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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Salem Media Group Inc | NASDAQ:SALM | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.2609 | 0.2501 | 0.2711 | 0 | 01:00:00 |
Salem Media Group, Inc. (NASDAQ: SALM) released its results for the three and nine months ended September 30, 2021.
Third Quarter 2021 Results
For the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020:
Consolidated
Broadcast
Digital Media
Publishing
Included in the results for the quarter ended September 30, 2021 are:
Included in the results for the quarter ended September 30, 2020 are:
Per share numbers are calculated based on 27,280,949 diluted weighted average shares for the quarter ended September 30, 2021, and 26,791,353 diluted weighted average shares for the quarter ended September 30, 2020.
Year to Date 2021 Results
For the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020:
Consolidated
Broadcast
Digital media
Publishing
Included in the results for the nine months ended September 30, 2021 are:
Included in the results for the nine months ended September 30, 2020 are:
Per share numbers are calculated based on 27,217,382 diluted weighted average shares for the nine months ended September 30, 2021, and 26,683,363 diluted weighted average shares for the nine months ended September 30, 2020.
Balance Sheet
On September 10, 2021, the company exchanged $112.8 million of the 2024 Notes for $114.7 million (reflecting a call premium of 1.688%) of newly issued 7.125% Senior Secured Notes due 2028 (“2028 Notes.”) Contemporaneously with the refinancing, the company obtained commitments from the holders of the 2028 Notes to purchase up to $50 million in additional 2028 Notes (“Delayed Draw 2028 Notes,”) contingent upon satisfying certain performance benchmarks, the proceeds of which are to be used exclusively to repurchase or repay the remaining balance outstanding of the 2024 Notes. The transaction was assessed on a lender-specific level and was accounted for as a debt modification in accordance with FASB ASC Topic 470. The company incurred debt issuance costs of $4.2 million, of which $2.3 million of third-party debt modification costs are reflected in operating expenses for the current period, $0.8 million is deferred with the Delayed Draw 2028 Notes, and $1.1 million, along with $3.0 million from the exchanged 2024 Notes, is being amortized as part of the effective yield on the 2028 Notes.
The company received $11.2 million in aggregate principal amount of PPP loans through the SBA during the first quarter of 2021 based on the eligibility of our radio stations and networks as determined on a per-location basis. The PPP loans were accounted for as debt in accordance with ASC 470. The loan balances and accrued interest were forgivable provided that the proceeds were used for eligible purposes, including payroll, benefits, rent and utilities within the covered period. The company used the PPP loan proceeds according to the terms and filed timely applications for forgiveness. During July 2021, the SBA forgave all but $20,000 of the PPP loans resulting in a pre-tax gain on the forgiveness of $11.2 million. The remaining PPP loan was repaid in July 2021.
Acquisitions and Divestitures
The following transactions were completed since July 1, 2021:
Pending transactions:
Conference Call Information
Salem will host a teleconference to discuss its results on November 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 Third 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 November 18, 2021 and can be heard by dialing (877) 660-6853, passcode 13722694 or on the investor relations portion of the company’s website, located at investor.salemmedia.com.
Follow us on Twitter @SalemMediaGrp.
Fourth Quarter 2021 Outlook
For the fourth quarter of 2021, the company is projecting total revenue to be between flat and an increase of 2% from fourth quarter 2020 total revenue of $64.5 million. Excluding the impact of $3.5 million in political revenue in fourth quarter of 2020, we are projecting revenue to increase between 6% and 8%. Compared to the fourth quarter of 2019, we are projecting revenue to be between flat and an increase of 2%. 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 1% and 4% compared to the fourth quarter of 2020 non-GAAP operating expenses of $54.6 million. Compared to the fourth quarter of 2019, we are projecting expenses to also increase between 1% and 4%.
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 (@SalemMediaGrp).
