Q4 2020 Saga Communications Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Saga Communications fourth quarter and year end earnings release at this time all participants have been placed on listen only mode. It is now my pleasure to turn the floor to your host Ed Christian Sir the floor is yours.
Morning, everybody and let me again and have the pleasure of introducing your true.
After many years you should all know him for a day.
Amazing Sam Bush.
All of you with the numbers as it that'd be Jim's so.
And PSA malls and as I said.
And I saw.
Right.
And that means lots of it won't be done okay. So let's go.
Thank you Ed this call will contain forward looking statements about our future performance and results of operations that involve risks and uncertainties that are described and the risk factors section of our most recent form 10-K. This call will also contain a discussion of certain non-GAAP financial measures reconciliation for all of the non-GAAP financial measures to the most directly comparable GAAP.
Measure are attached and the selected financial data table.
The fourth quarter saw our net revenue increased 19, 1% to $28 8 million up from the $24 1 million, we reported for the third quarter of this year.
2020, our focus on local continues to pay off as of the combined local direct and local agency increased 10, 4% between the third and fourth quarters of this of 2020.
Net revenue was down less than 10% when compared to the fourth quarter of 2019, which I think is pretty good performance given the ongoing COVID-19 issues that we are all still facing free cash flow for the quarter was also good at $5 1 million compared to $5 4 million for the quarter last year for.
For the year ended December 31st 2020, net revenue was $95 8 million station operating income was $20 4 million and free cash flow was $7 6 million as indicated in the press release, our net loss for the year was $1 3 million, but without the noncash impairment charge. We would have shown net income of $1 7 million.
And I've heard a number of reports of other companies and the industry, having increased bad debt issues and 2020 due to the pandemic I'm happy to say that our markets have been able to do a great job managing accounts receivable and collections that resulted in actual bad debt expense as a percentage of revenue to remain almost the same when comparing 2019 to 2020 at less than one half of one per se.
And.
Gross political revenue for the quarter was $3 8 million for the year. It was $6 9 million and some of you have asked how this compares to our annual political revenue and previous election years, we had gross political revenue of $2 9 million in 2018, and $3 8 million during the last presidential election in 2016, and so we saw a nice increase in 2020.
Yeah.
We have 51 4 million and cash on hand as of December 31, compared to $44 million at the beginning of the year.
Currently as of the our last check this week, we of 56 million of cash on hand.
At the end of the year, our outstanding debt remained $10 million, which given the cash on hand presents no covenant or liquidity issues leverage for our bank covenants is actually negative when you consider the cash we have on hand.
And with that short commentary on what was an unprecedented year I will turn it back over to you.
And as always thank you Sam and a two day be the last day.
We discuss 2020, it is baked and over and truth I actually thought we would be done for 2020 and the like November.
And I didn't use the word pandemic, sir but I thought we would be done with it and we hope that in November but it was not to be.
Ah, we're right back and pandemic for and late November and through December and even January of 2020, one and it.
So kind of lingering out there.
This was all over the second wave for the third wave and resolve it and media and drove our advertisers right back to where they were before.
And it looks like the economy was improving.
What I can say about 2020 is obviously the Sam just said we made it.
The structural rearranging of the enterprise.
And we never compromise our stated mission of doing excellent broadcasting.
We survived but some of this is painful.
Make no mistake for one and putting a hiatus and the dividend it was something that.
We never before would have considered and I personally and I also speak for our board of directors on this.
We feel that we're seeing tiny sprouts of merge of normalcy and.
And then as soon as practical we can get back on use of got funds to reestablish saga of dividends.
I do think our shareholder partners for the understanding and appreciation of the difficult situations that we successfully navigated.
For me personally if and when.
It's a very tough here.
I never taught them that and the series for 33 years that are 33 plus years.
And upside though.
That I would be having to go back and.
And frankly, deconstruct, albeit the lightweight that which we have built over the years.
Fortunately I I do believe that I too now am optimistic that the dark times.
The slipping out of sight.
Yeah.
I would be remiss if I didn't think also all of the bar saga staffers for both of their understanding and even commitment to keep our operations warm welcoming to our listeners during the darkness.
And my feelings are that this is the beginning of a proactive for recovery with the still the possibility of outside surprises.
And it's almost like going on of right and an amusement park I mean, if you think back to the early days.
And that's where you would get into a little car and you would go with some of these stores would open up and you would go into the darkness, and you'd be riding and the car and suddenly the zombie jumps out at you and and you.
