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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, 2019

 

 

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. ¨

 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered

Class A Common Stock,

par value $0.01 per share

SGA NASDAQ

  

 

 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On August 6, 2019, Saga Communications, Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2019. The press release, dated August 6, 2019, is attached as Exhibit 99.1 to this Form 8-K.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

99.1Press Release dated August 6, 2019.

 

 

 

  

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 6, 2019 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 6, 2019.

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1
 

Saga Communications, Inc. Reports 2nd Quarter 2019 Results Net Income Increased 13.5%

GROSSE POINTE FARMS, Mich., Aug. 6, 2019 /PRNewswire/ -- Saga Communications, Inc. (Nasdaq: SGA) today reported net income of $4.7 million for the quarter compared to $4.2 million for the same quarter last year. Net revenue was relatively flat when compared to the same period last year at $32.2 million. Station operating expense decreased $261 thousand to $22.9 million and operating income increased $575 thousand to $6.6 million compared to $6.0 million for the same period last year. Diluted earnings per share were $0.80/share in the second quarter of 2019 compared to $0.70/share during the same period in 2018. Free cash flow decreased $437 thousand to $5.6 million for the quarter ended June 30, 2019 primarily due to a $542 thousand increase in capital expenditures including capital costs associated with the Company's recent acquisitions.

On a same station basis for the quarter ended June 30, 2019 operating income increased $383 thousand to $6.4 million. Net revenue decreased $1.2 million to $31.1 million and operating expense decreased $1.2 million to $22.0 million.

Net income for the six-month period ended June 30, 2019 was $6.1 million compared to $5.7 million for the same period last year. Net revenue decreased $236 thousand to $60 million. Station operating expense decreased $495 thousand to $46.0 million and operating income increased $221 thousand to $8.6 million compared to $8.4 million for the same period last year. Diluted earnings per share were $1.03/share for the six-month period in 2019 compared to $0.96/share during the same period in 2018. Free cash flow decreased $113 thousand to $8.2 million for the six-month period ended June 30, 2019.

On a same station basis for the six-month period ended June 30, 2019 operating income was relatively flat when compared to the same period last year at 8.3 million. Net revenue was $58.0 million compared to $60.2 million last year. Operating expense decreased $2.3 million to $44.3 million.

The Company had $38.5 million in cash on hand as of June 30, 2019 and $39.3 million as of August 5, 2019. The Company's total bank debt was $10 million as of the end of the quarter. Including the recent $0.30 per share dividend which was paid on July 5, 2019, the Company will have paid almost $66 million in dividends since December 3, 2012.

Capital expenditures were $2.0 million in the second quarter compared to $1.4 million for the same period last year. For the six-month period capital expenditures were $3.2 million compared to $2.9 million last year. The Company expects to spend approximately $5.0 to $5.5 million for capital expenditures during 2019.

Saga's 2019 2nd Quarter conference call will be on Tuesday, August 6, 2019 at 11:00 a.m. EDT. The dial-in number for the call is 612/332-0418. 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 6, 2019 to [email protected] 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 "proforma" 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 2018 and 2019 occurred as of January 1, 2018.

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 27 markets, including 79 FM radio stations, 34 AM radio stations and 77 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 Six Months Ended

June 30, 2019 and 2018

(amounts in 000's except per share data)

(Unaudited)











 Three Months Ended  

 Six Months Ended  




 June 30, 

 June 30, 




2019

2018

2019

2018

Operating Results






Net operating revenue


$         32,191

$        32,234

$         60,007

$         60,243

Station operating expense


22,879

23,140

46,042

46,537

Corporate general and administrative


2,706

2,848

5,391

5,392

Other operating (income) expense, net


(2)

213

1

(38)

Operating income


6,608

6,033

8,573

8,352

Interest expense


184

255

392

474

Interest income


(160)

(188)

(323)

(277)

