Q2 2022 Saga Communications Inc Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to the Saga Communications, Inc. Q2 earnings Conference call. At this time all participants are placed on a listen only mode. It is now.
Pleasure to turn the floor over to your host President and CEO of Saga Communications Christian Sir the floor is yours.
Rifle introductions.
Everybody here and walk them into another and our warm trainer of conference calls.
And what kind of it right.
With that well.
What.
Sam Bush, our CFO for many many many decades.
Words.
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 in 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 the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data tables.
For the quarter ended June 32022, net revenue increased six 3% to $29 8 million compared to $28 million last year political didn't factor much into the comparison of revenue as gross political revenue for the second quarter of 2022 was 787000 compared to 430000 in the quarter last year.
We still are expecting a fairly robust political to pick up significantly as we continue through the year.
Station operating expenses increased three 7% to $21 8 million for the three months period.
Station operating income increased 10, 6% to $9 3 million, while operating income was $5 4 million compared to $4 6 million for the same period last year.
Free cash flow was $3 2 million for the quarter compared to $4 2 million for the same period in 2021, and I'll talk about that more in just a minute net income for the second quarter was $3 8 million or 63 cents per fully diluted share overall, a very good performance in the second quarter.
For the six months period ended June 32022, net revenue increased eight 8% to $54 8 million compared to $50 3 million for the same period last year.
Again political didn't factor much in the comparison as gross political revenue for the first six months was 907000 compared to 640000 last year.
Station operating expense increased 6% to $42 4 million for the six month period station operating income increased 13, 2% to $14 8 million, while operating income was $7 1 million compared to $5 5 million for the same period last year free cash flow was $5 1 million for the period compared to six.
For the same period in 2021 net income for the first six months was $5 million or <unk> 83 per fully diluted share as I indicated the free cash flows numbers is really impacted by an increased level of capital expenditures.
And in particular to too specific.
Our projects are.
Capital expenditures for the quarter and six month period included $1 1 million for the purchase of a building in Norfolk, Virginia that we will be converting to office and studio facilities, allowing us to exit the space. We currently lease we've leased a space in Norfolk for many years and it is the most expensive lease we have that.
And all of Saga and this just was it.
A perfect opportunity for us to control our own destiny going forward and one space for a much less fairly sizable cost savings.
We also completed work on our new studio building in the Gainesville Ocala market. This was reflected in our higher 2022 capital expenditures with approximately 500000 being spent in the second quarter and approximately 800000 for the six month period.
We will recoup a bit of this cost as we sell our existing studio building now that we've been able to move into the new facility.
We still expect to spend approximately five five to 6 million for capital expenditures in 2022.
Net revenue in April and May was up roughly 7% in comparison to the same months last year June was a bit weaker but still showed an increase of 4% over our June performance in 2021 third quarter of 2022 is currently pacing ahead of the same period last year by.
<unk>, 4% to 5% I think Ken will talk a little bit more about this in a minute, although with the current interest rate environment the potential recession on the horizon and ongoing global turmoil everything is still week by week month by month, and sometimes even day to day as you talk to our managers.
We saw very nice increases in our interactive revenue in our non traditional revenue during the quarter and the first half of the year compared to the same periods last year interactive increased 36% for the quarter and 51% for the six month period, while our NTR increased 51% for the quarter and 43% for the six months.
Our balance sheet shows $52 3 million in cash and short term investments as of June 32022. Currently we have $54 4 million of cash and short term investments on hand as of today.
We paid a quarterly dividend of <unk> 20 per share to our shareholders on July one 2022. This represented a 25% increase in the dividend being paid in comparison to the 16th cent per share quarterly dividend paid on April eight 2022 Saga has now paid over 79 million in dividends since the initial dividend was paid in 2012, we.
Currently expect that our station operating expense will increase by approximately 5% to 7% for the year as compared to 2021. This includes additional sales commissions based on our revenue growth as well as increases in our cost of sales surveys and health care. Our ongoing tax rate is expected to be 29% to 30% with deferred tax rate of five two.
<unk>, 7% and with that I will turn it back over to you Ed.
Right.
Well lots of numbers.
Uh huh.
Building there.
Out of the 27 markets.
25.
Owned buildings.
Yeah.
26 will be.
And we'll be breaking ground there in Boston.
Within several months.
Yep.
Permits and everything.
One market.
A very favorable long term lease.
Six out of 20.
Salaries.
Or so.
That's where we are.
Thank you for joining us.
The unscripted.
Presentation.
Sure.
Right.
Yeah.
Some notes.
Yeah.
And I'm talking about our markets, where we did a review on this the other day.
All the time, but this.
