Saga Communications, Inc. (NYSE MKT:SGA) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 11:00 am ET

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Saga Communications, Inc. (NYSE MKT:SGA) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the Saga Communications Incorporated Q3 2019 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor to your host, Ed Christian, President and CEO of Saga Communications. Sir, the floor is yours.

Executive
Edward K. Christian

Oh, Katherine, thank you, and this is so formal, we're more casual than that, but that's -- thank you so much. Hello, welcome to Q3. Sam is on the phone with me, and I will be turning it over to him slightly. He is going to review some numbers with you. Note the word adjusted is never used. Otherwise, UHY, our auditors would come in and severely reprimand him for doing so. You don't have any adjusted numbers, do you Sam?

Executive
Samuel D. Bush

I don't believe so. I'm looking very quickly just to make sure.

Executive
Edward K. Christian

All right, it's yours.

Executive
Samuel D. Bush

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 table.

As reported in the press release for the quarter, our net revenue was $31.3 million compared to $31.7 million for the quarter last year. Note that gross political revenue for the quarter this year was $96,000 compared to $486,000 for the quarter last year, a swing of $390,000. Without political, our revenue would have been approximately flat with last year.

Station operating expense remained a strong point, with an increase of only $171,000 for the quarter, including our picking up the expenses associated with our new stations in the Gainesville-Ocala market. On a same-station basis, our expense controls resulted in a $779,000 reduction in station operating expenses for the quarter.

Free cash flow was $4.5 million for the quarter compared to $5.2 million for the same period last year. Free cash flow was impacted by the reduction in Saga's deferred tax provision, primarily due to timing differences related to depreciation and amortization between 2018 and 2019.

For the quarter, our deferred tax provision was $400,000 compared to $785,000 last year. Of the roughly $1.5 million we spent on CapEx during the third quarter, almost $400,000 was related to the continued progress in building a new tower in Norfolk, Virginia, while approximately another $400,000 was spent finishing the upgrades to the existing studio buildings in Charleston and Springfield, Illinois.

For the nine-month period, political was $351,000 compared to $1.3 million last year. I really thought political would pick up as we went through the year, but so far, that hasn't happened. We're facing a soft fourth quarter with the headwinds of last year's political spending. In 2018, we had $1.6 million of political in the fourth quarter. So far this year, fourth quarter's political has been very disappointing.

Even with the