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Gray Reports Third Quarter Operating Results

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Gray Television reported impressive financial results for Q3 2022, with a 417% increase in net income attributable to common stockholders, reaching $95 million. Total revenue soared to $909 million, a 51% increase year-over-year, driven by political advertising revenues of $144 million, which grew by 1500% compared to Q3 2021. Cash flow enabled $124 million in capital returns to shareholders. However, results fell short of prior expectations due to a pullback in key political races. The company anticipates $495 million to $505 million in full-year political advertising revenue.

Positive
  • 417% increase in net income, reaching $95 million.
  • Total revenue of $909 million, a 51% year-over-year increase.
  • Political advertising revenue up 1500% year-over-year, totaling $144 million.
  • Strong cash flow allowed for $124 million returned to shareholders.
Negative
  • Results fell short of earlier expectations and guidance due to a pullback in key political races.

ATLANTA, Nov. 04, 2022 (GLOBE NEWSWIRE) -- Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announced its strong financial results for the third quarter ended September 30, 2022, including a 417% increase in net income attributable to common stockholders, compared to the third quarter of 2021. Overall, the third quarter of 2022 produced record results, including $909 million in total revenue, due to the combination of recent acquisitions, added scale, increasingly efficient integrated operations, and the “on-year” of the two-year political advertising cycle. Compared to the third quarter of 2018, the last mid-term election year, our political advertising revenue in the third quarter of 2022 of $144 million grew by 200% on the As-Reported Basis and by 30% on a Combined Historical Basis. While impressive, these figures fell short of our expectations and guidance issued in early August, due to an unexpected pullback in certain key political races. By October, political advertising revenue increased rapidly in many races in our markets and is expected to remain robust through Election Day. We currently anticipate that full-year 2022 political advertising revenue will be within a range of $495 million to $505 million.

Gray’s strong cash flow in the third quarter of 2022 enabled us to return $124 million of capital to our shareholders including: a voluntary principal pre-payment of $100 million under Gray’s 2017 Term Loan B (due 2024); a required principal payment of $4 million under the 2021 Term Loan D (due 2028); and $20 million of cash dividends to our preferred and common shareholders. Even after these actions, Gray ended the quarter with $144 million of cash on hand. Strong operating results and political advertising revenue are expected to enable Gray to fund additional de-leveraging and cash dividend payments during the remainder of the year. On November 1, 2022, we made a further $100 million voluntary debt principal pre-payment.

Due to the significant effect that material transactions have had on our results of our operations, we present the financial information herein consistent with both U.S. Generally Accepted Accounting Principles (“GAAP” or “As Reported Basis”) and on a Combined Historical Basis (“CHB”), which incorporates certain historical results of acquired businesses, less the historical results of divested businesses. We also furnish certain other detailed non-GAAP metrics to provide more meaningful period-over-period comparisons to assist the public in its analysis and valuation of Gray. This additional information includes a summary of incremental expenses that were specific to our acquisitions, divestitures, and related financing activities (“Transaction Related Expenses”), non-cash stock-based compensation expenses and certain non-GAAP terms common in our industry. Please refer to the detailed discussion of the foregoing terms and concepts included elsewhere herein.

Summary of Third Quarter Operating Results

As Reported Basis (the respective 2021 periods reflect the “off-year” of the two-year political advertising cycle):

  • Revenue was $909 million, an increase of 51% from the third quarter of 2021.
  • Core Advertising Revenue was $359 million, an increase of 23% from the third quarter of 2021.
  • Net income attributable to common stockholders was $95 million, or $1.03 per fully diluted share, an increase of 417% from the third quarter of 2021.
  • Broadcast Cash Flow was $357 million, an increase of 75% from the third quarter of 2021.
  • Adjusted EBITDA was $336 million, an increase of 81% from the third quarter of 2021.

Combined Historical Basis (the respective 2021 periods reflect the “off-year” of the two-year political advertising cycle):

  • Revenue was $909 million, an increase of 15% from the third quarter of 2021.
  • Core Advertising Revenue decreased 3% from the third quarter of 2021, primarily as a result of displacement by political advertising.
  • Broadcast Cash Flow was $358 million, an increase of 29% from the third quarter of 2021.

Other Key Metrics

• As of September 30, 2022, our Total Leverage Ratio, Net of all Cash, was 5.17 times on a trailing eight-quarter basis, netting our total cash balance of $144 million and giving effect to all Transaction Related Expenses, which is calculated as set forth in our Senior Credit Facility.

