Salem Media Group, Inc. Announces Second Quarter 2021 Total Revenue of $63.8 Million

 

IRVING, Texas–(BUSINESS WIRE)– 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.

 

Company Contact:
Evan D. Masyr
Executive Vice President and Chief
Financial Officer
(805) 384-4512
evan@salemmedia.com

Source: Salem Media Group, Inc.

Gray Reports Second Quarter Operating Results

 

ATLANTA, Aug. 05, 2021 (GLOBE NEWSWIRE) — Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announced financial results for the second quarter ended June 30, 2021. We experienced strong momentum in the first half of 2021 that we believe will continue throughout the remainder of the year. Key financial results were as follows:

• Revenue of $547 million, an increase of $96 million, or 21%, compared to the second quarter of 2020. The primary components of revenue were: combined local and national broadcast advertising revenue of $279 million and retransmission consent revenue of $242 million. Our retransmission consent revenue in the second quarter was slightly less than we had expected due to the timing of certain adjustments that will positively impact our retransmission consent revenue in the third quarter of 2021.
  
  
• Net income attributable to common stockholders for the second quarter of 2021 was $26 million, or $0.27 per diluted share.
  
  
• Broadcast Cash Flow was $183 million for the second quarter of 2021, increasing $60 million, or 49%, from the second quarter of 2020. Our Adjusted EBITDA for the second quarter of 2021 was $170 million, increasing $62 million, or 57%, compared to the second quarter of 2020.
  
  
• In the second quarter of 2021, our combined local and national broadcast revenue, excluding political advertising revenue (“Total Core Revenue”), increased by $81 million, or 41% compared to the second quarter of 2020. Revenue and Total Core Revenue increased as advertiser demand returned in the improving macroeconomic environment. Gray’s Total Core Revenue in the second quarter of 2021 was nearly the same as the second quarter of 2019, the most recent non-political and pre-pandemic year.
  
  
• As of June 30, 2021, our total leverage ratio, as defined in our senior credit facility, was 3.92 times on a trailing eight-quarter basis after netting our total cash on hand of $785 million and after giving effect to all Transaction Related Expenses (as defined below). As of June 30, 2021, the amount available under our revolving credit facility was $299 million. We are not subject to any maintenance covenants in our credit facilities at this time.
  
  
• On August 2, 2021, we acquired all outstanding shares of Quincy Media, Inc. (“Quincy”) for $925 million in cash (the “Quincy Transaction”). Simultaneously, we completed the divestiture to Allen Media Broadcasting (“Allen”) of certain television stations in the seven markets in which we currently operate, for $380 million in cash, before taxes (the “Allen Transaction”), in order to facilitate regulatory approvals for the Quincy Transaction. We expect that, net of divestitures, the Quincy transaction will be immediately accretive to our free cash flow.
  
  
• On May 3, 2021, we agreed to acquire all outstanding shares of Meredith Corporation (“Meredith”) subject to and immediately after the spinoff of Meredith’s National Media Group to the current Meredith shareholders (the “Meredith Transaction”). The agreement was amended on June 2, 2021 to revise the purchase consideration to $16.99 per share in cash, or $2.825 billion in total enterprise value. At the closing, Gray will acquire Meredith’s 17 television stations in 12 local markets, adding 11 new markets to our operations. To facilitate regulatory approvals for the Meredith Transaction, on July 14, 2021, we agreed to divest our existing television station WJRT (ABC) in the Flint-Saginaw, Michigan market, to Allen for $70 million in cash, before taxes. The Meredith Transaction is subject to approval by Meredith’s shareholders and customary closing conditions and regulatory approvals, including certain consents necessary to effectuate the spin-off of Meredith’s National Media Group immediately prior to closing. We expect to close the Meredith Transaction in the fourth quarter of 2021, and to close the sale of WJRT prior to the Meredith Transaction closing. We expect that, net of divestitures, the Meredith Transaction will be immediately accretive to our Free Cash Flow.
  
  
• On April 7, 2021, we acquired land in the Atlanta suburb of Doraville, Georgia for approximately $80 million. We intend to use this property, in part, for future studio production facilities.

(1) Excludes depreciation, amortization and gain on disposal of assets.
(2) See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included elsewhere herein.

Results of Operations for the Second Quarter of 2021, dollars in millions:

Results of Operations for the Six-Month Period Ended June 30, 2021, dollars in millions:

 

Transaction Related Expenses:

From time to time, we have incurred incremental expenses (“Transaction Related Expenses”) that were specific to acquisitions, divestitures and financing activities, including but not limited to legal and professional fees, severance and incentive compensation and contract termination fees. In addition, we have recorded certain non-cash stock-based compensation expenses. These expenses are summarized as follows, in millions:

Taxes:

During the 2021 and 2020 six-month periods, we made aggregate federal and state income tax payments of approximately $38 million and $1 million, respectively. During the remainder of 2021, we anticipate making income tax payments (excluding pending refunds) of approximately $12 million. We have approximately $204 million of federal operating loss carryforwards, which expire during the years 2023 through 2037. We expect to have federal taxable income in the carryforward periods. As a result, we believe that these federal operating loss carryforwards will be fully utilized. Additionally, we have an aggregate of approximately $567 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized.