Just wanted to show it.
Our 27 markets.
We are running up.
The last three that aren't one is flat.
Slightly down.
Our other.
We call administrative oversight so it's.
We do in terms of figuring out where the weak spots.
Concentrated.
Okay.
Alright.
Our local direct.
Uh huh.
Merchant sales.
Please.
Sure.
Our whole basis for the company.
With them.
Pardon me.
Alan.
So if I sound a little stuff in there.
With me.
Yeah.
I mean, it's a basic part.
Over here.
Yeah.
Examples.
So priority or anything like that but.
What we're doing.
Uh huh.
Trials are.
Which has been one of our newer facilities.
I was worried about the market.
Got it.
For me just about the radio group in the marketplace.
The market and how do we do that.
Yourself.
And injecting into the communities our ability to.
What I said that a flyer with them so that they know.
We're a trusted friend of where we're at.
So.
Do you have an example, Charleston.
Activity.
In the last few months.
The Charlotte somebody or partner with American road classroom blood drives.
Promoters.
Promoter.
The 10th annual low country.
11 heroes.
More than 25000.
His department.
Okay.
The roof.
The other thing with society.
Society.
Pretty much every market.
Turkey give away.
More than 200.
Okay.
That's all.
It came out of it.
Our music.
Children's Hospital.
Raised.
130000 in the community.
Charles for animal societies.
Pause in the park.
Uh huh.
Sure.
The Carolina Youth Development Center, we raised 45.
<unk> thousand for them.
It continues.
Uh huh.
Sure.
The Dorchester pause.
Okay.
More than 35000 pounds of pet food.
It's it's cool.
Hey, Edward.
Right sure.
Sure.
Our community.
Yeah.
Just kind of an example of how we're looking at.
Got it.
We try to work with all of our on air people too.
And it's part of it's part of our Creed of Localism.
Charlottesville, J, James instead of marbles podcast.
Yeah.
Other problems.
Right now what we're doing there.
The prices are getting ready for it.
Campaign with all the radio stations Fentanyl.
And the problems that we have enough.
Okay.
One.
Killer.
Sure.
Ben.
Yeah.
Five right now.
It's.
It's going around.
Perfect.
Yeah.
Sure.
Yeah.
But as things shake out.
And we need to get that message out to everybody.
But again, what I'm trying to spirit.
The passion.
It goes through it.
<unk>.
We can't.
Okay.
Picture for a picture.
And it shows.
Sure.
It's called on Steadier, She goes and we.
Know that we can't control the wins.
Can't control ourselves.
And how we do this is by Covid.
And also training.
People are.
Environment.
Yes.
I'm here.
It's kind of a life.
Got it.
And if I might.
Charleston, and Hilton head.
Several years ago.
Got it wrong.
This island.
And went through the gate was able to talk.
Two.
Uh huh.
Curtis Island.
Okay.
Amazed to see.
Sure.
The other programs out there.
Got it.
I jumped three days a week.
Over the last couple of years.
Marine trainers.
And they are trained.
You talked with a robot when it was through camp.
Island.
And how they're trading affected their lives and changed it.
Our whole thing.
While their salespeople.
Okay.
Because that's a core of our business.
Trade shows.
The Marine Corps.
We know that they've got the best routes.
We monitor it.
And I tried.
I'll talk to that.
Basic training is a life changing in terms of how they can work.
Yeah.
The Marine Corps training.
Okay.
Our passion for people so.
So that we can control themselves.
Yeah.
Well.
Let's go back to business here and I'm, sorry, if I kind of went off point there for a second.
What's striking about which way that for Q4.
Q3 and four.
Political should kick in for Q3 and four pretty shortly.
Yep.
8% overall and.
In terms of revenue.
Yes.
One of them.
Looking down the road.
We don't know exactly where we're going.
In terms of.
Sure.
Somewhat unsettled times.
And that's a difficult thing, but if you if you will.
The fundamental building blocks in place.
If you have in place.
Yeah.
The community respect.
Your group.
If we become number one.
If we look at where we.
We are in terms of.
Revenue.
Stop for Us our interactive is up 36%.
Hey.
Sure.
Our NTR events are up 51% for the quarter.
That's basically the events that we do the way.
Alrighty.
<unk>.
Raise funds whatever.
Let me give you just kind of it.
Strange example, I Miss.
Right.
In South Dakota.
In South Dakota.
As a regional radio station that was one of the largest web best coverage in the United States and it's basically.
For agriculture.
And we make hundreds of thousands of dollars a year.
Trips.
Sponsor.
We worked with travel agencies, and we're always doing trips because we know that the farmers.