• During the three and nine-months ended September 30, 2022 and 2021, we incurred Transaction Related Expenses on an As Reported Basis that included but were not limited to legal and professional fees, severance and incentive compensation and contract termination fees. In addition, we recorded certain non-cash stock-based compensation expenses. These expenses are summarized as follows:

 Three Months Ended Nine Months Ended
 September 30, September 30,
  2022  2021  2022  2021
 (in millions)
Transaction Related Expenses:       
Broadcasting$1 $- $5 $-
Corporate and administrative -  11  1  19
Miscellaneous expense -  -  -  7
Total Transaction Related Expenses$1 $11 $6 $26
        
Total non-cash stock-based compensation$6 $3 $17 $10
        

Taxes

• During the nine-months ended September 30, 2022 and 2021, we made income tax payments of $128 million and $129 million, respectively. During the remainder of 2022, based on our current forecasts, we anticipate making income tax payments (before deducting any refunds) within a range of $58 million to $68 million.

• As of September 30, 2022, we have an aggregate of $337 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized.

Guidance for the Three-Months Ending December 31, 2022

          Based on our current forecasts for the quarter ending December 31, 2022, we anticipate the following key financial results, as outlined below in approximate ranges. We present revenue net of agency commissions. We exclude depreciation, amortization and (gain) loss on disposal of assets from our estimates of operating expenses.

  • Revenue:
    • Core advertising revenue of $385 million to $400 million.
    • Retransmission revenue of $345 million to $350 million.
    • Political advertising revenue of $235 million to $245 million.
    • Production company revenue of $35 million to $36 million.
    • Total revenue of $1.017 billion to $1.049 billion.
  • Operating Expenses:
    • Broadcasting expenses of $565 million to $575 million, including retransmission expense of approximately $225 million and non-cash stock-based compensation expense of approximately $1 million.
    • Production company expenses of approximately $25 million to $26 million.
    • Corporate expenses of $30 million to $34 million, including non-cash stock-based compensation expense of approximately $4 million.
          
Selected Operating Data on As Reported Basis (Unaudited)
          
 As-Reported Basis
 Three Months Ended September 30,
     % Change   % Change
     2022 to   2022 to
  2022  2021  2021   2020 2020 
 (dollars in millions)
Revenue (less agency commissions):         
Broadcasting$889 $581  53% $593 50%
Production companies 20  20  0%  11 82%
Total revenue$909 $601  51% $604 50%
          
Political advertising revenue$144 $9  1500% $128 13%
          
Operating expenses (1):         
Broadcasting$537 $384  40% $326 65%
Production companies$16 $13  23% $8 100%
Corporate and administrative$27 $32  (16)% $15 80%
          
Net income (loss) attributable to common stockholders$95 $(30) 417% $109 (13)%
          
Non-GAAP Cash Flow (2):         
Broadcast Cash Flow$357 $204  75% $271 32%
Broadcast Cash Flow Less         
Cash Corporate Expenses$335 $175  91% $260 29%
Free Cash Flow (3)$162 $(5) 3340% $139 17%
          
          
 Nine Months Ended September 30,
     % Change   % Change
     2022 to   2022 to
  2022  2021  2021  2020 2020
 (dollars in millions)
Revenue (less agency commissions):         
Broadcasting$2,548 $1,648  55% $1,557 64%
Production companies 56  44  27%  32 75%
Total revenue$2,604 $1,692  54% $1,589 64%
          
Political advertising revenue$260 $24  983% $185 41%
          
Operating expenses (1):         
Broadcasting$1,595 $1,099  45% $985 62%
Production companies$56 $39  44% $32 75%
Corporate and administrative$80 $75  7% $47 70%
          
Net income attributable to common stockholders$230 $22  945% $147 56%
          
Non-GAAP Cash Flow (2):         
Broadcast Cash Flow$955 $555  72% $575 66%
Broadcast Cash Flow Less         
Cash Corporate Expenses$889 $489  82% $536 66%
Free Cash Flow (3)$339 $107  217% $259 31%
          

(1) Excludes depreciation, amortization and (gain) loss on disposal of assets.
(2) See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income (loss) included elsewhere herein.
(3) Excludes deduction for purchase of property and equipment related to the Assembly Atlanta project in 2022 and 2021.

