

SAGA COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   1-11588   38-3042953
 (State or other jurisdiction    (Commission File Number)   (IRS Employer
of incorporation)       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 November 7, 2017, Saga Communications, Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2017. The press release, dated November 7, 2017, is attached as Exhibit 99.1 to this Form 8-K.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

99.1Press Release dated November 7, 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: November 7, 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 November 7, 2017.

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Saga Communications, Inc. Reports 3rd Quarter 2017 Results



Net Revenue of $30.3 Million

GROSSE POINTE FARMS, Mich., Nov. 7, 2017 /PRNewswire/ -- Saga Communications, Inc. (NYSE American: SGA) today reported net revenue increased 1.3% to $30.3 million for the three months ended September 30, 2017. Station operating expense was flat with the same period last year at $21.8 million and operating income was $5.5 million compared to $6.8 million for the same period last year with the reduction primarily due to a gain of $1.4 million recognized from the sale of one of the Company's towers in Norfolk, VA during the third quarter last year. Gross political revenue from radio for the quarter was $0.3 million compared to $0.5 million for the same period last year.

On a same station basis net revenue declined 1.1% to $29.6 million. Station operating expense was down 2.8% at $21.2 million and operating income was $5.4 million.

The Company's net revenue for the nine months ended September 30, 2017 was $86.7 million compared to $88.2 million for the same period last year. Station operating expense decreased to $64.5 million for the nine month period compared to $64.8 million last year and operating income was $13.4 million for the nine month period compared to $16.8 million last year. Gross political revenue from radio was $0.6 million for the nine month period this year compared to $1.9 million for the comparable period last year.

On a same station basis net revenue for the nine months was $85.8 million compared to $88.2 million for the same period last year. Station operating expense was $63.8 million and operating income was $13.2 million for the nine months ended September 30, 2017.

Net Income for the quarter was $33.4 million ($5.66 per fully diluted share) compared to $5.4 million ($0.92 per fully diluted share) for the same period last year and $39.9 million ($6.76 per fully diluted share) for the nine months ended September 30, 2017 compared to $13.2 million ($2.25 per fully diluted share) last year. During the quarter the Company realized a gain of $29.9 million net of tax on the sale of its television assets.

Capital expenditures were $1.4 million in the third quarter compared to $1.6 million for the same period last year. The Company expects to spend approximately $6.5 million for capital expenditures during 2017 including approximately $750 thousand relating to our recent acquisitions in Charleston and Hilton Head, SC.

On September 1, 2017 the Company closed on the sale of its television stations for approximately $66.6 million and on the purchase of radio stations in Charleston and Hilton Head, SC for approximately $23.0 million. At the end of the quarter the Company had approximately $81.0 million of cash on its balance sheet. As of this week we have approximately $72.0 million of cash with $25.0 million in outstanding debt. Approximately $22.0 million of our cash will be used to pay taxes later this year based on the gain on the sale of our television assets. In addition to taxes the Company intends to utilize the cash for prospective future acquisitions, regular quarterly cash dividends as declared by the Board of Directors, and to consider its use for special cash dividends and stock buybacks.

Saga's 2017 Third Quarter call will be on Tuesday, November 7, 2017 at 11:00 a.m. EST. The dial-in number for the call is (612) 234-9959. 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. EST on November 7, 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", "proforma", 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. The "proforma" amounts assume all acquisitions in 2016 and 2017 occurred as of January 1, 2016.