Right for the rent of hideous scour the jumps out at you win and another and another until the doors open and your car rides and to the Sun.
Maybe we're not yet and the sudden but for sure of the rest of the of like the head and.
That makes me feel good and for a while they're drawing from.
2020 I, certainly was not for your white goods or was that for.
And like pessimistic, but I was feeling just so challenge to keep everything going with where we were with the operation and.
And keep it in tip top shape.
With reported in terms of well understood Q1 for this year was still in recovery.
But in March.
And we believe it will be up perhaps three per cent from Webster and how you go.
The three three per cent.
Well wait a minute and that's good because the last two weeks of March last year, where one giant cascade of advertiser cancellations.
Can't tell you about.
Sitting or answering the phones of getting calls from our R of managers, saying Oh, what is going on here, it's Bam Bam Bam for Katz of our advertiser and hold our advertising the.
That's the.
So the 3% is good and and by the way.
I don't want the drinks anything.
Right now April and forward are showing us and much momentum.
And as compared to 2020 and was always told me don't tell figures and advance.
It's good and working towards of normalcy of 20, and 19 grows for kind of growth.
And that we were experiencing in 18 and 19, we do see that.
We're getting calls all of them from national advertisers want it could get back on the year very encouraging very encouraging now.
And it's probably not all companies are looking this way, but maybe just maybe we can convince them that our model of up against circle. Many of our communities with a lot of.
After information and caring and concern is the right commitment.
[laughter] frankly.
We are not standing at the shredder and feeding radio into it.
And that is not in our DNA.
Ah we're proud very proud of what we do and accomplish and stop bragging.
It's not showing off.
And it really is and it really is a key.
Caring.
And the.
And.
All of a whole lot of stock and <unk>.
Total unusual, but I'll try and I'm going to try and do something here if I can let me just find it.
So my computer here I'm going to do something a little different and say I'm probably is rolling his eyes right now I'm wondering what's going out of your whole lot alright.
Alright, let me try this this is.
I have to move the computer screen and I have the way I think.
And I have to come up with the route Goldberg of sending audio so just bear with me and I want you to hear something I want to the of missing something and and then we'll talk about it so be patient for a SEC here.
Okay.
Yeah.
Okay.
Okay.
And I can't country.
Good morning, and Mr Bob and that Scott.
And this is for you guys.
I'll be back.
Last week and on Saturday.
Yeah.
For for.
For smoking.
And.
Oh boy.
A young boy with terminal cancer.
And it was.
And the community came out and.
And I'd say this is for you guys and perhaps for you guys.
Oh boy come walking up with chemo.
Thanks, Brian.
Yes.
And.
Jim and Scott.
Uh huh.
Yeah.
And then you guys do you don't get enough recognition you recognize us for help and you don't get enough because of the wasn't for you guys.
It didn't happen and.
And wouldn't walk up.
The country.
From a.
Got it.
Got it.
And again.
The two because.
Mark.
And if you didn't put it out there was for.
For you guys that I called out.
No.
And thank all of you well. Thank you so much mark.
The reason that.
A lot of the chemo.
I mean does that little boy.
The exactly how it works.
Tim.
And I kind of love.
Of that.
And.
Those are the things, we'd like to see and come out of the marathon.
Yes, absolutely.
But.
As I said, we couldn't do it all.
I mean you guys.
And just you know.
And like the conduit here.
And proud of.
One of the great store and love it. Thank you for sharing that margin.
The country.
Okay, and just the headset back on here.
We just got that the other the other day.
And.
It just.
And we get these all of the time from our stakes and it's not all of the time, but I mean.
And I'll plot.
So showing us and this was shut in and that's true.
Mr Bob and Kathy.
And who have been there for years and years and kicked countries and.
Using radio search and nobody knew what was the U K and itself and all.
Catalog of Florida, and it's one that I.
Lusted after range, that's not sinful, but I wanted the distinction for many years ago.
Great Radio station and we were fortunate enough that the the.
The family that own debt.
Up north of.
And I chose for us.
Two of our half the radio station and I cant tell you.
Oh of fulfilling it is.
To know that.
Yes.
So real.
Two of the community.
Mr Bob and Kathy.
And he walked U K, they are iconic influencers and personalities and the market.
Essentially what their dominance there is no second Playstation.
And this is not just.
One market, but this happens all the time.
And by the way, it's a perfect example.
Of white, good and radio will never never die.