            
Selected Operating Data on As Reported Basis (Unaudited)
            
 Three Months Ended September 30,
  2022   2021  Amount Percent
   Percent   Percent Increase Increase
 Amount  of Total Amount  of Total  (Decrease) (Decrease)
 (dollars in millions)
Revenue (less agency commissions):           
Core$359 39% $292 49% $67 23%
Political 144 16%  9 1%  135 1500%
Retransmission consent 368 40%  266 44%  102 38%
Production companies 20 2%  20 3%  - 0%
Other 18 3%  14 3%  4 29%
Total$909 100% $601 100% $308 51%
            


Operating expenses (before          
depreciation, amortization and          
(gain) loss on disposal of assets):          
Broadcasting:          
Station expenses$309 58% $229 60% $80 35%
Retransmission expense 226 42%  154 40%  72 47%
Transaction Related Expenses 1 0%  - 0%  1 100%
Non-cash stock-based compensation 1 0%  1 0%  - 0%
Total broadcasting expense$537 100% $384 100% $153 40%
           
Production companies expense$16   $13   $3 23%
           
Corporate and administrative:          
Corporate expenses$22 81% $19 60% $3 16%
Transaction Related Expenses - 0%  11 34%  (11)(100)%
Non-cash stock-based compensation 5 19%  2 6%  3 150%
Total corporate and          
administrative expense$27 100% $32 100% $(5)(16)%
           


           
Selected Operating Data on As Reported Basis (Unaudited)
           
 Nine Months Ended September 30,
  2022   2021  AmountPercent
   Percent   Percent IncreaseIncrease
 Amount  of Total Amount  of Total  (Decrease)(Decrease)
 (dollars in millions)
Revenue (less agency commissions):          
Core$1,090 42% $831 49% $259 31%
Political 260 10%  24 1%  236 983%
Retransmission consent 1,143 44%  755 45%  388 51%
Production companies 56 2%  44 3%  12 27%
Other 55 2%  38 2%  17 45%
Total$2,604 100% $1,692 100% $912 54%
           


Operating expenses (before          
depreciation, amortization and          
(gain) loss on disposal of assets):          
Broadcasting:          
Station expenses$909 57% $654 60% $255 39%
Retransmission expense 678 43%  444 40%  234 53%
Transaction Related Expenses 5 0%  - 0%  5 100%
Non-cash stock-based compensation 3 0%  1 0%  2 200%
Total broadcasting expense$1,595 100% $1,099 100% $496 45%
           
Production companies expense$56   $39   $17 44%
           
Corporate and administrative:          
Corporate expenses$65 81% $47 63% $18 38%
Transaction Related Expenses 1 1%  19 25%  (18)(95)%
Non-cash stock-based compensation 14 18%  9 12%  5 56%
Total corporate and          
administrative expense$80 100% $75 100% $5 7%
           


        
Detail Table of Operating Results on As Reported Basis (Unaudited)
      
 Three Months Ended Nine Months Ended
 September 30, September 30,
        
  2022   2021   2022   2021 
 (in millions, except for per share information)
Revenue (less agency commissions):       
Broadcasting$889  $581  $2,548  $1,648 
Production companies 20   20   56   44 
Total revenue (less agency commissions) 909   601   2,604   1,692 
Operating expenses before depreciation, amortization       
and (gain) loss on disposal of assets, net:       
Broadcasting 537   384   1,595   1,099 
Production companies 16   13   56   39 
Corporate and administrative 27   32   80   75 
Depreciation 33   26   96   76 
Amortization of intangible assets 52   28   156   81 
(Gain) loss on disposal of assets, net (1)  51   (6)  46 
Operating expenses 664   534   1,977   1,416 
Operating income 245   67   627   276 
Other expense:       
Miscellaneous expense, net (1)  (1)  (3)  (7)
Interest expense (94)  (48)  (254)  (143)
Income before income taxes 150   18   370   126 
Income tax expense 42   35   101   65 
Net income (loss) 108   (17)  269   61 
Preferred stock dividends 13   13   39   39 
Net income (loss) attributable to common stockholders$95  $(30) $230  $22 
        
Basic per share information:       
Net income (loss) attributable to common stockholders$1.04  $(0.32) $2.47  $0.23 
Weighted-average shares outstanding 91   95   93   94 
        
Diluted per share information:       
Net income (loss) attributable to common stockholders$1.03  $(0.32) $2.47  $0.23 
Weighted-average shares outstanding 92   95   93   95 
        


          
Selected Operating Data on Combined Historical Basis (Unaudited)
  
 Three Months Ended September 30,
     % Change   % Change
     2022 to   2022 to
  2022  2021 2021   2020 2020 
 (dollars in millions)
Revenue (less agency commissions):         
Broadcast$889 $768 16% $836 6%
Production companies 20  20 0%  11 82%
Total revenue$909 $788 15% $847 7%
          
Political advertising$144 $14 929% $190 (24)%
          
Operating expenses (1):         
Broadcast$537 $518 4% $473 14%
Production companies$16 $13 23% $8 100%
Corporate and administrative$27 $32 (16)% $15 80%
          