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 75 FM and 33 AM radio stations and 64 metro signals. 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 Nine Months Ended

September 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)











 Three Months Ended  

 Nine Months Ended  




 September 30, 

 September 30, 




2017

2016

2017

2016

Operating Results






Net operating revenue


$         30,269

$        29,878

$         86,685

$         88,208

Station operating expense


21,755

21,775

64,521

64,757

Corporate general and administrative


3,132

2,728

8,875

8,065

Other operating (income) expense, net


(127)

(1,393)

(69)

(1,388)

Operating income


5,509

6,768

13,358

16,774

Interest expense


254

187

691

548

Income from continuing operations, before tax


5,255

6,581

12,667

16,226

Income tax expense


2,290

2,678

5,280

6,665

Income from continuing operations, net of tax


2,965

3,903

7,387

9,561

Income from discontinued operations, net of tax


30,451

1,511

32,501

3,688

Net income


$         33,416

$          5,414

$         39,888

$         13,249








Basic Earnings per share:







From continuing operations


$             0.50

$           0.66

$             1.25

$             1.63


From discontinued operations


5.16

0.26

$             5.51

$             0.63


Basic earnings per share


$             5.66

$           0.92

$             6.76

$             2.26








Diluted Earnings per share:







From continuing operations


$             0.50

$           0.66

$             1.25

$             1.62


From discontinued operations


5.16

0.26

$             5.51

$             0.63


Diluted earnings per share


$             5.66

$           0.92

$             6.76

$             2.25








Weighted average common shares


5,807

5,755

5,800

5,753

Weighted average common and common 







equivalent shares


5,807

5,764

5,804

5,762








Free Cash Flow






Net income 


$         33,416

$          5,414

$         39,888

$         13,249

Plus: Depreciation and amortization:







        Station


1,483

1,363

4,213

4,115


        Corporate


71

69

214

207


        Discontinued operations


-

370

445

1,023

         Deferred tax provision


340

675

2,020

2,165

         Non-cash compensation


629

536

1,761

1,594

         Other operating expense from continuing operations


(127)

(1,393)

(69)

(1,388)

         Other operating expense from discontinued operations


-

-

31

3

         Gain on the disposal of discontinued operations, net of tax

(29,902)

-

(29,902)

-

Less: Capital expenditures from continuing operations


(1,410)

(1,463)

(4,725)

(3,432)


    Capital expenditures from discontinued operations


(15)

(136)

(125)

(717)

Free cash flow


$           4,485

$          5,435

$         13,751

$         16,819













 September 30, 






2017

2016

Balance Sheet Data







Working capital




$         56,294

$         32,840


Net fixed assets




$         56,345

$         57,627


Net intangible assets and other assets




$       117,947

$        110,847


Total assets




$       277,954

$        216,631


Long-term debt including $10,287 of current portion of long term debt 





     at September 30, 2017.


$         35,287

$         36,365


Stockholders' equity




$       171,555

$        133,223


Saga Communications, Inc.


Selected Supplemental Financial Data


For The Three and Nine Months Ended


September 30, 2017 and 2016


(amounts in 000's except per share data)


(Unaudited)















 Three Months Ended  

 Nine Months Ended  




 September 30, 

 September 30, 




2017 (1)

2016

2017(1)

2016

Results of Discontinued Operations






Net operating revenue


$     3,296

$        6,241

$     14,238

$     17,094

Station operating expense 


2,372

3,684

9,727

10,807

Other operating expense


-

-

31

3

Operating income


924

2,557

4,480

6,284

Interest expense 


5

9

21

26

Income before income taxes


919

2,548

4,459

6,258

Pretax gain on the disposal of discontinued operations


50,842

-

50,842

-

Total pretax gain on discontinued operations


51,761

2,548

55,301

6,258

Income tax expense 


21,310

1,037

22,800

2,570

Income from discontinued operations, net of tax


$   30,451

$        1,511

$     32,501

$       3,688








(1)

Results of operations for the Television stations are reflected through August 31, 2017.  The effective date of the sale was September 1, 2017.  


Saga Communications, Inc.