Other Financial Data:

Detailed Table of Operating Results:

Guidance for the Three-Months Ending September 30, 2021:

Before the impact of the Quincy Transaction (and related divestures under the Allen Transaction), our Local, National, and together, our Total Core Revenue are anticipated to exceed the third quarter of 2019, the most recent non-political and pre-pandemic year, by low single digit percentage increases.

Based on our current forecasts for the third quarter of 2021, we anticipate changes from the third quarter of 2020 (excluding the Quincy Transaction, discussed below), as outlined below:

• Revenue, less agency commissions:

• Local revenue will increase by 18% to 20% to approximately $222 to $225 million.
• National revenue will increase by 14% to 16% to approximately $56 to $57 million.
  • Total Core Revenue will increase by 17% to 19% to approximately $278 to $282 million.
• Political revenue will decrease by 95% to 96% to approximately $5 to $6 million.
• Retransmission consent revenue will increase by 17% to 18% to approximately $254 to $256 million.
• Total broadcasting revenue will decrease by 6% to 7% to approximately $549 to $557 million.
• Production company revenue will increase to approximately $18 to $19 million.

• Operating expenses (before depreciation, amortization and (gain) loss on disposal of assets, net):

• Broadcasting expenses will increase by 14% to 15%, to approximately $373 to $375 million. This increase primarily reflects an increase in retransmission expense by approximately $21 million. This increase also includes Transaction Related Expenses within a range of $2 to $3 million.
• Production company expenses will increase to approximately $12 to $13 million.
• Corporate and administrative expenses will be approximately $27 to $30 million. This increase primarily reflects an increase in Transaction Related Expenses within a range of $6 to $8 million.

On August 2, 2021, we completed the Quincy Transaction (and related divestitures under the Allen Transaction). We currently expect that the addition of Quincy will have the following incremental effects on our broadcasting revenue and broadcasting operating expenses (before depreciation, amortization and (gain) loss on disposal of assets, net), as outlined below:

• Third quarter of 2021:

• Broadcasting revenue, less agency commissions will increase by approximately $22 to $24 million.
• Broadcasting operating expenses expenses (before depreciation, amortization and (gain) loss on disposal of assets, net) will increase by approximately $14 to $15 million.
  • Broadcasting revenue, less broadcasting operating expenses expenses (before depreciation, amortization and (gain) loss on disposal of assets, net) will increase by approximately $8 to $9 million.

• Fourth quarter of 2021:

• Broadcasting revenue, less agency commissions will increase by approximately $32 to $35 million.
• Broadcasting operating expenses (before depreciation, amortization and (gain) loss on disposal of assets, net) will increase by approximately $22 to $24 million.
  • Broadcasting revenue, less broadcasting operating expenses (before depreciation, amortization and (gain) loss on disposal of assets, net) will increase by approximately $10 to $11 million.

Our Corporate expenses (before depreciation, amortization and (gain) loss on disposal of assets, net) in the third and fourth quarters of 2021 are not currently expected to be materially impacted by the acquisition of Quincy other than anticipated Transaction Related Expenses and related realization of synergies.

The Company

Gray Television, headquartered in Atlanta, Georgia, is the largest owner of top-rated local television stations and digital assets in the United States. Upon its anticipated acquisition of the television stations of Meredith Corporation, Gray will become the nation’s second largest television broadcaster, with television stations serving 113 markets that reach approximately 36 percent of US television households. The pro forma portfolio includes 79 markets with the top-rated television station and 101 markets with the first and/or second highest rated television station according to Comscore’s audience measurement data. Gray also owns video program production, marketing, and digital businesses including Raycom Sports, Tupelo Honey, and RTM Studios, the producer of PowerNation programs and content and is the majority owner of Swirl Films.

Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act

This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. These “forward-looking statements” are not statements of historical facts, and may include, among other things, statements regarding our estimates, expectations, intentions, projections, and beliefs of operating results for future periods, macroeconomic trends, the impact of COVID-19 on our future operating results, future income tax payments, pending transactions and other future events. Actual results are subject to a number of risks and uncertainties and may differ materially from the current expectations and beliefs discussed in this press release. All information set forth in this release is as of the date hereof. We do not intend, and undertake no duty, to update this information to reflect future events or circumstances. As such, caution should be taken to not place undue reliance on forward-looking statements. Information about certain potential factors that could affect our business and financial results and cause actual results to differ materially from those expressed or implied in any forward-looking statements are included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2020, and may be contained in reports subsequently filed with the U.S. Securities and Exchange Commission and available at www.sec.gov.