Okay bring on the skeptics.
Bring on the podcast bring on the satellite and bring on the music streamers, none can compete and locally better day and the great local radio and you've just heard one example.
And you've got to put yourself into that market to understand it.
So we can sit here all of the oil and go through figures and facts and everything else, but it is the emotion and the commitment.
That we put into the radio sections to insurer.
They were part of that the community to make sure that we own and top of mind awareness.
And when you hear the outstanding commitment and service to your community and it occurs every single day and saga of radio stations.
I wish I could do a conference call with you sitting here playing you audio clips.
Of what comments, we get from what we do both of you know outside of that radio station and inside the radio station.
But it is so important you can't measure by the way you can't measure this feeling of code of local radio with ratings or cost per point or impressions.
And you really have to be in the community.
Do feel bullish of the commitment and the passion and.
And the tactical imagery, the local radio has the ability to advertise.
Alright, I got off message I'm sorry.
But I'm actually that's the worry about it.
And my job is also kind of true.
Teaching position.
And as radio is the only job for I've ever had.
It was the guy who understand it pretty well.
We as an industry will survive.
I mean, the there are some of the naysayers out there all the all radios over but you know what.
Radios is not.
Isn't that functioning anymore.
And so of rub oven awhile.
And I.
I'm, sorry, we will prosper because what we do cannot be replaced.
Local radio and have survived.
And so many attacks and waste is one of them, starting with TV and outdoor drive ins a track of audiocassette digital local newspapers and magazines music streaming podcast and more.
Let me, let me give me Great example of that.
Other example here.
I was talking with the other day with built Holst Who's our general manager and.
Yankton South Dakota now.
And he's a W and X radio.
We're extremely proud of what bill was accomplished in the Yankton.
And.
And so places and it's part of our portfolio we've had it for many years.
Most people would probably say it acted to spec out of the map.
But the always who know understand that this radio station and Stewart now for coming up on 100 years.
2020 two marks the 100th anniversary of.
W and X.
Serving.
And the computer and you think Oh my allergies, it's ranked no one of them no no no.
The station has an incredible.
Signal and and.
And it's all agribusiness for the most part.
And it's reaching farmers and five different states and in fact, if you will.
Look at it and you.
You understand it.
And it has the largest W and X. The signal itself is the largest covers the largest landmass coverage and the United States.
And as I said, it's nonstop AG programming from from Sunrise through late in the afternoon with a lot of people just talking about that and is the voice to the farm community of five states.
And it's been doing this for 100 years.
And.
By the way I when I was mentioning of the Billings said. Please if you use this information please.
To all of the people that I am not the original manager.
And he's been with us and a lot of years, but you can't make that claim there.
But it's and what else aside to show you just the power of this out of about 80 years ago, Wm and actually had a gas stations.
And I actually asked for and it was and gas stations, and South Dakota, Nebraska and I.
Iowa, and Minnesota and.
Elsewhere.
And the motto of the gas stations.
And that's you'll run out of gas before you run out of signal.
That's how powerful it is.
And this isn't necessity and WMA exodus of Big example.
Of what the importance of local broadcasting is it's all about.
If you ever and South Dakota and.
And you end up in Yankton. Please visit our studios talk for people and and and in the lobby of we actually find out of a copy of the W. N of ex gas pump.
One other final thing about that with you when they ask and a lot of people don't even know the name, but the original band of leader for the radio station was Lawrence Welk.
Okay. This is back of the studies of radio when they had studio bands.
We are dating ourselves here.
Not that I remember that either what's in our future.
Well, we'll know what when we hear it.
And we will adapt to it and we're very agile and we'll still be on the air.
And.
Yes.
I have gotten off message and I and I apologize for it and actually no I don't apologize for my passion and for what we do sometimes outweighs reporting numbers and percentages and EBITDA.
All of the other piece that goes with it.
We have we have picked middle market America.
And in the and the fitting and with the categories that we have and and criteria for looking at radio sections, which are you know.
State Capitals Big College towns nine clubs of all military bases.
High net worth retirement communities like our Ocala, which also has the villages and theirs.
Hundreds of thousands of people there and they are building another another copy of the village right, there which is the.
And you're going to have another have room for 100000 net.
New residents for Florida.
Of.
And we.
We have <unk>.
All of this going for us.
And it's and the stations of NEP, and won't but bought and mass or and big numbers, but one of the time with the individual understanding of the marketplace and what it can do and what again, what it can have as revenue and net it's secure and.
