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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): December 31, 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:

 

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

oPre-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 March 6, 2018, Saga Communications, Inc. issued a press release announcing its financial results for the three and twelve months ended December 31, 2017. The press release, dated March 6, 2018, is attached as Exhibit 99.1 to this Form 8-K.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

99.1Press Release dated March 6, 2018.

 

 

 

 

 

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: March 6, 2018 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 March 6, 2018.

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 
Exhibit 99.1
 

Saga Communications, Inc. Reports 4th Quarter and Year End 2017 Results



Net Income increased $9.9 million for the Quarter and $36.5 million for the Year

GROSSE POINTE FARMS, Mich., March 6, 2018 /PRNewswire/ -- Saga Communications, Inc. (NYSE American: SGA) today reported net income increased $9.9 million for the quarter and $36.5 million for the year. The results for the quarter and the year were affected by the previously announced sale of the Company's television stations and purchase of radio stations in Charleston and Hilton Head, SC on September 1, 2017, the effect of the recently enacted Tax Cuts and Jobs Act, the previously reported sale of a tower in Norfolk, VA on July 22, 2016, the charge for impairment of intangible assets taken this quarter and the reduction in political revenue.

Net revenue increased 2.3% to $31.5 million for the quarter ended December 31, 2017. Operating Income decreased $433 thousand to $5.3 million when adjusted for the $1.5 million charge for impairment of intangible assets. Station operating expense increased 5.4% to $23.2 million (station operating expense includes depreciation and amortization attributable to the stations) primarily due to the acquisition of the Charleston and Hilton Head radio stations. Free cash flow was $6.3 million compared to $7.6 million last year. Same station net revenue decreased 4.2% to $29.5 million primarily due to a decrease in gross political revenue of $1.0 million and same station operating expense decreased 2.5% to $21.5 million for the quarter. Net income for the fourth quarter was $14.8 million ($2.51 per fully diluted share compared to $0.84 for the same period last year).

Net Revenue decreased 0.7% to $118.2 million for the twelve months ended December 31, 2017. Operating Income decreased $2.5 million to $18.7 million when adjusted for the $1.5 million charge for impairment of intangible assets in 2017 and the $1.4 million gain on the sale of the Norfolk tower in 2016. Station operating expense increased 1.1% to $87.8 million (station operating expense includes depreciation and amortization attributable to the stations) primarily due to the acquisition of the Charleston and Hilton Head radio stations. Free cash flow was $20.1 million compared to $24.5 million last year. Same station net revenue decreased 3.1% to $115.3 million primarily due to a decrease in gross political revenue of $2.3 million and same station operating expense decreased 1.7% to $85.3 million for the year. Net income for the year was $54.7 million ($9.27 per fully diluted share compared to $3.09 for the same period last year).

The Company had $53.0 million in cash on hand as of December 31, 2017 and $49.4 million as of March 5, 2018. The Company's total long term debt was $25 million as of December 31, 2017. Including the recently announced $0.30 per share dividend to be paid on March 30, 2018 the Company will have paid over $55 million in dividends since December 3, 2012.

Capital expenditures were $1.7 million in the fourth quarter compared to $0.7 million for the same period last year and $6.6 million for the twelve month period compared to $4.9 million last year. The Company expects to spend approximately $5.0 million to $6.0 million for capital expenditures during 2018.

Saga's 2017 4th Quarter and Year End conference call will be on Tuesday, March 6, 2018 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 March 6, 2018 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 Twelve Months Ended

December 31, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)











 Three Months Ended  

 Twelve Months Ended  




 December 31, 

 December 31, 




2017

2016

2017

2016

Operating Results






Net operating revenue


$         31,464

$        30,747

$       118,149

$        118,955

Station operating expense


23,238

22,042

87,759

86,799

Corporate general and administrative


2,782

2,915

11,657

10,980

Other operating expense (income), net


124

37

55

(1,351)

