Salem Media Group, Inc. (Nasdaq: SALM) released its results for
the three and six months ended June 30, 2021.
Second Quarter 2021
Results
For the quarter ended June 30, 2021 compared to the quarter
ended June 30, 2020:
Consolidated
- Total revenue increased 20.6% to $63.8 million from $52.9
million;
- Total operating expenses increased 8.2% to $58.1 million from
$53.8 million;
- Operating expenses, excluding gains or losses on the
disposition of assets, stock-based compensation expense, changes in
the estimated fair value of contingent earn-out consideration,
depreciation expense and amortization expense (1) increased 9.9% to
$55.0 million from $50.1 million;
- The company’s operating income was $5.6 million compared to an
operating loss of $0.9 million;
- The company generated net income of $2.3 million, or $0.08 net
income per diluted share compared to a net loss of $2.5 million, or
$0.09 net loss per share;
- EBITDA (1) increased 235.9% to $9.0 million from $2.7
million;
- Adjusted EBITDA (1) increased 212.1% to $8.7 million from $2.8
million; and
- Net cash provided by operating activities decreased to $1.0
million from $11.2 million.
Broadcast
- Net broadcast revenue increased 18.5% to $46.8 million from
$39.5 million;
- Station Operating Income (“SOI”) (1) increased 66.6% to $10.6
million from $6.4 million;
- Same Station (1) net broadcast revenue increased 18.7% to $46.5
million from $39.1 million; and
- Same Station SOI (1) increased 58.7% to $10.6 million from $6.7
million.
Digital Media
- Digital media revenue increased 9.5% to $10.3 million from $9.4
million; and
- Digital Media Operating Income (1) increased 11.8% to $2.0
million from $1.8 million.
Publishing
- Publishing revenue increased 68.3% to $6.7 million from $4.0
million; and
- Publishing Operating Income (1) was $0.2 million to compared to
an operating loss of $1.6 million.
Included in the results for the quarter ended June 30, 2021
are:
- A $0.3 million ($0.2 million, net of tax, or $0.01 per share)
net gain on the disposition of assets relates to $0.5 million
pre-tax gain on the sale of Singing News Magazine and Singing News
Radio offset by an additional $0.1 million pre-tax loss recorded at
closing on the sale of radio station WKAT-AM and FM translator in
Miami, Florida; and
- A $0.1 million non-cash compensation charge ($0.1 million, net
of tax) related to the expensing of stock options.
Included in the results for the quarter ended June 30, 2020
are:
- A $0.1 million non-cash compensation charge related to the
expensing of stock options.
Per share numbers are calculated based on 27,232,423 diluted
weighted average shares for the quarter ended June 30, 2021, and
26,683,363 diluted weighted average shares for the quarter ended
June 30, 2020.
Year to Date 2021 Results
For the six months ended June 30, 2021 compared to the six
months ended June 30, 2020:
Consolidated
- Total revenue increased 10.8% to $123.1 million from $111.1
million;
- Total operating expenses decreased 13.0% to $113.1 million from
$130.0 million;
- Operating expenses, excluding gains or losses on the
disposition of assets, stock-based compensation expense, changes in
the estimated fair value of contingent earn-out consideration,
impairments, depreciation expense and amortization expense (1)
increased 1.5% to $106.5 million from $104.9 million;
- The company had operating income of $10.0 million compared to
an operating loss of $18.9 million;
- The company generated net income of $2.6 million, or $0.10 net
income per diluted share compared to a net loss of $57.7 million,
or $2.16 net loss per share;
- EBITDA (1) was $16.5 million as compared to a loss of $11.6
million;
- Adjusted EBITDA (1) increased 167.5% to $16.7 million from $6.2
million; and
- Net cash provided by operating activities decreased 46.2% to
$10.2 million from $19.0 million.
Broadcast
- Net broadcast revenue increased 7.3% to $90.8 million from
$84.7 million;
- SOI (1) increased 49.9% to $21.3 million from $14.2
million;
- Same station (1) net broadcast revenue increased 7.7% to $90.4
million from $83.9 million; and
- Same station SOI (1) increased 44.0% to $21.5 million from
$14.9 million.
Digital media
- Digital media revenue increased 7.6% to $20.0 million from
$18.5 million; and
- Digital media operating income (1) increased 14.8% to $2.9
million from $2.6 million.
Publishing
- Publishing revenue increased 55.8% to $12.3 million from $7.9
million; and
- Publishing Operating Income (1) was $0.7 million compared to an
operating loss of $2.7 million.