Conference Call Information

We will host a conference call to discuss our second quarter operating results on August 5, 2021. The call will begin at 10:00 AM Eastern Time. The live dial-in number is 1(855) 493-3489 and the confirmation code is 1176873. The call will be webcast live and available for replay at www.gray.tv. The taped replay of the conference call will be available at 1(855) 859-2056 and the confirmation code is 1176873, until September 5, 2021.

Gray Contacts

Web site: www.gray.tv 

Hilton H. Howell, Jr., Executive Chairman and Chief Executive Officer, (404) 266-5513

Pat LaPlatney, President and Co-Chief Executive Officer, (334) 206-1400

Jim Ryan, Executive Vice President and Chief Financial Officer, (404) 504-9828

Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, (404) 266-8333

Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms

From time to time, Gray supplements its financial results prepared in accordance with GAAP by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, Operating Cash Flow as defined in the Senior Credit Agreement, Free Cash Flow, Adjusted EBITDA and Total Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by us to approximate amounts used to calculate key financial performance covenants contained in our debt agreements and are used with our GAAP data to evaluate our results and liquidity.

We define Broadcast Cash Flow as net income or loss plus loss on early extinguishment of debt, non-cash corporate and administrative expenses, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Broadcast Transactions Related Expenses and broadcast other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

We define Broadcast Cash Flow Less Cash Corporate Expenses as net income or loss plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

We define Operating Cash Flow as defined in our Senior Credit Agreement as net income or loss plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses, other adjustments, certain pension expenses, synergies and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, pension income and contributions to pension plans.

Operating Cash Flow as defined in our Senior Credit Agreement gives effect to the revenue and broadcast expenses of all completed acquisitions and divestitures as if they had been acquired or divested, respectively, on June 30, 2019. It also gives effect to certain operating synergies expected from the acquisitions and related financings and adds back professional fees incurred in completing the acquisitions. Certain of the financial information related to the acquisitions has been derived from, and adjusted based on, unaudited, un-reviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from this financial information if the acquisitions had been completed on the stated date. In addition, the presentation of Operating Cash Flow as defined in the Senior Credit Agreement and the adjustments to such information, including expected synergies resulting from such transactions, may not comply with GAAP or the requirements for pro forma financial information under Regulation S-X under the Securities Act of 1933.

We define Free Cash Flow as net income or loss plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, any income tax expense, non-cash 401(k) expense, Transactions Related Expenses, broadcast other adjustments, certain pension expenses, synergies, other adjustments and amortization of deferred financing costs less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, pension income, contributions to pension plans, preferred dividends, purchase of property and equipment (net of reimbursements) and income taxes paid (net of any refunds received).

We define Adjusted EBITDA as net income or loss, plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization of intangible assets, any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses less any gain on disposal of assets, any miscellaneous income and any income tax benefits.

Our Total Leverage Ratio, Net of All Cash is determined by dividing our Adjusted Total Indebtedness, Net of All Cash, by our Operating Cash Flow as defined in our Senior Credit Agreement, divided by two. Our Adjusted Total Indebtedness, Net of All Cash, represents the total outstanding principal of our long-term debt, plus certain other obligations as defined in our Senior Credit Agreement, less all cash (excluding restricted cash). Our Operating Cash Flow, as defined in our Senior Credit Agreement, divided by two, represents our average annual Operating Cash Flow as defined in our Senior Credit Agreement for the preceding eight quarters.

We define Transaction Related Expenses as incremental expenses incurred specific to acquisitions and divestitures, including, but not limited to legal and professional fees, severance and incentive compensation, and contract termination fees. We present certain line-items from our selected operating data, net of Transaction Related Expenses, in order to present a more meaningful comparison between periods of our operating expenses and our results of operations.

These non-GAAP terms are not defined in GAAP and our definitions may differ from, and therefore may not be comparable to, similarly titled measures used by other companies, thereby limiting their usefulness. Such terms are used by management in addition to, and in conjunction with, results presented in accordance with GAAP and should be considered as supplements to, and not as substitutes for, net income and cash flows reported in accordance with GAAP.

Reconciliation of Non-GAAP Terms, in millions:

(1) Excludes approximately $80 million related to the purchase of land in Doraville, Georgia.

Reconciliation of Non-GAAP Terms, in millions:

(1) Excludes approximately $80 million related to the purchase of land in Doraville, Georgia.

Reconciliation of Net Income to Adjusted EBITDA and the Effect of Transaction Related Expenses and Certain Non-cash Expenses, in millions except for per share information:

(1) Excludes $7 million of Transaction Related Expenses included in miscellaneous expense, net for the three and six-month periods ended June 30, 2021, respectively.

Reconciliation of Total Leverage Ratio, Net of All Cash, dollars in millions: