Saga Communications, Inc. (SGA)

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Saga Communications, Inc. (SGA)

Q1 2013 Earnings Call

May 7, 2013 2:00 pm ET

Executives

Edward K. Christian – Chairman, President and Chief Executive Officer

Samuel D. Bush – Senior Vice President and Chief Financial Officer

Presentation

Operator

Ladies and gentlemen thank you for standing by. And welcome to the Saga Communications First Quarter 2013 Results Call. And for the conference all participants are in a listen-only mode. As a reminder, today’s call is being recorded.

I’ll turn the conference now to Mr. Ed Christian. Please go ahead, sir.

Edward K. Christian

Thank you, John. Good morning, good afternoon wherever you might be in the U.S.A listing right now. Thank your for joining us. And it’s been our historic tradition Sam Bush will kick it off with his summary of events.

Samuel D. Bush

Thank you, Ed. This call will contain certain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the risk factor section of our most recent Form 10-K. Actual results may differ materially from those expressed in this conference call. This call will also contain a discussion of non-GAAP financial measures within the meaning of Item 10 of Reg S-K. Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure is attached in the selected financial data table.

The quarter was challenging from a revenue perspective. During the first quarter of last year, we have $500,000 in gross political revenue compared to $62,000 this year. Gross national revenue was down $505,000 for the quarter this year when compared to last year. The bright spot was our local revenue efforts. We increased our gross local revenue by $523,000 over first quarter of last year. This went a long way to makeup to the national decline, but it wasn’t enough to makeup the political as well, resulting in our net revenue being down 1.3% for the quarter.

National accounted for approximately 11.6% of gross revenue for the quarter, compared to 13% for the same period of last year. We are anticipating a bit of improvement in revenue growth for the second quarter, as currently April finished up mid single-digits, May is relatively flat with last year and June is of low to mid single digits as of today. Keep in mind, at last year we did $717,000 of political during the second quarter.

Station operating expense decreased $272,000 for the quarter. Going forward, we expect station operating expense to be flat to up 1% for 2013. Retrans revenue from our TV stations was $537,000 in the first quarter, up from $431,000 last year. Retrans expenses of payments that we give to the networks were $150,000 in the first quarter, compared to $127,000 last year. All of our existing retrans agreements are in place through 2014. In the other income or expense area, you will continue to see that we saw a nice reduction in our interest expense for the quarter. Interest expenses for the quarter was $358,000, it was $528,000 for the first quarter of 2012. This is primarily due to the reduction in the level of our outstanding debt and a meaningful reduction in the interest rate we are paying.

As of today, we have approximately $25 million in cash on hand, as long as our leverage stays below two times EBITDA, we have no more required debt repayments. Our outstanding bank debt is currently $57.750 million. As reported in the press release, capital expenditures in the quarter were $1.2 million, which is approximately the same as last year. We currently expect our CapEx for the year to be $5 million.

For 2013, we expect interest expenses for the year to be between $1.8 million and $2 million given the existing interest rate environment. Our anticipated total tax rate going forward will be between 40% and 41%. We anticipate deferred taxes for 2013 to be between $3.5 million and $4 million. We did sell our Greenville, Mississippi Television station on February 1st. We recorded a $223,000 gain net of taxes from this sale. On January 16th, we completed a 4 for 3 stock split and on March 6th, we announced that our Board of Directors have improved increasing the amount available to repurchase shares of our Class A common stock to $30 million. As usual, we asked for you questions to be submitted via email prior to the call. Ed and I will respond to those questions that we feel we can appropriately respond to later in this call.

Ed, back to you.

Edward K. Christian

We’ve had questions that we couldn’t feel that we could appropriately return.

Samuel D. Bush

No, actually not.

Edward K. Christian

And I’m wondering about that interest something if you have say.

Samuel D. Bush

Well, something I said for a quite while now. So may be I should look at see whether I really have to say it or not.

Edward K. Christian

I would like know what an appropriate question is?

Samuel D. Bush

Sorry, but I will look into that.

Edward K. Christian

Let’s begin. Thanks Sam. The quarter was interesting. We kind of missed it a little bit because we thought it would break near the end of December that we’re kind of waiting for that moment of what result suddenly we saw, January would come alive. And it didn’t and we recognize it probably about a week later then we shred. But everything has been breaking so late, of late, but we worked overly concerned about it. And then February came, and that was flat. And then March came in, we got a glimmer of something decent in there.

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