Income before income tax expense


6,584

5,966

8,504

8,155

Income tax expense


1,850

1,795

2,400

2,455

Net income


$           4,734

$          4,171

$           6,104

$           5,700








Earnings per share:







Basic


$             0.80

$           0.70

$             1.03

$             0.96


Diluted


$             0.80

$           0.70

$             1.03

$             0.96








Weighted average common shares


5,844

5,834

5,843

5,838

Weighted average common and common 







equivalent shares


5,844

5,834

5,843

5,838








Free Cash Flow






Net income 


$           4,734

$          4,171

$           6,104

$           5,700

Plus: Depreciation and amortization:







        Radio Stations


1,617

1,606

3,257

3,186


        Corporate


72

72

143

138

         Deferred tax provision


520

785

700

1,095

         Non-cash compensation


565

554

1,124

1,105

         Other operating (income) expense, net 


(2)

213

1

(38)

Less: Capital expenditures 


(1,950)

(1,408)

(3,162)

(2,906)

Free cash flow


$           5,556

$          5,993

$           8,167

$           8,280













 June 30, 






2019

2018

Balance Sheet Data







Working capital




$         43,807

$         60,196


Net fixed assets




$         59,240

$         56,101


Net intangible assets and other assets




$       126,539

$        114,950


Total assets




$       247,152

$        246,171


Long-term debt  




$         10,000

$         25,000


Stockholders' equity




$       188,594

$        182,414

Saga Communications, Inc.

Selected Supplemental Financial Data

For the Three Months Ended

June 30, 2019 and 2018

(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



June 30,


June 30,


June 30,



2019

2018


2019

2018


2019

2018

Consolidated









Net operating revenue

$      32,191

$    32,234


$      31,089

$      32,234


$      32,191

$      33,473

Station operating expense

22,879

23,140


21,968

23,140


22,879

24,064

Corporate general and administrative

2,706

2,848


2,706

2,848


2,706

2,848

Other operating (income) expense, net 

(2)

213


(1)

213


(2)

213

Operating income

6,608

6,033

#

$        6,416

$        6,033


6,608

6,348

Interest expense

184

255





184

255

Interest income

(160)

(188)





(160)

(188)

Income before income tax expense

6,584

5,966





6,584

6,281

Income tax expense

1,850

1,795





1,850

1,890

Net income 

$        4,734

$      4,171





$        4,734

$        4,391











Earnings per share:










Basic

$          0.80

$        0.70





$          0.80

$          0.74


Diluted

$          0.80

$        0.70





$          0.80

$          0.74













Actual


Same Station (1)


Pro Forma (2)



Three Months Ended


Three Months Ended


Three Months Ended



June 30,


June 30,


June 30,



2019

2018


2019

2018


2019

2018

Depreciation and amortization










by segment









Radio Stations

$        1,617

$      1,606


$        1,488

$        1,606


$        1,617

$        1,739

Corporate 

72

72


72

72


72

72



$        1,689

$      1,678


$        1,560

$        1,678


$        1,689

$        1,811











(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 2019 and 2018 occurred as of January 1, 2018.




Saga Communications, Inc.

Selected Supplemental Financial Data

For the Six Months Ended

June 30, 2019 and 2018

(amounts in 000's except per share data)

(Unaudited)













Actual


Same Station (1)


Pro Forma (2)



Six Months Ended


Six Months Ended


Six Months Ended



June 30,


June 30,


June 30,



2019

2018


2019

2018


2019

2018

Consolidated









Net operating revenue

$      60,007

$      60,243


$      57,920

$      60,243


$      60,007

$      62,448

Station operating expense

46,042

46,537


44,265

46,537


46,042

48,296

Corporate general and administrative

5,391

5,392


5,391

5,392


5,391

5,392

Other operating (income) expense, net 

1

(38)


1

(38)


1

(38)

Operating income

8,573

8,352


$        8,263

$        8,352


8,573

8,798

Interest expense

392

474





392

474

Interest income

(323)

(277)





(323)