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
Nine Months Ended
September 30,
September 30,
2020
2021
2020
2021
(Unaudited)
Net broadcast revenue
$
45,391
$
49,591
$
130,041
$
140,422
Net digital media revenue
9,808
10,645
28,355
30,603
Net publishing revenue
5,442
5,747
13,366
18,093
Total revenue
60,641
65,983
171,762
189,118
Operating expenses:
Broadcast operating expenses
34,283
37,463
104,704
106,968
Digital media operating expenses
7,144
8,269
23,123
25,280
Publishing operating expenses
5,814
5,213
16,443
16,844
Unallocated corporate expenses
3,849
4,284
11,909
12,764
Debt modification costs
—
2,347
—
2,347
Change in the estimated fair value of contingent earn-out consideration
(10
)
—
(12
)
—
Impairment of indefinite-lived long-term assets other than goodwill
—
—
17,254
—
Impairment of goodwill
—
—
307
—
Depreciation and amortization
3,428
3,215
10,686
9,671
Net (gain) loss on the disposition of assets
1,381
(10,607
)
1,494
(10,552
)
Total operating expenses
55,889
50,184
185,908
163,322
Operating income (loss)
4,752
15,799
(14,146
)
25,796
Other income (expense):
Interest income
1
—
1
1
Interest expense
(4,024
)
(4,026
)
(12,069
)
(11,887
)
Gain on the forgiveness of PPP loans
—
11,212
—
11,212
Gain (loss) on the early retirement of long-term debt
—
(56
)
49
(56
)
Net miscellaneous income and (expenses)1
2
(45
)
87
Net income (loss) before income taxes
730
22,931
(26,210
)
25,153
Provision for income taxes
401
837
31,180
479
Net income (loss)
$
329
$
22,094
$
(57,390
)
$
24,674
Basic income (loss) per share Class A and Class B common stock
$
0.01
$
0.82
$
(2.15
)
$
0.92
Diluted income (loss) per share Class A and Class B common stock
$
0.01
$
0.81
$
(2.15
)
$
0.91
Basic weighted average Class A and Class B common stock shares outstanding
26,683,363
26,870,664
26,683,363
26,825,483
Diluted weighted average Class A and Class B common stock shares outstanding
26,791,353
27,280,949
26,683,363
27,217,382
Salem Media Group, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, 2020
September 30, 2021
(Unaudited)
Assets
Cash
$
6,325
$
23,781
Trade accounts receivable, net
24,469
24,429
Other current assets
15,002
15,641
Property and equipment, net
79,122
78,425
Operating and financing lease right-of-use assets
48,355
44,221
Intangible assets, net
347,547
346,779
Deferred financing costs
213
895
Other assets
3,538
4,042
Total assets
$
524,571
$
538,213
Liabilities and Stockholders’ Equity
Current liabilities
$
50,860
$
48,386
Long-term debt
213,764
208,559
Operating and financing lease liabilities, less current portion
47,847
43,259
Deferred income taxes
68,883
69,287
Other liabilities
7,938
8,124
Stockholders’ Equity
135,279
160,598
Total liabilities and stockholders’ equity
$
524,571
$
538,213
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
Stock-based compensation
—
—
—
—
74
—
—
74
Net income
—
—
—
—
—
329
—
329
Stockholders’ equity, September 30, 2020
23,447,317
$ 227
5,553,696
$ 56
$ 246,953
$ (81,351)
$(34,006)
$ 131,879
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
Stock-based compensation
—
—
—
—
78
—
—
78
Options exercised
6,725
—
—
—
13
—
—
13
Net income
—
—
—
—
—
22,094
—
22,094
Stockholders’ equity, September 30, 2021