They wanted to do trips with other farmers.
Farmers and especially in tight times.
Cultural communities going through.
Raising prices.
Try and do that because they can't keep increasing.
Rice of their crops to try and offset the increases there.
Due to this because this is the bonding experience for people.
Trust.
100 years old in November .
It gives you an idea of of what we're trying to structure here.
The company is this.
Solid foundation.
Based on the fact that we know we can be the last person standing.
The other companies.
Try to figure out what they're doing.
It's a difficult thing for them to compete with US because were you planning on our heels to really just.
Love Bob the community.
Communities.
So.
Basically what I'll kind of wrap up on this and hope that there are questions.
Is that.
We come to a point in time.
You have to work ahead.
Provide some direction about that I was thinking about that this morning.
And our approach.
Where we are.
It's kind of quality.
And going forward.
And I.
Remember the song.
Just heard this morning and it came in about.
I don't know how it pop there.
That was saga was written down.
Trying to.
A compulsory Julian Livingston.
Pro forma 1956 by Doris day now.
I think I can really remember about doors.
Chevrolet commercials, where exactly but what's up.
Case.
And that is whatever will be will be the future.
Okay.
Yes.
And they define that in a very interesting way.
And is described as.
Cheerful fatalism.
And I think that's what we have had to adapt.
The company was tearful photo with them.
Difficult times, we have to approach it with the fact that we are the survivors.
And with no debt.
They were trained.
Sales talent.
We are a company that has supported the communities for years.
Those sorts of things.
The bond is subtypes.
Those are the things that will get us through any downtime coming up.
We can't predict the future, we don't know where the storm is going to come from.
Certainly feel it and see it.
But we have the resources, we have the people most importantly.
The people.
Who are committed to doing this and we haven't even identification in our communities.
Our national sales are down.
We cannot compete with.
With the big operators, who are now selling in bulk.
Chris for VR AR number.
And for Us.
That's a great way of saying is that he says it's rock candy and a blow out.
Bagged that they're doing in their packages and we can't compete on the rates because the rates are continually being low for their sell advertising.
The archived.
Our concentration as I said before it is really in the heartland of the people and the merchants and the businesses.
Yeah.
And we're doing everything we can to encourage growth into two entities. We're at a point right now developing a program.
How can the new business working whether it's flavors of drivers.
The new Covenant comes in where the new business starts on.
Meet with them and provide advertisers for free.
Sure.
The community.
We want us to succeed.
We're going to provide advertising packages for you to get you started.
And there's no cost or does your gut.
Economic concerns.
Investment and trying to get your business off the ground and we want to walk him you know there's a community we wanted to make sure.
And the best way is through our ability to provide to help you kickstart jumpstart.
Your business.
That's the feeling that we have that's where we get the the memories, that's where we get paid.
But from the community.
So the reason that we are the voice, but we'll talk to them.
And we're there for them 24 hours a day seven days a week.
Weak.
Sure.
That was unscripted Sam.
Well it takes a lot of scripts should do talk through the the localism that we are so proud of and that you are insist that everybody follow day to day every day.
It's a 36 years.
It was running company, though.
And it's.
Unusual in the business.
A little bit different.
Because of the way we approach things Nevertheless, it's been successful.
We will continue to be that way.
So long as.
Watch commander for this thing this thing.
Company.
Yeah.
But I do get carried away a little bit even in AR days.
Worry about the pilot outside so.
That's really where we are in.
In terms of discussions about the company.
Welcome your comments and your thoughts because we know that without you.
Supporters of our radio stations.
We wouldn't be anywhere.
Yes.
Yes.
Reserve for opportunities that we believe will come on come along.
Or is the offset in the economy.
Opportunities for acquisitions there.
We continue to grow the company in an environment, where we can take advantage of them, we're disciplined buyers, but at the same time, we have our reserve, which is our seed corn.
And we're not going to eat away at our seed corn.
While we are trying to.
All of this in case of we needed.
And in case, we have opportunities.
Expand the business.
We're very selective as we have talked to you Bob.
And that's our mantra.
That's our feeling of doing them find their community.
Radio stations that fit our bill and make sure that.
Last night and standing in the industry.
If there is continued problems as we should.
Sure.
Sure.
No I think that's very good and I think it gives a full impression of what we're trying to do with the localism as you've stated so well so I think that's very good.
You have any questions today, we did not today I think neither the press release did a good job. It was it was a fairly general quarter and was a good quarter. So I think we're happy with where we are.
Well I'm happy with where we are too so that's good.
Over for the final announcement too.
Yeah, Kelly will you take it didnt wrap us up.
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.
Thanks Kelly.