(277)

Income before income tax expense

8,504

8,155





8,504

8,601

Income tax expense

2,400

2,455





2,400

2,589

Net income 

$        6,104

$        5,700





$        6,104

$        6,012











Earnings per share:










Basic

$          1.03

$          0.96





$          1.03

$          1.01


Diluted

$          1.03

$          0.96





$          1.03

$          1.01













Actual


Same Station (1)


Pro Forma (2)



Six Months Ended


Six Months Ended


Six Months Ended



June 30,


June 30,


June 30,



2019

2018


2019

2018


2019

2018

Depreciation and amortization










by segment









Radio Stations

$        3,257

$        3,186


$        2,989

$        3,186


$        3,257

$        3,452

Corporate 

143

138


143

138


143

138



$        3,400

$        3,324


$        3,132

$        3,324


$        3,400

$        3,590











(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 2019 and 2018 occurred as of January 1, 2018.




Saga Communications, Inc.

Selected Supplemental Financial Data

June 30, 2019

(amounts in 000's except ratios)

(Unaudited)






































Less:


Plus:




Trailing



Twelve


Six


Six




Twelve



Months Ended


Months Ended


Months Ended


Add:


Months Ended



December 31,


June 30,


June 30,


Proforma


June 30,



2018


2018


2019


Acquisitions (2)


2019

Trailing Twelve Month Consolidated Earnings Before Interest,










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










Net income

$                  13,690


$                  5,700


$                  6,104


$                     256


$                  14,350

Exclusions:











Gain (loss) on sale of assets 

(61)


(38)


1


-


(22)


Gain (loss) on insurance proceeds

23


-


-


-


23


Interest income

631


277


323


-


677


Other

(107)


(13)


137


-


43

Total exclusions

486


226


461


-


721

Consolidated adjusted net income (1)

13,204


5,474


5,643


256


13,629

Plus:  Interest expense

946


474


392


-


864


Income tax expense

5,700


2,455


2,400


110


5,755


Depreciation & amortization expense

6,786


3,324


3,400


266


7,128


Non-cash stock based compensation expense

2,201


1,105


1,124


-


2,220

Trailing twelve month consolidated EBITDA (1)

$                  28,837


$                 12,832


$                 12,959


$                     632


$                  29,596












Total long-term debt, including current maturities









$                  10,000

Divided by trailing twelve month consolidated EBITDA (1)









29,596

Leverage ratio









0.34


































(1)

As defined in the Company's credit facility.










(2)

Trailing Twelve Month Adjustment











Saga Communications, Inc.


Selected Financial Data Non-GAAP Disclosures


For the Three and Six Months Ended


June 30, 2019 and 2018


(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,




2019


Period


2019


2018


Period


2018


Consolidated













Net operating revenue

$              32,191


$              (1,102)


$              31,089


$              32,234


$                     -


$              32,234


Station operating expense

22,879


(911)


21,968


23,140


-


23,140


Corporate general and administrative

2,706


-


2,706


2,848


-


2,848


Other operating (income) expense, net 

(2)


1


(1)


213


-


213


Operating income

$                6,608


$                 (192)


$                6,416


$                6,033


$                     -


$                6,033
















Depreciation and amortization

$                1,689


$                 (129)


$                1,560


$                1,678


$                     -


$                1,678




















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,




2019


Period


2019


2018


Period


2018


Consolidated













Net operating revenue

$              60,007


$              (2,087)


$              57,920


$              60,243


$                     -


$              60,243


Station operating expense

46,042


(1,777)


44,265


46,537


-


46,537


Corporate general and administrative

5,391


-


5,391


5,392


-


5,392


Other operating expense (income), net

1


-


1


(38)


-


(38)


Operating income

$                8,573


$                 (310)


$                8,263


$                8,352


$                     -


$                8,352
















Depreciation and amortization

$                3,400


$                 (268)


$                3,132


$                3,324


$                     -


$                3,324




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

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