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Section 1: 8-K (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): August 5, 2020

SAGA COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida

 

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))

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

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 5, 2020, Saga Communications, Inc. issued a press release announcing its financial results for the three and six months ended June 30, 2020. The press release, dated August 5, 2020, 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 5, 2020.


INDEX OF EXHIBITS

Exhibit No.

Description

99.1

Press Release dated August 5, 2020.


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.

ugust

 

SAGA COMMUNICATIONS, INC.

 

 

 

 

 

 

 

 

 

Dated: August 5, 2020

By:

/s/ Samuel D. Bush

 

 

 

Samuel D. Bush

 

 

 

Senior Vice President and Chief

 

 

 

Financial Officer

 


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Section 2: EX-99.1 (EX-99.1)

Exhibit 99.1

Graphic

Saga Communications, Inc.

Reports 2nd Quarter 2020 Results

Contact:

Samuel D. Bush

313/886-7070

Grosse Pointe Farms, MI – August 5, 2020 – Saga Communications, Inc. (Nasdaq - SGA) reported today that second quarter revenue and related net income (loss) was materially impacted by disruptions to businesses and service providers activities from closures and restrictive measures imposed by governmental authorities attributable to COVID-19 in the markets in which the Company operates, and the nation as a whole. The inability for businesses and service providers to operate normally negatively impacted all broadcast and other media advertising. Initial industry estimates for radio broadcast revenue predicted a decrease in gross revenue of more than 50% for the month of April. This held true for the Company as well. The Company, however, did show monthly revenue improvements for each subsequent month, as the Company concentrated on new revenue strategies and enhanced engagement with its existing and new advertisers. This trend has continued through Q2 and further revenue improvement has been noted in the beginning of Q3. From the Company’s low point in April when its gross revenue was down 55% compared to the prior period, its revenue has continued to build. The Company’s July revenue was down 29% over the prior period. These amounts represent gross cash revenue. Trade and barter revenue are not included in these gross revenue numbers, because it only represents approximately 2% of the Company’s revenue each month. From the start of Q2 to the end of the first month of Q3 there was a reduction in the decline in revenue by approximately 50%.

The Company’s balance sheet reflects $48.9 million in cash on hand as of June 30, 2020 and $47.5 million as of August 3, 2020. The Company’s total bank debt remained at $10 million as of the end of the quarter. Including the significant impact on its revenue, the Company’s trailing twelve-month leverage ratio is an extremely conservative 0.65, per our bank covenant calculation, and below zero when cash on hand is included in the calculation.

Net revenue was $16.9 million for the quarter ended June 30, 2020. Station operating expense decreased $4.2 million to $18.7 million for the same period. An operating loss of $8.7 million was incurred for the quarter with a net loss of $4.9 million. Diluted earnings per share were -$0.82 in the 2nd quarter of 2020. Results for the quarter include a non-cash impairment charge of $3.8 million. Without the non-cash impairment charge, the Company would have had a net loss of $2.2 million or -$0.37 per share.

For the six months ended June 30, 2020 net revenue was $42.9 million with an operating loss of $6.5 million. Net loss for the six-month period was $3.2 million. On a fully diluted basis earnings per share were -$0.54. The net loss for the six-month period without the non-cash impairment charge would have been $564 thousand or -$0.09 per share.

Capital expenditures in the second quarter were $358 thousand compared to $2.0 million for the same period last year. For the six-month period capital expenditures were $1.4 million compared to $3.2 million for the same period last year. The Company expects to spend approximately $2.0 – 2.5 million for capital expenditures during 2020 which is down from the Company’s normative annual capital expenditures of $5.0 – 6.0 million.

Saga’s 2020 2nd Quarter conference call will be on Wednesday, August 5, 2020 at 11:00 a.m. EDT. The dial-in number for the call is 973/528-0008. Enter conference code 521008. 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 5, 2020 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” information as well as the Company’s trailing twelve-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.