Selected Supplemental Financial Data

For the Three Months Ended

September 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)













Actual


Same Station (1)


Pro Forma (2)



Three Months Ended


Three Months Ended


Three Months Ended



September 30,


September 30,


September 30,



2017

2016


2017

2016


2017

2016

Consolidated









Net operating revenue

$      30,269

$    29,878


$      29,552

$      29,878


$      31,546

$      31,888

Station operating expense

21,755

21,775


21,174

21,775


23,000

23,478

Corporate general and administrative

3,132

2,728


3,132

2,728


3,132

2,728

Other operating (income) expense, net

(127)

(1,393)


(127)

(1,393)


(127)

(1,393)

Operating income

5,509

6,768


5,373

6,768


5,541

7,075

Interest expense

254

187





254

187

Income from continuing operations, before tax

5,255

6,581





5,287

6,888

Income tax expense

2,290

2,678





2,430

2,804

Income from continuing operations, net of tax

2,965

3,903





2,857

4,084

Income from discontinued operations, net of tax

30,451

1,511





30,451

1,511

Net income 

$      33,416

$      5,414





$      33,308

$        5,595











Basic Earnings per share:










From continuing operations

$          0.50

$        0.66





$          0.47

$          0.70


From discontinued operations

5.16

0.26





5.16

0.26


Basic earnings per share

$          5.66

$        0.92





$          5.63

$          0.96











Diluted Earnings per share:










From continuing operations

$          0.50

$        0.66





$          0.47

$          0.70


From discontinued operations

5.16

0.26





5.16

0.26


Diluted earnings per share

$          5.66

$        0.92





$          5.63

$          0.96













Actual


Same Station (1)


Pro Forma (2)



Three Months Ended


Three Months Ended


Three Months Ended



September 30,


September 30,


September 30,



2017

2016


2017

2016


2017

2016

Depreciation and amortization










by segment









Radio Stations

$        1,483

$      1,363


$        1,397

$        1,363


$        1,647

$        1,609

Discontinued Operations

-

370


-

-


-

-

Corporate and Other

71

69


71

69


71

69



$        1,554

$      1,802


$        1,468

$        1,432


$        1,718

$        1,678











(1)

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


(2)

Pro Forma results assume all acquisitions in 2016 and 2017 occurred as of January 1, 2016.




Saga Communications, Inc.

Selected Supplemental Financial Data

For the Nine Months Ended

September 30, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)













Actual


Same Station (1)


Pro Forma (2)



Nine Months Ended


Nine Months Ended


Nine Months Ended



September 30,


September 30,


September 30,



2017

2016


2017

2016


2017

2016

Consolidated









Net operating revenue

$      86,685

$      88,208


$      85,811

$      88,208


$      92,187

$      93,993

Station operating expense

64,521

64,757


63,825

64,757


69,325

69,874

Corporate general and administrative

8,875

8,065


8,875

8,065


8,875

8,065

Other operating (income) expense, net

(69)

(1,388)


(69)

(1,388)


(69)

(1,388)

Operating income

13,358

16,774


13,180

16,774


14,056

17,442

Interest expense

691

548





691

548

Income from continuing operations, before tax

12,667

16,226





13,365

16,894

Income tax expense

5,280

6,665





5,566

6,939

Income from continuing operations, net of tax

7,387

9,561





7,799

9,955

Income from discontinued operations, net of tax

32,501

3,688





32,501

3,688

Net income 

$      39,888

$      13,249





$      40,300

$      13,643











Basic Earnings per share:










From continuing operations

$          1.25

$          1.63





$          1.32

$          1.70


From discontinued operations

5.51

0.63





5.51

0.63


Basic earnings per share

$          6.76

$          2.26





$          6.83

$          2.33











Diluted Earnings per share:










From continuing operations

$          1.25

$          1.62





$          1.32

$          1.70


From discontinued operations

5.51

0.63





5.51

0.63


Diluted earnings per share

$          6.76

$          2.25





$          6.83

$          2.33













Actual


Same Station (1)


Pro Forma (2)



Nine Months Ended


Nine Months Ended


Nine Months Ended



September 30,


September 30,


September 30,



2017

2016


2017

2016


2017

2016

Depreciation and amortization










by segment









Radio Stations

$        4,213

$        4,115


$        4,125

$        4,115


$        4,867

$        4,851

Discontinued Operations

445

1,023


-

-


-

-

Corporate and Other

214

207


214

207


214

207



$        4,872

$        5,345


$        4,339

$        4,322


$        5,081

$        5,058











(1)

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


(2)

Pro Forma results assume all acquisitions in 2016 and 2017 occurred as of January 1, 2016.