23,639,824
$
229
5,553,696
$
56
$
247,668
$
(53,349
)
$
(34,006
)
$
160,598
SALEM MEDIA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2021
2020
2021
OPERATING ACTIVITIES
Net income (loss)
$
329
$
22,094
$
(57,390
)
$
24,674
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Non-cash stock-based compensation
74
78
273
240
Depreciation and amortization
3,428
3,215
10,686
9,671
Amortization of deferred financing costs
214
264
675
690
Non-cash lease expense
2,281
2,180
6,745
6,527
Provision for bad debts
501
77
4,122
(248
)
Deferred income taxes
325
807
30,954
404
Impairment of indefinite-lived long-term assets other than goodwill
—
—
17,254
—
Impairment of goodwill
—
—
307
—
Gain on the forgiveness of PPP loans
—
(11,212
)
—
(11,212
)
Change in the estimated fair value of contingent earn-out consideration
(10
)
—
(12
)
—
Net (gain) loss on the disposition of assets
1,381
(10,607
)
1,494
(10,552
)
(Gain) loss on early retirement of long-term debt
—
56
(49
)
56
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue
(2,965
)
(488
)
2,565
(67
)
Inventories
89
(188
)
99
(412
)
Prepaid expenses and other current assets
(1,440
)
(899
)
(1,343
)
(1,218
)
Accounts payable and accrued expenses
4,151
2,143
5,871
2,596
Operating lease liabilities
(2,993
)
(2,386
)
(6,396
)
(7,317
)
Contract liabilities
(1,993
)
(528
)
5,274
782
Deferred rent income
(117
)
(83
)
(268
)
28
Other liabilities
1,050
6
2,254
41
Income taxes payable
(125
)
20
30
63
Net cash provided by operating activities
$
4,180
$
4,549
$
23,145
$
14,746
INVESTING ACTIVITIES
Cash paid for capital expenditures net of tenant improvement allowances
(1,040
)
(2,958
)
(3,565
)
(6,952
)
Capital expenditures reimbursable under tenant improvement allowances and trade agreements
(46
)
(119
)
(140
)
(138
)
Deposits on broadcast assets and radio stations
—
—
—
(100
)
Purchases of broadcast assets and radio stations
—
—
—
(600
)
Purchases of digital media businesses and assets
(400
)
(2,680
)
(400
)
(3,980
)
Proceeds from sale of assets
—
12,144
188
15,771
Proceeds from the cash surrender value of life insurance policies
—
—
2,363
—
Other
31
(413
)
(353
)
(1,227
)
Net cash provided by (used in) investing activities
$
(1,455
)
$
5,974
$
(1,907
)
$
2,774
FINANCING ACTIVITIES
Proceeds from 2028 Notes
—
114,731
—
114,731
Payments to repurchase or exchange 2024 Notes
—
(119,443
)
(3,392
)
(119,443
)
Proceeds from borrowings under ABL Facility
277
—
38,626
16
Payments on ABL Facility
(2,677
)
—
(34,452
)
(5,016
)
Proceeds from borrowing under PPP loans
—
—
—
11,195
Payments under PPP loans
—
17
—
17
Payments of debt issuance costs
(58
)
(1,902
)
(124
)
(1,921
)
Proceeds from the exercise of stock options
—
13
—
405
Payments on financing lease liabilities
(17
)
(16
)
(52
)
(48
)
Payment of cash distribution on common stock
—
—
(667
)
—
Book overdraft
—
—
(1,885
)
—
Net cash used in financing activities
$
(2,475
)
$
(6,600
)
$
(1,946
)
$
(64
)
Net increase (decrease) in cash and cash equivalents
$
250
$
3,923
$
19,292
$
17,456
Cash and cash equivalents at beginning of year
19,048
19,858
6
6,325
Cash and cash equivalents at end of period
$
19,298
$
23,781
$
19,298
$
23,781
Salem Media Group, Inc.