Included in the results for the six months ended June 30, 2021
are:
- A $0.1 million net gain on the disposition of assets relating
to a $0.5 million pre-tax gain on the sale of Singing News Magazine
and Singing News Radio offset by $0.4 million additional loss
recorded at closing on the sale of radio station WKAT-AM and FM
translator in Miami, Florida and various fixed asset disposals;
and
- A $0.2 million non-cash compensation charge ($0.1 million, net
of tax) related to the expensing of stock options.
Included in the results for the six months ended June 30, 2020
are:
- A $17.3 million impairment charge ($12.8 million, net of tax,
or $0.48 per share), of which $0.3 million related to impairment of
mastheads, and the remainder to broadcast licenses due to the
financial impact of the COVID-19 pandemic;
- A $0.3 million impairment charge ($0.2 million, net of tax, or
$0.01 per share) related to the company’s goodwill; and
- A $0.2 million non-cash compensation charge ($0.1 million, net
of tax, or $0.01 per share) related to the expensing of stock
options.
Per share numbers are calculated based on 27,185,598 diluted
weighted average shares for the six months ended June 30, 2021, and
26,683,363 diluted weighted average shares for the six months ended
June 30, 2020.
Balance Sheet
As of June 30, 2021, the company had $216.3 million outstanding
on the 6.75% senior secured notes due 2024 (the “Notes”), no
balance outstanding on the Asset Based Revolving Credit Facility
(“ABL Facility”), and $11.2 million outstanding on Paycheck
Protection Program (“PPP”) loans from the Small Business
Administration (“SBA”).
During July 2021, the SBA forgave all but $20,000 of the loans.
The company will record the loan forgiveness in the period in which
the loans are forgiven.
Acquisitions and
Divestitures
The following transactions were completed since April 1,
2021:
- On July 23, 2021, the company sold approximately 34 acres of
land in Lewisville, Texas, currently being used as the transmitter
site for Company owned radio station KSKY-AM, for $12.1 million in
cash. The company will retain enough of the property in the
southwest corner of the site to operate the station.
- On July 2, 2021, the company acquired SeniorResource.com for
$0.1 million of cash.
- On July 1, 2021, the company acquired the ShiftWorship.com
domain and digital assets for $2.6 million of cash.
- On June 1, 2021, the company acquired radio stations KDIA-AM
and KDYA-AM in San Francisco, California for $0.6 million in
cash.
- On May 25, 2021, the company sold Singing News Magazine and
Singing News Radio for $0.1 million in cash. The buyer assumed the
deferred subscription liabilities of $0.4 million.
- On April 28, 2021, the company closed on the acquisition of the
Centerline New Media domain and digital assets for $1.3 million of
cash.
Pending
transactions:
- On June 2, 2021, the company entered into an Asset Purchase
Agreement (“APA”) to acquire radio station KKOL-AM in Seattle,
Washington for $0.5 million. The company paid $0.1 million of cash
into an escrow account and began operating the station under a
Local Marketing Agreement (“LMA”) on June 7, 2021.
- On February 5, 2020, we entered into an APA with Word
Broadcasting to sell radio stations WFIA-AM, WFIA-FM and WGTK-AM in
Louisville, Kentucky for $4.0 million with credits applied from
amounts previously paid, including a portion of the monthly fees
paid under a Time Brokerage Agreement (“TBA”). Due to changes in
debt markets, the transaction was not funded, and it is uncertain
when, or if, the transaction will close. Word Broadcasting
continues to program the stations under a TBA that began in January
2017.
Conference Call Information
Salem will host a teleconference to discuss its results on
August 4, 2021 at 4:00 p.m. Central Time. To access the
teleconference, please dial (877) 524-8416, and then ask to be
joined into the Salem Media Group Second Quarter 2021 call or
listen via the investor relations portion of the company’s website,
located at investor.salemmedia.com. A replay of the teleconference
will be available through August 18, 2021 and can be heard by
dialing (877) 660-6853, passcode 13720097 or on the investor
relations portion of the company’s website, located at
investor.salemmedia.com.
Follow us on Twitter @SalemMediaGrp.
Third Quarter 2021
Outlook
For the third quarter of 2021, the company is projecting total
revenue to increase between 2% and 4% from third quarter 2020 total
revenue of $60.6 million. In the third quarter of 2020 the company
had approximately $3.5 million of revenue from political and the
Uncle Tom film on SalemNOW. Excluding that revenue, revenue is
projected to increase between 9% and 11%. The company is also
projecting operating expenses before gains or losses on the sale or
disposal of assets, stock-based compensation expense, changes in
the estimated fair value of contingent earn-out consideration,
impairments, depreciation expense and amortization expense to
increase between 7% and 10% compared to the third quarter of 2020
non-GAAP operating expenses of $51.0 million.