Saga Communications, Inc.

Selected Supplemental Financial Data

September 30, 2017

(amounts in 000's except ratios)

(Unaudited)






































Less:


Plus:




Trailing



12 Mos Ended


9 Mos Ended


9 Mos Ended


Add:


12 Mos Ended



December 31,


September 30,


September 30,


Proforma


September 30,



2016


2016


2017


Acquisitions


2017

Trailing 12 Month Consolidated Earnings Before Interest,










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










Net income

$                  18,186


$                 13,249


$                 39,888


$                     499


$                  45,324

Exclusions:











Gain (loss) on sale of assets from continuing operations

1,393


1,385


69


-


77


Gain (loss) on sale of assets from discontinued operations

-


-


(31)


-


(31)


Gain (loss) on sale of television stations

-


-


50,842


-


50,842


Other

298


236


332


-


394



1,691


1,621


51,212




51,282

Total exclusions

1,691


1,621


51,212


-


51,282

Consolidated adjusted net income (1)

16,495


11,628


(11,324)


499


(5,958)

Plus:  Interest expense

776


574


712


-


914


Income tax expense

12,500


9,235


28,080


346


31,691


Depreciation & amortization expense

7,263


5,345


4,872


890


7,680


Amortization of television syndicated programming contracts

628


467


418


-


579


Non-cash stock based compensation expense

2,101


1,594


1,761


-


2,268

Less: Cash television programming payments

(625)


(466)


(418)


-


(577)

Trailing twelve month consolidated EBITDA (1)

$                  39,138


$                 28,377


$                 24,101


$                  1,735


$                  36,597












Total long-term debt, including current maturities









$                  35,287

Divided by trailing twelve month consolidated EBITDA (1)









36,597

Leverage ratio









0.96


































(1)

As defined in the Company's credit facility.












Saga Communications, Inc.



Selected Financial Data Non-GAAP Disclosures



For the Three and Nine Months Ended



September 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





September 30,


Entire Comparable


September 30,


September 30,


Entire Comparable


September 30,





2017


Period


2017


2016


Period


2016



Consolidated














Net operating revenue

$              30,269


$                 (717)


$              29,552


$              29,878


$                            -


$              29,878



Station operating expense

21,755


(581)


21,174


21,775


-


21,775



Corporate general and administrative

3,132


-


3,132


2,728


-


2,728



Other operating (income) expense, net

(127)


-


(127)


(1,393)


-


(1,393)



Operating income

$                5,509


$                 (136)


$                5,373


$                6,768


$                            -


$                6,768


















Depreciation and amortization

$                1,554


$                   (86)


$                1,468


$                1,802


$                      (370)


$                1,432





































Adjustment






Adjustment







Actual


For Acquisitions


Same Station


Actual


For Acquisitions


Same Station





Nine Months


and Dispositions


Nine Months


Nine Months


and Dispositions


Nine Months





Ended


Not Included in 


Ended


Ended


Not Included in 


Ended





September 30,


Entire Comparable


September 30,


September 30,


Entire Comparable


September 30,





2017


Period


2017


2016


Period


2016



Consolidated














Net operating revenue

$              86,685


$                 (874)


$              85,811


$              88,208


-


$              88,208



Station operating expense

64,521


(696)


63,825


64,757


-


64,757



Corporate general and administrative

8,875


-


8,875


8,065


-


8,065



Other operating (income) expense

(69)


-


(69)


(1,388)


-


(1,388)



Operating income

$              13,358


$                 (178)


$              13,180


$              16,774


$                             -


$              16,774


















Depreciation and amortization

$                4,872


$                 (533)


$                4,339


$                5,345


$                    (1,023)


$                4,322




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

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