Supplemental Information
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 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, Debt Modification Costs and Depreciation and Amortization Expense (Recurring Operating Expenses)
Operating Expenses
$
55,889
$
50,184
$
185,908
$
163,322
Less debt modification costs
—
(2,347
)
—
(2,347
)
Less depreciation and amortization expense
(3,428
)
(3,215
)
(10,686
)
(9,671
)
Less change in estimated fair value of contingent earn-out
consideration
10
—
12
—
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
(1,381
)
10,607
(1,494
)
10,552
Less stock-based compensation expense
(74
)
(78
)
(273
)
(240
)
Total Recurring Operating Expenses
$
51,016
$
55,151
$
155,906
$
161,616
Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue
Net broadcast revenue
$
45,391
$
49,591
$
130,041
$
140,422
Net broadcast revenue – acquisitions
—
(264
)
—
(343
)
Net broadcast revenue – dispositions
(192
)
2
(635
)
(36
)
Net broadcast revenue – format change
(104
)
(216
)
(384
)
(561
)
Same Station net broadcast revenue
$
45,095
$
49,113
$
129,022
$
139,482
Reconciliation of Broadcast Operating Expenses to Same Station Broadcast Operating Expenses
Broadcast operating expenses
$
34,283
$
37,463
$
104,704
$
106,968
Broadcast operating expenses – acquisitions
—
(168
)
—
(206
)
Broadcast operating expenses – dispositions
(344
)
(14
)
(1,225
)
(199
)
Broadcast operating expenses – format change
(252
)
(209
)
(771
)
(593
)
Same Station broadcast operating expenses
$
33,687
$
37,072
$
102,708
$
105,970
Reconciliation of SOI to Same Station SOI
Station Operating Income
$
11,108
$
12,128
$
14,229
$
33,454
Station operating (income) loss – acquisitions
—
(96
)
—
(137
)
Station operating loss – dispositions
152
16
438
163
Station operating (income) loss – format change
148
(7
)
239
32
Same Station - Station Operating Income
$
11,408
$
12,041
$
14,906
$
33,512
Salem Media Group, Inc.
Supplemental Information
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2021
2020
2021
(Unaudited)
Calculation of Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss)
Net broadcast revenue
$
45,391
$
49,591
$
130,041
$
140,422
Less broadcast operating expenses
(34,283
)
(37,463
)
(104,704
)
(106,968
)
Station Operating Income
$
11,108
$
12,128
$
25,337
$
33,454
Net digital media revenue
$
9,808
$
10,645
$
28,355
$
30,603
Less digital media operating expenses
(7,144
)
(8,269
)
(23,123
)
(25,280
)
Digital Media Operating Income
$
2,664
$
2,376
$
5,232
$
5,323
Net publishing revenue
$
5,442
$
5,747
$
13,366
$
18,093
Less publishing operating expenses
(5,814
)
(5,213
)
(16,443
)
(16,844
)
Publishing Operating Income (Loss)
$
(372
)
$
534
$
(3,077
)
$
1,249
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 debt modification costs, 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, before gain on the forgiveness of PPP loans, 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 September 30,
Nine Months Ended September 30,
2020
2021
2020
2021
(Unaudited)
Net income (loss)
$
329
$
22,094
$
(57,390
)
$
24,674
Plus interest expense, net of capitalized interest
4,024
4,026
12,069
11,887
Plus provision for income taxes
401
837
31,180
479
Plus depreciation and amortization
3,428
3,215
10,686
9,671
Less interest income
(1
)
—
(1
)
(1
)
EBITDA
$
8,181
$
30,172
$
(3,456
)
$
46,710
Less net (gain) loss on the disposition of assets
1,381
(10,607
)
1,494
(10,552
)
Less debt modification costs
—
2,347
—
2,347
Less change in the estimated fair value of contingent
earn-out consideration
(10
)
—
(12
)
—