A reconciliation of non-GAAP operating
expenses, excluding gains or losses on the disposition of assets,
stock-based compensation expense, changes in the estimated fair
value of contingent earn-out consideration, impairments,
depreciation expense and amortization expense to the most directly
comparable GAAP measure is not available without unreasonable
efforts on a forward-looking basis due to the potential high
variability, complexity and low visibility with respect to the
charges excluded from this non-GAAP financial measure, in
particular, the change in the estimated fair value of earn-out
consideration, impairments and gains or losses from the disposition
of fixed assets. The company expects the variability of the above
charges may have a significant, and potentially unpredictable,
impact on its future GAAP financial results.
About Salem Media Group,
Inc.
Salem Media Group is America’s leading multimedia company
specializing in Christian and conservative content, with media
properties comprising radio, digital media and book and newsletter
publishing. Each day Salem serves a loyal and dedicated audience of
listeners and readers numbering in the millions nationally. With
its unique programming focus, Salem provides compelling content,
fresh commentary and relevant information from some of the most
respected figures across the Christian and conservative media
landscape. Learn more about Salem Media Group, Inc. at
www.salemmedia.com, Facebook and Twitter.
Forward-Looking
Statements
Statements used in this press release that relate to future
plans, events, financial results, prospects or performance are
forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially
from those anticipated as a result of certain risks and
uncertainties, including but not limited to the ability of Salem to
close and integrate announced transactions, market acceptance of
Salem’s radio station formats, competition from new technologies,
adverse economic conditions, and other risks and uncertainties
detailed from time to time in Salem's reports on Forms 10-K, 10-Q,
8-K and other filings filed with or furnished to the Securities and
Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. Salem undertakes no obligation to update or
revise any forward-looking statements to reflect new information,
changed circumstances or unanticipated events.
(1) Regulation G
Management uses certain non-GAAP financial
measures defined below in communications with investors, analysts,
rating agencies, banks and others to assist such parties in
understanding the impact of various items on its financial
statements. The company uses these non-GAAP financial measures to
evaluate financial results, develop budgets, manage expenditures
and as a measure of performance under compensation programs.
The company’s presentation of these non-GAAP
financial measures should not be considered as a substitute for or
superior to the most directly comparable financial measures as
reported in accordance with GAAP.
Regulation G defines and prescribes the
conditions under which certain non-GAAP financial information may
be presented in this earnings release. The company closely monitors
EBITDA, Adjusted EBITDA, Station Operating Income (“SOI”), Same
Station net broadcast revenue, Same Station broadcast operating
expenses, Same Station Operating Income, Digital Media Operating
Income, Publishing Operating Income (Loss), and operating expenses
excluding gains or losses on the disposition of assets, stock-based
compensation, changes in the estimated fair value of contingent
earn-out consideration, impairments, depreciation and amortization,
all of which are non-GAAP financial measures. The company believes
that these non-GAAP financial measures provide useful information
about its core operating results, and thus, are appropriate to
enhance the overall understanding of its financial performance.
These non-GAAP financial measures are intended to provide
management and investors a more complete understanding of its
underlying operational results, trends and performance.
The company defines Station Operating Income
(“SOI”) as net broadcast revenue minus broadcast operating
expenses. The company defines Digital Media Operating Income as net
Digital Media Revenue minus Digital Media Operating Expenses. The
company defines Publishing Operating Income (Loss) as net
Publishing Revenue minus Publishing Operating Expenses. The company
defines EBITDA as net income before interest, taxes, depreciation,
and amortization. The company defines Adjusted EBITDA as EBITDA
before gains or losses on the disposition of assets, before changes
in the estimated fair value of contingent earn-out consideration,
before impairments, before net miscellaneous income and expenses,
before gain on bargain purchase, before (gain) loss on early
retirement of long-term debt and before non-cash compensation
expense. SOI, Digital Media Operating Income, Publishing Operating
Income (Loss), EBITDA and Adjusted EBITDA are commonly used by the
broadcast and media industry as important measures of performance
and are used by investors and analysts who report on the industry
to provide meaningful comparisons between broadcasters. SOI,
Digital Media Operating Income, Publishing Operating Income (Loss),
EBITDA and Adjusted EBITDA are not measures of liquidity or of
performance in accordance with GAAP and should be viewed as a
supplement to and not a substitute for or superior to its results
of operations and financial condition presented in accordance with
GAAP. The company’s definitions of SOI, Digital Media Operating
Income, Publishing Operating Income (Loss), EBITDA and Adjusted
EBITDA are not necessarily comparable to similarly titled measures
reported by other companies.