Impairment of intangible assets


1,449

-

1,449

-

Operating income


3,871

5,753

17,229

22,527

Interest expense


212

196

903

744

Income from continuing operations, before tax


3,659

5,557

16,326

21,783

Income tax expense (benefit)


(11,200)

2,208

(5,920)

8,873

Income from continuing operations, net of tax


14,859

3,349

22,246

12,910

Income (loss) from discontinued operations, net of tax


(30)

1,588

32,471

5,276

Net income


$         14,829

$          4,937

$         54,717

$         18,186








Basic Earnings per share:







From continuing operations


$             2.52

$           0.57

$             3.77

$             2.20


From discontinued operations


(0.01)

0.27

$             5.50

$             0.90


Basic earnings per share


$             2.51

$           0.84

$             9.27

$             3.10








Diluted Earnings per share:







From continuing operations


$             2.52

$           0.57

$             3.77

$             2.19


From discontinued operations


(0.01)

0.27

$             5.50

$             0.90


Diluted earnings per share


$             2.51

$           0.84

$             9.27

$             3.09








Weighted average common shares


5,815

5,785

5,803

5,761

Weighted average common and common 







equivalent shares


5,815

5,797

5,807

5,771








Free Cash Flow






Net income 


$         14,829

$          4,937

$         54,717

$         18,186

Plus: Depreciation and amortization:







        Station


1,749

1,440

5,962

5,555


        Corporate


75

114

289

321


        Discontinued operations


-

364

445

1,387

         Deferred tax provision


(10,690)

995

(8,670)

3,160

         Non-cash compensation


518

507

2,279

2,101

         Other operating expense (income) from continuing operations

124

37

55

(1,351)

         Other operating expense (income) from discontinued operations

-

(45)

31

(42)

         Gain on the disposal of discontinued operations, net of tax

-

-

(29,902)

-

         Impairment of intangible assets


1,449

-

1,449

-

Less: Capital expenditures from continuing operations


(1,521)

(535)

(6,246)

(3,967)


    Capital expenditures from discontinued operations


(210)

(177)

(335)

(894)

Free cash flow


$           6,323

$          7,637

$         20,074

$         24,456













 December 31, 






2017

2016

Balance Sheet Data







Working capital




$         55,269

$          36,727


Net fixed assets




$         56,235

$          49,174


Net intangible assets and other assets




$       116,360

$        118,052


Total assets




$       248,769

$        219,998


Long-term debt 




$         25,000

$          35,287


Stockholders' equity




$       179,465

$        134,982








Saga Communications, Inc.

Selected Supplemental Financial Data

For The Three and Twelve Months Ended

December 31, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)















 Three Months Ended  

 Twelve Months Ended  




 December 31,  

 December 31,  




2017 (1)

2016

2017(1)

2016

Results of Discontinued Operations






Net operating revenue


$          -

$        6,542

$     14,238

$     23,636

Station operating expense 


30

3,936

9,757

14,743

Other operating (income) expense, net


-

(45)

31

(42)

Operating income (loss)


(30)

2,651

4,450

8,935

Interest expense 


-

6

21

32

Income (loss) before income taxes


(30)

2,645

4,429

8,903

Pretax gain on the disposal of discontinued operations


-

-

50,842

-

Total pretax gain (loss) on discontinued operations


(30)

2,645

55,271

8,903

Income tax expense 


-

1,057

22,800

3,627

Income (loss) from discontinued operations, net of tax


$        (30)

$        1,588

$     32,471

$       5,276








(1)

Results of operations for the Television stations are reflected through August 31, 2017.  The effective date of the sale
was September 1, 2017.  The three months ended December 31, 2017 activity was a result of additional expenses
incurred after the sale of the television stations was completed.

Saga Communications, Inc.

