Gray Television, Inc. (GTN)

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Gray Television (GTN)

Q3 2012 Earnings Call

October 31, 2012 1:00 pm ET

Executives

Hilton H. Howell - Vice Chairman, Chief Executive Officer and Member of Executive Committee

Robert S. Prather - President, Chief Operating Officer, Director and Member of Executive Committee

James C. Ryan - Chief Financial Officer and Senior Vice President

Analysts

Aaron Watts - Deutsche Bank AG, Research Division

Matthew Swope - Gleacher & Company Securities, Inc.

Barry L. Lucas - Gabelli & Company, Inc.

Presentation

Operator

Good day, everyone, and welcome to the Gray Television Third Quarter 2012 Earnings Release Conference Call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Mr. Hilton Howell, please go ahead.

Hilton H. Howell

Thank you, operator, and good afternoon, everyone. Welcome to the third quarter and 9 months 2012 review of Gray Television's financial performance. Happy Halloween. And for all of you impacted by Hurricane Sandy, our thoughts and prayers are with you, your family and friends. And we want to thank all of you for the effort you took to join us on this call.

As usual, I will begin with a brief overview of our results followed by Bob Prather, our Chief Operating Officer, who will add his thoughts concerning our performance; and then Jim Ryan, our Chief Financial Officer, will follow with more detailed financial data and questions will be answered at the conclusion of our group comments.

We are very pleased to be reporting another terrific quarter today. In fact, we didn't just break records for the third quarter, we delivered record results that were better than any other quarter in Gray Television's operating history.

Record revenue for the third quarter 2012 was $102.9 million, against a previous record, not against a prior succeeding quarter or preceding quarter, but a previous record quarter of $85.3 million, a 21% increase.

For the 9 months, record revenue was $278.2 million against a previous record of $232.4 million, a 20% increase. With regard to broadcasting cash flow less corporate expenses, for the third quarter 2012, broadcasting cash flow less corporate was $46.8 million against a previous record of $31.9 million, a 47% increase.

For the 9 months, broadcasting cash flow less corporate expenses was $111.5 million versus our previous record of $85.2 million, a 31% increase.

Furthermore, record third quarter broadcasting cash flow was $50.7 million against a previous record of $35.2 million, a 44% increase. And for the 9 months, our broadcasting cash flow increased by 29% to $122.1 million, compared to our previous record of $94.8 million.

These terrific results led to net income for the quarter of $14.7 million against $27,000 last year, and net income of $27 million for the year to date against a loss of $4 million. On a per share basis for the quarter, we reported $0.26 per share and for the year, $0.47 per share, respectively.

Obviously, political advertising was a huge contributor accounting for $24.5 million for the third quarter and $42.6 million for the 9 months.

These records were set against the backdrop of the complete refinancing and recasting of our balance sheet, which was initiated in the third quarter and will be finalized on November 13 of this year. Many of you on this call or your firms participated in this refinancing, and we thank you for your support and confidence in our company.

At closing, we anticipate long-term debt at face value of $855 million comprised of $300 million of 2020 notes at 7.5% and $555 million of a new senior credit facility with a weighted average interest rate of 5.7%. Significantly, all of the company's preferred stock was retired during this transaction.

At this point, I want to personally take an opportunity to thank Jim Ryan, our Chief Financial Officer, and Jake Howard, our Chief Accounting Officer, and our entire financial team in Albany, Georgia for the extraordinary job they did in a very short period of time. Every single shareholder in Gray Television, owes them a sincere thank you for a job well done. I also want to thank our underwriters at Bank of America Merrill Lynch and at Wells Fargo. All of who did a fantastic job in this transaction.

With that, I will bring my comments to a close and turn it over to Bob.

Robert S. Prather

If you're still out there, we were very fortunate to have a lot #1 stations which traditionally, on political years, dipped around 2/3 of political TV dollars spent in the market and our managers did a great job of managing the inventory and making sure we have the time available to sell to the politicians and this has been an incredible year as they predicted way back that if the politician raised record amounts, they spend record amounts. We're clearly on track for an all-time record political year and we were once again, I'm sure, have the highest percentage of political dollars than any other TV group out there that reported publicly.

Last cycle, we’re considerably ahead of any other group but I think we will be again. And here again, that's a tribute to the markets we're in and to the strength of the stations in these markets. The other thing, Hilton mentioned our refinancing, I think, is extremely important for the company. I want to reiterate my pledge again and that to all the stakeholders that we will continue to pay down our debt, that's our #1 priority in this company and this year's extra cash flow will all go to pay -- prepay to get the debt down some more. We're very proud of this and we will continue to get our balance sheet in better shape.

Read the rest of this transcript for free on seekingalpha.com