The company defines Adjusted Free Cash Flow
as Adjusted EBITDA less cash paid for capital expenditures, less
cash paid for income taxes, and less cash paid for interest. The
company considers Adjusted Free Cash Flow to be a liquidity measure
that provides useful information to management and investors about
the amount of cash generated by its operations after cash paid for
capital expenditures, cash paid for income taxes and cash paid for
interest. A limitation of Adjusted Free Cash Flow as a measure of
liquidity is that it does not represent the total increase or
decrease in its cash balance for the period. The company uses
Adjusted Free Cash Flow, a non-GAAP liquidity measure, both in
presenting its results to stockholders and the investment
community, and in its internal evaluation and management of the
business. The company’s presentation of Adjusted Free Cash Flow is
not intended to be considered in isolation or as a substitute for
the financial information prepared and presented in accordance with
GAAP. The company’s definition of Adjusted Free Cash Flow is not
necessarily comparable to similarly titled measures reported by
other companies.
The company defines Same Station net
broadcast revenue as broadcast revenue from its radio stations and
networks that the company owns or operates in the same format on
the first and last day of each quarter, as well as the
corresponding quarter of the prior year. The company defines Same
Station broadcast operating expenses as broadcast operating
expenses from its radio stations and networks that the company owns
or operates in the same format on the first and last day of each
quarter, as well as the corresponding quarter of the prior year.
The company defines Same Station SOI as Same Station net broadcast
revenue less Same Station broadcast operating expenses. Same
Station operating results include those stations that the company
owns or operates in the same format on the first and last day of
each quarter, as well as the corresponding quarter of the prior
year. Same Station operating results for a full calendar year are
calculated as the sum of the Same Station-results for each of the
four quarters of that year. The company uses Same Station operating
results, a non-GAAP financial measure, both in presenting its
results to stockholders and the investment community, and in its
internal evaluations and management of the business. The company
believes that Same Station operating results provide a meaningful
comparison of period over period performance of its core broadcast
operations as this measure excludes the impact of new stations, the
impact of stations the company no longer owns or operates, and the
impact of stations operating under a new programming format. The
company’s presentation of Same Station operating results are not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
GAAP. The company’s definition of Same Station operating results is
not necessarily comparable to similarly titled measures reported by
other companies.
For all non-GAAP financial measures,
investors should consider the limitations associated with these
metrics, including the potential lack of comparability of these
measures from one company to another.
The Supplemental Information tables that
follow the condensed consolidated financial statements provide
reconciliations of the non-GAAP financial measures that the company
uses in this earnings release to the most directly comparable
measures calculated in accordance with GAAP. The company uses
non-GAAP financial measures to evaluate financial performance,
develop budgets, manage expenditures, and determine employee
compensation. The company’s presentation of this additional
information is not to be considered as a substitute for or superior
to the directly comparable measures as reported in accordance with
GAAP.
Salem Media Group,
Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except share
and per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2021
2020
2021
(Unaudited)
Net broadcast revenue
$
39,470
$
46,783
$
84,650
$
90,831
Net digital media revenue
9,443
10,339
18,547
19,958
Net publishing revenue
3,958
6,660
7,924
12,346
Total revenue
52,871
63,782
111,121
123,135
Operating expenses:
Broadcast operating expenses
33,094
36,162
70,421
69,505
Digital media operating expenses
7,653
8,338
15,979
17,011
Publishing operating expenses