Plus impairment of indefinite-lived long-term assets
other than goodwill
—
—
17,254
—
Plus impairment of goodwill
—
—
307
—
Plus (gain) loss on early retirement of long- term
debt
—
56
(49
)
56
Plus net miscellaneous (income) and expenses
(1
)
(2
)
45
(87
)
Plus gain on the forgiveness of PPP loans
―
(11,212
)
―
(11,212
)
Plus non-cash stock-based compensation
74
78
273
240
Adjusted EBITDA
$
9,625
$
10,832
$
15,856
$
27,502
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
Nine Months Ended
September 30,
September 30,
2020
2021
2020
2021
(Unaudited)
Net cash provided by operating activities
$
4,180
$
4,549
$
23,145
$
14,746
Non-cash stock-based compensation
(74
)
(78
)
(273
)
(240
)
Depreciation and amortization
(3,428
)
(3,215
)
(10,686
)
(9,671
)
Amortization of deferred financing costs
(214
)
(264
)
(675
)
(690
)
Non-cash lease expense
(2,281
)
(2,180
)
(6,745
)
(6,527
)
Provision for bad debts
(501
)
(77
)
(4,122
)
248
Deferred income taxes
(325
)
(807
)
(30,954
)
(404
)
Change in the estimated fair value of contingent earn-out
consideration
10
—
12
—
Impairment of indefinite-lived long-term assets other than
goodwill
—
—
(17,254
)
—
Impairment of goodwill
—
—
(307
)
—
Gain on forgiveness of PPP loans
—
11,212
—
11,212
Net gain (loss) on the disposition of assets
(1,381
)
10,607
(1,494
)
10,552
Gain (loss) on early retirement of long-term debt
—
(56
)
49
(56
)
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue
2,965
488
(2,565
)
67
Inventories
(89
)
188
(99
)
412
Prepaid expenses and other current assets
1,440
899
1,343
1,218
Accounts payable and accrued expenses
(4,151
)
(2,143
)
(5,871
)
(2,596
)
Contract liabilities
1,993
528
(5,274
)
(782
)
Operating lease liabilities (deferred rent)
2,993
2,386
6,396
7,317
Deferred rent revenue
117
83
268
(28
)
Other liabilities
(1,050
)
(6
)
(2,254
)
(41
)
Income taxes payable
125
(20
)
(30
)
(63
)
Net income (loss)
$
329
$
22,094
$
(57,390
)
$
24,674
Plus interest expense, net of capitalized interest
4,024
4,026
12,069
11,887
Plus provision for income taxes
401
837
31,180
479
Plus depreciation and amortization
3,428
3,215
10,686
9,671
Less interest income
(1
)
—
(1
)
(1
)
EBITDA
$
8,181
$
30,172
$
(3,456
)
$
46,710
Plus net (gain) loss on the disposition of assets
1,381
(10,607
)
1,494
(10,552
)
Plus change in the estimated fair value of contingent earn-out
consideration
(10
)
—
(12
)
—
Plus debt modification costs
—
2,347
—
2,347
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
—
56
(49
)
56
Plus gain on the forgiveness of PPP loans
—
(11,212
)
—
(11,212
)
Plus net miscellaneous (income) and expenses
(1
)
(2
)
45
(87
)
Plus non-cash stock-based compensation
74
78
273
240
Adjusted EBITDA
$
9,625
$
10,832
$
15,856
$
27,502
Less net cash paid for capital expenditures (1)
(1,040
)
(2,958
)
(3,565
)
(6,952
)
Less cash paid for taxes
(201
)
(10
)
(196
)
(13
)
Less cash paid for interest, net of capitalized interest
(133
)
(2,239
)
(7,737
)
(9,634
)
Adjusted Free Cash Flow
$
8,251
$
5,625
$
4,358
$
10,903
(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
September 30, 2021
Senior Secured Notes due 2028 (1)
$
114,731,000
7.125%
Senior Secured Notes due 2024 (2)
$
98,815,000
6.750%
(1) $114.7 million notes with semi-annual interest payments at an annual rate of 7.125%.
(2) $98.8 million notes with semi-annual interest payments at an annual rate of 6.750%.
View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006162/en/
Evan D. Masyr Executive Vice President and Chief Financial Officer (805) 384-4512 evan@salemmedia.com
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