Selected Supplemental Financial Data

For the Three Months Ended

December 31, 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



December 31,


December 31,


December 31,



2017

2016


2017

2016


2017

2016

Consolidated









Net operating revenue

$      31,464

$    30,747


$      29,451

$      30,747


$      31,464

$      32,796

Station operating expense

23,238

22,042


21,486

22,042


23,238

23,944

Corporate general and administrative

2,782

2,915


2,782

2,915


2,782

2,915

Other operating expense 

124

37


124

37


124

37

Impairment of intangible assets

1,449

-


1,449

-


1,449

-

Operating income

3,871

5,753


$        3,610

$        5,753


3,871

5,900

Interest expense

212

196





212

196

Income from continuing operations, before tax

3,659

5,557





3,659

5,704

Income tax expense (benefit)

(11,200)

2,208





(11,200)

2,268

Income from continuing operations, net of tax

14,859

3,349





14,859

3,436

Income (loss) from discontinued operations, net of tax

(30)

1,588





(30)

1,588

Net income 

$      14,829

$      4,937





$      14,829

$        5,024











Basic Earnings per share:










From continuing operations

$          2.52

$        0.57





$          2.52

$          0.58


From discontinued operations

(0.01)

0.27





(0.01)

0.27


Basic earnings per share

$          2.51

$        0.84





$          2.51

$          0.85











Diluted Earnings per share:










From continuing operations

$          2.52

$        0.57





$          2.52

$          0.58


From discontinued operations

(0.01)

0.27





(0.01)

0.27


Diluted earnings per share

$          2.51

$        0.84





$          2.51

$          0.85













Actual


Same Station (1)


Pro Forma (2)



Three Months Ended


Three Months Ended


Three Months Ended



December 31,


December 31,


December 31,



2017

2016


2017

2016


2017

2016

Depreciation and amortization










by segment









Radio Stations

$        1,749

$      1,440


$        1,495

$        1,440


$        1,749

$        1,676

Discontinued Operations

-

364


-

-


-

364

Corporate and Other

75

114


75

114


75

114



$        1,824

$      1,918


$        1,570

$        1,554


$        1,824

$        2,154











(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 Twelve Months Ended

December 31, 2017 and 2016

(amounts in 000's except per share data)

(Unaudited)













Actual


Same Station (1)


Pro Forma (2)



Twelve Months Ended


Twelve Months Ended


Twelve Months Ended



December 31,


December 31,


December 31,



2017

2016


2017

2016


2017

2016

Consolidated









Net operating revenue

$    118,149

$    118,955


$    115,264

$    118,955


$    123,651

$    126,789

Station operating expense

87,759

86,799


85,317

86,799


92,563

93,818

Corporate general and administrative

11,657

10,980


11,657

10,980


11,657

10,980

Other operating expense (income), net

55

(1,351)


55

(1,351)


55

(1,351)

Impairment of intangible assets

1,449

-


1,449

-


1,449

-

Operating income

17,229

22,527


$      16,786

$      22,527


17,927

23,342

Interest expense

903

744





903

744

Income from continuing operations, before tax

16,326

21,783





17,024

22,598

Income tax expense (benefit)

(5,920)

8,873





(5,634)

9,207

Income from continuing operations, net of tax

22,246

12,910





22,658

13,391

Income (loss) from discontinued operations, net of tax

32,471

5,276





32,471

3,688

Net income 

$      54,717

$      18,186





$      55,129

$      17,079











Basic Earnings per share:










From continuing operations

$          3.77

$          2.20





$          3.84

$          2.28


From discontinued operations

5.50

0.90





5.50

0.90


Basic earnings per share

$          9.27

$          3.10





$          9.34

$          3.18











Diluted Earnings per share:










From continuing operations

$          3.77

$          2.19





$          3.84

$          2.28


From discontinued operations

5.50

0.90





5.50

0.90


Diluted earnings per share

$          9.27

$          3.09





$          9.34

$          3.18













Actual


Same Station (1)


Pro Forma (2)