5,567
6,426
10,629
11,631
Unallocated corporate expenses
3,850
4,192
8,060
8,480
Change in the estimated fair value of
contingent earn-out consideration
3
—
(2
)
—
Impairment of indefinite-lived long-term
assets other than goodwill
—
—
17,254
—
Impairment of goodwill
—
—
307
—
Depreciation and amortization
3,558
3,286
7,258
6,456
Net (gain) loss on the disposition of
assets
34
(263
)
113
55
Total operating expenses
53,759
58,141
130,019
113,138
Operating income (loss)
(888
)
5,641
(18,898
)
9,997
Other income (expense):
Interest income
—
—
—
1
Interest expense
(4,013
)
(3,935
)
(8,045
)
(7,861
)
Gain on early retirement of long-term
debt
—
—
49
—
Net miscellaneous income and
(expenses)
6
63
(46
)
85
Net income (loss) before income taxes
(4,895
)
1,769
(26,940
)
2,222
Provision for (benefit from) income
taxes
(2,380
)
(488
)
30,779
(358
)
Net income (loss)
$
(2,515
)
$
2,257
$
(57,719
)
$
2,580
Basic income (loss) per share Class A and
Class B common stock
$
(0.09
)
$
0.08
$
(2.16
)
$
0.10
Diluted income (loss) per share Class A
and Class B common stock
$
(0.09
)
$
0.08
$
(2.16
)
$
0.10
Basic weighted average Class A and Class B
common stock shares outstanding
26,686,363
26,869,145
26,686,363
26,802,892
Diluted weighted average Class A and Class
B common stock shares outstanding
26,683,363
27,232,423
26,683,363
27,185,598
Salem Media Group,
Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
December 31, 2020
June 30, 2021
(Unaudited)
Assets
Cash
$
6,325
$
19,858
Trade accounts receivable, net
24,469
24,568
Other current assets
15,002
11,992
Property and equipment, net
79,122
79,415
Operating and financing lease right-of-use
assets
48,355
45,050
Intangible assets, net
347,547
347,019
Deferred financing costs
213
174
Other assets
3,538
3,868
Total assets
$
524,571
$
531,944
Liabilities and Stockholders’
Equity
Current liabilities
$
50,860
$
47,366
Long-term debt
213,764
225,327
Operating and financing lease liabilities,
less current portion
47,847
44,131
Deferred income taxes
68,883
68,480
Other liabilities
7,938
8,227
Stockholders’ Equity
135,279
138,413
Total liabilities and stockholders’
equity
$
524,571
$
531,944
SALEM MEDIA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Dollars
in thousands, except share and per share data)
Class A
Class B
Common Stock
Common Stock
Additional
Paid-In
Accumulated
Treasury
Shares
Amount
Shares
Amount
Capital
Deficit
Stock
Total
Stockholders’ equity, December 31,
2019
23,447,317
$
227
5,553,696
$
56
$
246,680
$
(23,294
)
$
(34,006
)
$
189,663
Stock-based compensation
—
—
—
—
103
—
—
103
Cash distributions
—
—
—
—
—
(667
)
—
(667
)
Net loss
—
—
—
—
—
(55,204
)
—
(55,204
)
Stockholders’ equity,
March 31, 2020
23,447,317
$
227
5,553,696
$
56
$
246,783
$
(79,165
)
$
(34,006
)
$
133,895
Distributions per share
$
0.025
—
$
0.025
—
—
—
—
—
Stock-based compensation
—
—
—
—
96
—
—
96
Net loss
—
—
—
—
—
(2,515
)
—
(2,515
)
Stockholders’ equity,
June 30, 2020
23,447,317
$
227
5,553,696
$
56
$
246,879
$
(81,680
)
$
(34,006
)
$
131,476
Class A
Class B
Common Stock
Common Stock
Additional
Paid-In
Accumulated
Treasury
Shares
Amount
Shares
Amount
Capital
Deficit
Stock
Total
Stockholders’ equity, December 31,
2020
23,447,317
$
227
5,553,696
$
56
$
247,025
$
(78,023
)
$
(34,006
)
$
135,279
Stock-based compensation
—
—
—
—
78
—
—
78
Options exercised
185,782
2
—
—
390
—
—
392
Net income
—
—
—
—
—
323
—
323
Stockholders’ equity,
March 31, 2021
23,633,099
$
229
5,553,696
$
56
$
247,493
$
(77,700
)
$
(34,006
)
$
136,072
Stock-based compensation
—
—
—
—
84
—
—
84
Net income
—
—
—
—
—
2,257
—
2,257
Stockholders’ equity, June 30,
2021
23,633,099
$
229
5,553,696
$
56
$
247,577
$
(75,443
)
$
(34,006
)
$
138,413
SALEM MEDIA GROUP,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2021
2020
2021
OPERATING ACTIVITIES
Net income (loss)
$
(2,515
)
$
2,257
$
(57,719
)
$
2,580
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Non-cash stock-based compensation
96
84
199
162
Depreciation and amortization
3,558
3,287
7,258
6,456
Amortization of deferred financing
costs
234
213
461
426
Non-cash lease expense
2,212
2,186
4,464
4,348
Provision for bad debts
1,721
(30
)
3,621
(325
)
Deferred income taxes
(2,455
)
(591
)
30,629
(403
)
Impairment of indefinite-lived long-term
assets other than goodwill
—
—
17,254
—
Impairment of goodwill
—
—
307
—
Change in the estimated fair value of