It's not going to go away and the long run and it will continue to grow as the marketplace grows itself.
And as long as we have that relationship with the marketplace Saga, we will continue to be strong.
Profitable company with excellent perspective.
And the industry.
And as I said.
I'm, sorry, I got off message my job is don't let the passion flow and what the stations do what is right.
Uh huh.
With that said, Sam and I'm, sorry, if I got.
Well and after that.
We still answer questions and with that I'll ask Sam of if there are any questions and by the way anyone out there who didn't have the opportunity to ask a question about saga.
And our financials or whatever can still of call either call me or call Sam we're always accessible and.
And so our managers are of any saga of radio station San.
The way the question yes.
And we did have one question that came in and it basically was asking about.
What our policy was or what our future was when we were talking about.
The internet.
Slash podcast ing, and our activity and wed broadcasting, which I read debride mainstreaming and so forth and how we were doing that too.
Defend our enviable as he says and enviable dominant position in local markets.
Well.
Let's talk about streaming first of all.
We are doing very well and.
Monetizing it and I think will be up.
About three times the revenue that we have.
Yeah last year.
The issue of course is it's all of the exchanges rates their rates.
Which means that we have to work harder just to meet the delta of of servicing the money just south of the exchange for.
The right to play music on the on the Internet.
And that's a problem there as far as podcasts it goes.
And you might have some numbers on this I'm not sure, but our the way we.
And you can look at it and view it as a.
And I understand that and I understand it's great for social media communication and it certainly has a function and the purpose.
But it's got to the point that it's almost.
And and it's getting bigger every day, and it's getting too big to make it economically.
The usable to make any profit and the.
Podcasts and do you have.
And any numbers at all.
And we've done some research on this AD and and.
And on an article that we'd gotten here not long ago from Edison research.
And that indicated that there are currently and.
And this changes every day, apparently but currently over 1 million and 750000 podcasts.
The debt are available as of January of this year and that includes over 43 million episodes of those podcasts and.
And I think that what you were pointing out is that the industry.
And the podcasting and she is just so fragmented debt.
<unk>.
And.
It's very difficult to monetize the podcast and I think that's what some of the others that have gone into podcasting and.
The significant fashion and have found is that you can have a lot of podcasts and a lot of listeners, which there are a lot of folks and listen to podcasts.
But it's just tough to monetize.
I think part of the problem and it really is.
The.
And to survive, they're taking Remington and.
The inventory and remnant inventory is that which is left up and and sold very cheap for you yet.
This is the word remnant and it reflects on the garment industry and.
And I think that's the problem is.
And they can do some really interesting stuff on in podcasting.
And Ken can they make it a.
Is it anything more than a boutique and now there are some that are in debt are quite profitable a couple of the NPR ones.
And with that and a few of the other ones, but for the most part of.
They're still in the range of boutiques and struggling to find money to do.
And do that and when money is available with sort of a very cheap price point and so I.
I think that's all of that I have anything else that we missed today yeah. The one thing I would do is add to your streaming comment that.
And just recent conversations I mean, we're doing a lot of different things on the streaming side to enhance the revenue.
As you were saying Ed.
And we separated our streams from our over the air broadcast and we're selling sponsorships on the streams and and our websites.
Were selling.
AD inventory with some streaming injections, but also selling a lot of local inventory.
Two of our clients honor of extremes versus on the air we're working with our clients on targeted display targeting audio advertising targeted display advertising targeted video advertising banner ads pre rolls and then we've got a very active interactive.
Very good very active interactive department.
So I think we're seeing a lot of growth and that this year as you said.
Yeah, no and that's and that was something we purposely designed for you too.
To revamp.
The year and a half ago I think that isn't it yeah.
What we were doing and how we're doing to make that and actual.
Center of the company and.
And it's turned out but it is becoming that very nicely. So I'm really pleased about what we've done on that.
And again, if you have questions.
The call Sam called me.
We thank you for your time.
We thank you for being interested and saga.
If you were of sugars.
The saga of shareholder.
See that fast turn times.
You know sums up to you and we promise of our commitment to continue to do what we've been doing for all of these years now. So thank you very much and that should be it for this time and we'll see you all went about the 90 days right.
And the little less and that since we are right.
And our next month and May the first.
For a quarter always sneaks up on it.
Okay. Thanks, everybody. We appreciate it very much. Thank you Catherine we'll turn it back over to you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Thank you Catherine.
Good day.