Twelve Months Ended


Twelve Months Ended


Twelve Months Ended



December 31,


December 31,


December 31,



2017

2016


2017

2016


2017

2016

Depreciation and amortization










by segment









Radio Stations

$        5,962

$        5,555


$        5,629

$        5,555


$        6,616

$        6,527

Discontinued Operations

445

1,387


-

-


445

1,387

Corporate and Other

289

321


289

321


289

321



$        6,696

$        7,263


$        5,918

$        5,876


$        7,350

$        8,235











(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

December 31, 2017

(amounts in 000's except ratios)

(Unaudited)







































12 Months Ended


Add:


Less:


12 Months Ended



December 31,


Proforma


Discontinued


December 31,



2017


Acquisitions


Operations


2017

Trailing 12 Month Consolidated Earnings Before Interest,








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








Net income

$                  54,717


$                     412


$                 32,471


$                  22,658

Exclusions:









Gain (loss) on sale of assets from continuing operations

(55)


-


-


(55)


Gain (loss) on sale of assets from discontinued operations

(31)


-


(31)


-


Gain (loss) on sale of television stations

50,842


-


50,842


-


Impairment of Intangibles

(1,449)


-


-


(1,449)


Other

289


-


(18)


307

Total exclusions

49,596


-


50,793


(1,197)

Consolidated adjusted net income (1)

5,121


412


(18,322)


23,855

Plus:  Interest expense

925


-


22


903


Income tax expense

16,880


286


22,800


(5,634)


Depreciation & amortization expense

6,696


654


445


6,905


Amortization of television syndicated programming contracts

418


-


418


-


Non-cash stock based compensation expense

2,279


-


-


2,279

Less: Cash television programming payments

(418)


-


(418)


-










Trailing twelve month consolidated EBITDA (1)

$                  31,901


1,352


4,945


$                  28,308










Total long-term debt, including current maturities







$                  25,000

Divided by trailing twelve month consolidated EBITDA (1)







28,308

Leverage ratio







0.88




























(1)

As defined in the Company's credit facility.









Saga Communications, Inc.


Selected Financial Data Non-GAAP Disclosures


For the Three and Twelve Months Ended


December 31, 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




December 31,


Entire Comparable


December 31,


December 31,


Entire Comparable


December 31,




2017


Period


2017


2016


Period


2016


Consolidated













Net operating revenue

$              31,464


$              (2,013)


$              29,451


$              30,747


$                     -


$              30,747


Station operating expense

23,238


(1,752)


21,486


22,042


-


22,042


Corporate general and administrative

2,782


-


2,782


2,915


-


2,915


Other operating expense 

124


-


124


37


-


37


Impairment of intangible assets

1,449


-


1,449


-


-


-


Operating income

$                3,871


$                 (261)


$                3,610


$                5,753


$                     -


$                5,753
















Depreciation and amortization

$                1,824


$                 (254)


$                1,570


$                1,918


$                 (364)


$                1,554




















Adjustment






Adjustment






Actual


For Acquisitions


Same Station


Actual


For Acquisitions


Same Station




Twelve Months


and Dispositions


Twelve Months


Twelve Months


and Dispositions


Twelve Months




Ended


Not Included in 


Ended


Ended


Not Included in 


Ended




December 31,


Entire Comparable


December 31,


December 31,


Entire Comparable


December 31,




2017


Period


2017


2016


Period


2016


Consolidated













Net operating revenue

$            118,149


$              (2,885)


$            115,264


$            118,955


$                     -


$            118,955


Station operating expense

87,759


(2,442)


85,317


86,799


-


86,799


Corporate general and administrative

11,657


-


11,657


10,980


-


10,980


Other operating (income) expense

55


-


55


(1,351)


-


(1,351)


Impairment of intangible assets

1,449


-


1,449


-


-


-


Operating income

$              17,229


$                 (443)


$              16,786


$              22,527


$                     -


$              22,527
















Depreciation and amortization

$                6,696


$                 (778)


$                5,918


$                7,263


$              (1,387)


$                5,876




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

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