contingent earn-out consideration
3
—
(2
)
—
Net (gain) loss on the disposition of
assets
34
(263
)
113
55
Gain on early retirement of long-term
debt
—
—
(49
)
—
Changes in operating assets and
liabilities:
Accounts receivable and unbilled
revenue
3,111
(2,128
)
5,530
421
Inventories
(60
)
(131
)
10
(224
)
Prepaid expenses and other current
assets
684
431
97
(319
)
Accounts payable and accrued expenses
(2,758
)
(2,037
)
1,720
453
Operating lease liabilities
(996
)
(2,433
)
(3,403
)
(4,931
)
Contract liabilities
7,134
188
7,267
1,310
Deferred rent income
(67
)
(59
)
(151
)
111
Other liabilities
1,198
5
1,204
35
Income taxes payable
98
21
155
42
Net cash provided by (used in) operating
activities
$
11,232
$
1,000
$
18,965
$
10,197
INVESTING ACTIVITIES
Cash paid for capital expenditures net of
tenant improvement allowances
(938
)
(2,135
)
(2,525
)
(3,994
)
Capital expenditures reimbursable under
tenant improvement allowances and trade agreements
(10
)
(19
)
(94
)
(19
)
Deposit on broadcast assets and radio
station acquisitions
—
—
—
(100
)
Purchases of broadcast assets and radio
stations
—
(600
)
—
(600
)
Purchases of digital media businesses and
assets
—
(1,300
)
—
(1,300
)
Proceeds from sale of assets
186
126
188
3,627
Other
2,407
(576
)
1,979
(814
)
Net cash provided by (used in) investing
activities
$
1,645
$
(4,504
)
$
(452
)
$
(3,200
)
FINANCING ACTIVITIES
Payments to repurchase 6.75% Senior
Secured Notes
—
—
(3,392
)
—
Proceeds from borrowings under ABL
Facility
5,030
—
38,349
16
Payments on ABL Facility
(30
)
—
(31,775
)
(5,016
)
Proceeds from borrowings under PPP
Loans
—
—
—
11,195
Payments of debt issuance costs
(65
)
(16
)
(66
)
(19
)
Proceeds from the exercise of stock
options
—
—
—
392
Payments on financing lease
liabilities
(17
)
(16
)
(35
)
(32
)
Payment of cash distribution on common
stock
—
—
(667
)
—
Book overdraft
—
—
(1,885
)
—
Net cash provided by (used in) financing
activities
$
4,918
$
(32
)
$
529
$
6,536
Net increase (decrease) in cash and cash
equivalents
$
17,795
$
(3,536
)
$
19,042
$
13,533
Cash and cash equivalents at beginning of
year
1,253
23,394
6
6,325
Cash and cash equivalents at end of
period
$
19,048
$
19,858
$
19,048
$
19,858
Salem Media Group,
Inc.
Supplemental
Information
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2021
2020
2021
(Unaudited)
Reconciliation of Total Operating
Expenses to Operating Expenses excluding Gains or Losses on the
Disposition of Assets, Stock-based Compensation Expense, Changes in
the Estimated Fair Value of Contingent Earn-out Consideration,
Impairments and Depreciation and Amortization Expense (Recurring
Operating Expenses)
Operating Expenses
$
53,759
$
58,141
$
130,019
$
113,138
Less depreciation and amortization
expense
(3,558
)
(3,286
)
(7,258
)
(6,456
)
Less change in estimated fair value of
contingent earn-out
consideration
(3
)
—
2
—
Less impairment of indefinite-lived
long-term assets other
than goodwill
—
—
(17,254
)
—
Less impairment of goodwill
—
—
(307
)
—
Less net gain (loss) on the disposition of
assets
(34
)
263
(113
)
(55
)
Less stock-based compensation expense
(96
)
(84
)
(199
)
(162
)
Total Recurring Operating
Expenses
$
50,068
$
55,034
$
104,890
$
106,465
Reconciliation of Net Broadcast Revenue
to Same Station Net Broadcast Revenue
Net broadcast revenue
$
39,470
$
46,783
$
84,650
$
90,831
Net broadcast revenue – acquisitions
—
(79
)
—
(79
)
Net broadcast revenue – dispositions
(220
)
(42
)
(443
)
(38
)
Net broadcast revenue – format change
(104
)
(205
)
(280
)
(345
)
Same Station net broadcast revenue
$
39,146
$
46,457
$
83,927
$
90,369
Reconciliation of Broadcast Operating
Expenses to Same Station Broadcast Operating Expenses
Broadcast operating expenses
$
33,094
$
36,162
$
70,421
$
69,505
Broadcast operating expenses –
acquisitions
—
(38
)
—
(38
)
Broadcast operating expenses –
dispositions
(379
)
(79
)
(881
)
(185
)
Broadcast operating expenses – format
change
(259
)
(206
)
(519
)
(384
)
Same Station broadcast operating
expenses
$
32,456
$
35,839
$
69,021
$
68,898
Reconciliation of SOI to Same Station
SOI
Station Operating Income
$
6,376
$
10,621
$
14,229
$
21,326
Station operating (income) loss –
acquisitions
—
(41
)
—
(41
)
Station operating loss – dispositions
159
37
438
147
Station operating loss – format change
155
1
239
39
Same Station - Station Operating
Income
$
6,690
$
10,618
$
14,906
$
21,471
Salem Media Group,
Inc.