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 Financial Data 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, changes in the radio broadcast industry in general, and the effects of the ongoing COVID-19 pandemic, 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 78 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, 2020 and 2019

(amounts in 000’s except per share data)

(Unaudited)

Three Months Ended

 

Six Months Ended

June 30, 

 

June 30, 

    

2020

    

2019

    

2020

    

2019

Operating Results

Net operating revenue

$

16,866

    

$

32,191

  

$

42,917

$

60,007

Station operating expenses

 

18,652

 

22,879

  

 

40,851

 

46,042

Corporate general and administrative

 

3,070

 

2,706

  

 

6,085

 

5,391

Other operating expense (income), net

46

(2)

(1,284)

1

Impairment of broadcast licenses

 

3,757

 

  

 

3,757

 

Operating income (loss)

 

(8,659)

 

6,608

  

 

(6,492)

 

8,573

Interest expense

 

82

 

184

  

 

190

 

392

Interest income

 

(25)

 

(160)

  

 

(133)

 

(323)

Other income

(213)

Income (loss) before income tax (benefit) expense

 

(8,716)

 

6,584

  

 

(6,336)

 

8,504

Income tax expense (benefit)

 

(3,805)

 

1,850

  

 

(3,105)

 

2,400

Net income (loss)

$

(4,911)

$

4,734

  

$

(3,231)

$

6,104

  

Earnings (loss) per share:

  

Basic

$

(0.82)

$

0.80

  

$

(0.54)

$

1.03

Diluted

$

(0.82)

$

0.80

  

$

(0.54)

$

1.03

  

Weighted average common shares

 

5,868

 

5,844

  

 

5,867

 

5,843

Weighted average common and common equivalent shares

 

5,868

 

5,844

  

 

5,867

 

5,843

Free Cash Flow

Net income (loss)

$

(4,911)

$

4,734

$

(3,231)

$

6,104

Plus: Depreciation and amortization:

Radio Stations

 

1,605

 

1,617

 

3,213

 

3,257

Corporate

 

74

 

72

 

149

 

143

Deferred tax (benefit) provision

 

(2,615)

 

520

 

(2,500)

 

700

Non-cash compensation

 

612

 

565

 

1,181

 

1,124

Other operating expense (income), net

 

46

 

(2)

 

(1,284)

 

1

Other income

 

 

 

(213)

 

Impairment of intangible assets

3,757

3,757

Less: Capital expenditures

 

(358)

 

(1,950)

 

(1,379)

 

(3,162)

Free cash flow

$

(1,790)

$

5,556

$

(307)

$

8,167

 

June 30, 

    

 

2020

    

2019

Balance Sheet Data

 

  

  

Working capital

$

48,970

$

43,807

Net fixed assets

$

56,860

$

59,240

Net intangible assets and other assets

$

122,513

$

126,539

Total assets

$

243,053

$

247,152

Long-term debt

$

10,000

$

10,000

Stockholders' equity

$

188,593

$

188,594


Saga Communications, Inc.

Selected Supplemental Financial Data

June 30, 2020

(amounts in 000's except ratios)

(Unaudited)

    

    

Less:

    

Plus:

    

Trailing

12 Months Ended

Six Months Ended

Six Months Ended

12 Months Ended

December 31, 

June 30, 

June 30, 

June 30, 

2019

2019

2020

2020

Trailing 12 Month Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") (1)

 

  

 

  

 

  

 

  

Net income (loss)

$

13,279

$

6,104

$

(3,231)

$

3,944

Exclusions:

 

  

 

  

 

  

 

  

Gain (loss) on sale of assets

 

(112)

 

1

 

1,284

 

1,171

Gain (loss) on insurance proceeds

 

16

 

 

213

 

229

Interest income

 

610

 

323

 

133

 

420

Impairment of intangible assets

(3,757)

(3,757)

Other

 

190

 

137

 

34

 

87

Total exclusions

 

704

 

461

 

(2,093)

 

(1,850)

Consolidated adjusted net income (loss) (1)

 

12,575

 

5,643

 

(1,138)

 

5,794

Plus: Interest expense

 

735

 

392

 

190

 

533

Income tax expense (benefit)

 

5,420

 

2,400

 

(3,105)

 

(85)

Depreciation & amortization expense

 

6,945

 

3,400

 

3,362

 

6,907

Non-cash stock based compensation expense

 

2,129

 

1,124

 

1,181

 

2,186

Trailing twelve month consolidated EBITDA (1)

$

27,804

$

12,959

$

490

$

15,335

Total long-term debt, including current maturities

 

  

 

  

$

10,000

Divided by trailing twelve month consolidated EBITDA (1)

 

  

 

  

 

15,335

Leverage ratio

 

  

 

  

 

0.65


(1)    As defined in the Company's credit facility.

(2)    Trailing 12 Month Adjustment


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