Supplemental
Information
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2021
2020
2021
(Unaudited)
Calculation of Station Operating
Income, Digital Media Operating Income and Publishing Operating
Income (Loss)
Net broadcast revenue
$
39,470
$
46,783
$
84,650
$
90,831
Less broadcast operating expenses
(33,094
)
(36,162
)
(70,421
)
(69,505
)
Station Operating Income
$
6,376
$
10,621
$
14,229
$
21,326
Net digital media revenue
$
9,443
$
10,339
$
18,547
$
19,958
Less digital media operating expenses
(7,653
)
(8,338
)
(15,979
)
(17,011
)
Digital Media Operating Income
$
1,790
$
2,001
$
2,568
$
2,947
Net publishing revenue
$
3,958
$
6,660
$
7,924
$
12,346
Less publishing operating expenses
(5,567
)
(6,426
)
(10,629
)
(11,631
)
Publishing Operating Income (Loss)
$
(1,609
)
$
234
$
(2,705
)
$
715
The company defines EBITDA (1) as net income before interest,
taxes, depreciation, and amortization. The table below presents a
reconciliation of EBITDA (1) to Net Income (Loss), the most
directly comparable GAAP measure. EBITDA (1) is a non-GAAP
financial performance measure that is not to be considered a
substitute for or superior to the directly comparable measures
reported in accordance with GAAP. The company defines Adjusted
EBITDA (1) as EBITDA (1) before gains or losses on the disposition
of assets, before changes in the estimated fair value of contingent
earn-out consideration, before impairments, before net
miscellaneous income and expenses, before (gain) loss on early
retirement of long-term debt and before non-cash compensation
expense. The table below presents a reconciliation of Adjusted
EBITDA (1) to Net Income (Loss), the most directly comparable GAAP
measure. Adjusted EBITDA (1) is a non-GAAP financial performance
measure that is not to be considered a substitute for or superior
to the directly comparable measures reported in accordance with
GAAP.
Three Months Ended
June 30,
Six Months Ended
June 30,
2020
2021
2020
2021
(Unaudited)
Net income (loss)
$
(2,515
)
$
2,257
$
(57,719
)
$
2,580
Plus interest expense, net of capitalized
interest
4,013
3,935
8,045
7,861
Plus provision for (benefit from) income
taxes
(2,380
)
(488
)
30,779
(358
)
Plus depreciation and amortization
3,558
3,286
7,258
6,456
Less interest income
—
—
—
(1
)
EBITDA
$
2,676
$
8,990
$
(11,637
)
$
16,538
Less net (gain) loss on the disposition of
assets
34
(263
)
113
55
Less change in the estimated fair value of
contingent
earn-out consideration
3
—
(2
)
—
Plus impairment of indefinite-lived
long-term assets
other than goodwill
—
—
17,254
—
Plus impairment of goodwill
—
—
307
—
Plus (gain) on early retirement of long-
term
debt
—
—
(49
)
—
Plus net miscellaneous (income) and
expenses
(6
)
(63
)
46
(85
)
Plus non-cash stock-based compensation
96
84
199
162
Adjusted EBITDA
$
2,803
$
8,748
$
6,231
$
16,670
The company defines Adjusted Free Cash Flow (1) as Adjusted
EBITDA (1) less cash paid for capital expenditures, less cash paid
for income taxes, and less cash paid for interest. The company
considers Adjusted Free Cash Flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by its operations after cash paid for
capital expenditures, cash paid for income taxes and cash paid for
interest. A limitation of Adjusted Free Cash Flow as a measure of
liquidity is that it does not represent the total increase or
decrease in its cash balance for the period. The company uses
Adjusted Free Cash Flow, a non-GAAP liquidity measure, both in
presenting its results to stockholders and the investment
community, and in its internal evaluation and management of the
business. The company’s presentation of Adjusted Free Cash Flow is
not intended to be considered in isolation or as a substitute for
the financial information prepared and presented in accordance with
GAAP. The company’s definition of Adjusted Free Cash Flow is not
necessarily comparable to similarly titled measures reported by
other companies.
The table below presents a reconciliation of Adjusted Free Cash
Flow to net cash provided by operating activities, the most
directly comparable GAAP measure. Adjusted Free Cash Flow is a
non-GAAP liquidity measure that is not to be considered a
substitute for or superior to the directly comparable measures
reported in accordance with GAAP.
Salem Media Group,
Inc.
Supplemental
Information
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2021
2020
2021
(Unaudited)
Net cash provided by operating
activities
$
11,232
$
1,000
$
18,965
$
10,197
Non-cash stock-based compensation
(96
)
(84
)
(199
)
(162
)
Depreciation and amortization
(3,558
)
(3,287
)
(7,258
)
(6,456
)
Amortization of deferred financing
costs
(234
)
(213
)
(461
)
(426
)
Non-cash lease expense
(2,212
)
(2,186
)
(4,464
)
(4,348
)
Provision for bad debts
(1,721
)
30
(3,621
)
325
Deferred income taxes
2,455
591
(30,629
)
403
Change in the estimated fair value of
contingent earn-out
consideration
(3
)
—
2
—
Impairment of indefinite-lived long-term
assets other than
goodwill
—
—
(17,254
)
—
Impairment of goodwill
—
—
(307
)
—
Net gain (loss) on the disposition of
assets
(34
)
263
(113
)
(55
)
Gain on early retirement of long-term
debt
—
—
49
—
Changes in operating assets and
liabilities:
Accounts receivable and unbilled
revenue
(3,111
)
2,128
(5,530
)
(421
)
Inventories
60
131
(10
)
224
Prepaid expenses and other current
assets
(684
)
(431
)
(97
)
319
Accounts payable and accrued expenses
2,758
2,037
(1,720
)
(453
)
Contract liabilities
(7,134
)
(188
)
(7,267
)
(1,310
)
Operating lease liabilities (deferred
rent)
996
2,433
3,403
4,931
Deferred rent revenue
67
59
151
(111
)
Other liabilities
(1,198
)
(5
)
(1,204
)
(35
)
Income taxes payable
(98
)
(21
)
(155
)
(42
)
Net income (loss)
$
(2,515
)
$
2,257
$
(57,719
)
$
2,580
Plus interest expense, net of capitalized
interest
4,013
3,935
8,045
7,861
Plus provision for (benefit from) income
taxes
(2,380
)
(488
)
30,779
(358
)
Plus depreciation and amortization
3,558
3,286
7,258
6,456
Less interest income
—
—
—
(1
)
EBITDA
$
2,676
$
8,990
$
(11,637
)
$
16,538
Plus net (gain) loss on the disposition of
assets
34
(263
)
113
55
Plus change in the estimated fair value of
contingent earn-out
consideration
3
—
(2
)
—
Plus impairment of indefinite-lived
long-term assets other than
goodwill
—
—
17,254
—
Plus impairment of goodwill
—
—
307
—
Plus (gain) on the early retirement of
long-term debt
—
—
(49
)
—
Plus net miscellaneous (income) and
expenses
(6
)
(63
)
46
(85
)
Plus non-cash stock-based compensation
96
84
199
162
Adjusted EBITDA
$
2,803
$
8,748
$
6,231
$
16,670
Less net cash paid for capital
expenditures (1)
(938
)
(2,135
)
(2,525
)
(3,994
)
Less cash received (paid for) taxes
23
(82
)
5
(3
)
Less cash paid for interest, net of
capitalized interest
(7,439
)
(7,808
)
(7,604
)
(7,861
)
Adjusted Free Cash Flow
$
(5,551
)
$
(1,277
)
$
(3,893
)
$
4,812
(1) Net cash paid for capital expenditures
reflects actual cash payments net of cash reimbursements under
tenant improvement allowances and net of property and equipment
acquired in trade transactions.
Selected Debt Data
Outstanding at
Applicable Interest
Rate
June 30, 2021
Senior Secured Notes due 2024 (1)
$
216,341,000
6.75%
Asset-based revolving credit facility
(2)
$
—
—%
Small Business Administration Paycheck
Protection Program loans (3)
$
11,194,895
1.00%
(1) $216.3 million notes with semi-annual
interest payments at an annual rate of 6.75%.
(2) Outstanding borrowings under the ABL
Facility, with interest spread ranging from Base Rate plus 0.50% to
1.00% for base rate borrowings and LIBOR plus 1.50% to 2.00% for
LIBOR rate borrowings.
(3) The PPP loans accrue interest at 1%
annually and mature in five years for any amount that is not
forgiven.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006039/en/
Company Contact: Evan D. Masyr Executive Vice President and
Chief Financial Officer (805) 384-4512 evan@salemmedia.com
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