Non-GAAP Cash Flow (2):         
Broadcast Cash Flow$358 $277 29% $381 (6)%
Broadcast Cash Flow Less         
Cash Corporate Expenses$336 $248 35% $370 (9)%
Operating Cash Flow as defined         
in our Senior Credit Facility$333 $256 30% $368 (10)%
Free Cash Flow(3)$164 $110 49% $194 (15)%
          
          
          
 Nine Months Ended September 30,
     % Change   % Change
     2022 to   2022 to
  2022  2021 2021   2020 2020 
 (dollars in millions)
Revenue (less agency commissions):         
Broadcast$2,548 $2,251 13% $2,187 17%
Production companies 56  44 27%  32 75%
Total revenue$2,604 $2,295 13% $2,219 17%
          
Political advertising$260 $35 643% $269 (3)%
          
Operating expenses (1):         
Broadcast$1,595 $1,523 5% $1,405 14%
Production companies$56 $39 44% $32 75%
Corporate and administrative$80 $75 7% $47 70%
          
Non-GAAP Cash Flow (2):         
Broadcast Cash Flow$960 $794 21% $835 15%
Broadcast Cash Flow Less         
Cash Corporate Expenses$894 $728 23% $796 12%
Operating Cash Flow as defined         
in our Senior Credit Facility$894 $744 20% $794 13%
Free Cash Flow(3)$350 $304 15% $386 (9)%
          

(1) Excludes depreciation, amortization and (gain) loss on disposal of assets.
(2) See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income (loss) included elsewhere herein.
(3) Excludes deduction for purchase of property and equipment related to the Assembly Atlanta project in 2022 and 2021.

             
Selected Operating Data on Combined Historical Basis (Unaudited)
             
  Three Months Ended September 30,
   2022   2021  Amount Percent
    Percent   Percent Increase Increase
  Amount  of Total Amount  of Total  (Decrease) (Decrease)
  (dollars in millions)
Broadcasting net revenues:            
Core $359 39% $372 47% $(13) (3)%
Political  144 16%  14 2%  130  929%
Retransmission consent  368 40%  364 46%  4  1%
Production companies  20 2%  20 3%  -  0%
Other  18 3%  18 2%  -  0%
Total $909 100% $788 100% $121  15%
             

 

Operating expenses (before           
depreciation, amortization and           
(gain) loss on disposal of assets):           
Broadcasting:           
Station expenses$309 58% $303 59% $6  2%
Retransmission expense 226 42%  214 41%  12  6%
Transaction Related Expenses 1 0%  - 0%  1  100%
Non-cash stock-based compensation 1 0%  1 0%  -  0%
Total broadcasting expense$537 100% $518 100% $19  4%
            
Production companies expense$16   $13   $3  23%
            
Corporate and administrative:           
Corporate expenses$22 81% $18 57% $4  22%
Transaction Related Expenses - 0%  11 34%  (11) (100)%
Non-cash stock-based compensation 5 19%  3 9%  2  67%
Total corporate and           
administrative expense$27 100% $32 100% $(5) (16)%
            


             
Selected Operating Data on Combined Historical Basis (Unaudited)
             
  Nine Months Ended September 30,
   2022   2021  Amount Percent
    Percent   Percent Increase Increase
  Amount  of Total Amount  of Total  (Decrease) (Decrease)
  (dollars in millions)
Broadcasting net revenues:            
Core $1,090 42% $1,092 48% $(2) 0%
Political  260 10%  35 1%  225  643%
Retransmission consent  1,143 44%  1,071 47%  72  7%
Production companies  56 2%  44 2%  12  27%
Other  55 2%  53 2%  2  4%
Total $2,604 100% $2,295 100% $309  13%
             


Operating expenses (before           
depreciation, amortization and           
(gain) loss on disposal of assets):           
Broadcasting:           
Station expenses$909 57% $889 59% $20  2%
Retransmission expense 678 43%  631 41%  47  7%
Transaction Related Expenses 5 0%  - 0%  5  100%
Non-cash stock-based compensation 3 0%  3 0%  -  0%
Total broadcasting expense$1,595 100% $1,523 100% $72  5%
            
Production companies expense$56   $39   $17  44%
            
Corporate and administrative:           
Corporate expenses$65 81% $47 63% $18  38%
Transaction Related Expenses 1 1%  19 25%  (18) (95)%
Non-cash stock-based compensation 14 18%  9 12%  5  56%
Total corporate and           
administrative expense$80 100% $75 100% $5  7%
            


    
Other Financial Data on As Reported Basis (Unaudited)
    
 Nine Months Ended September 30,
  2022   2021 
 (in millions)
  
Net cash provided by operating activities$596  $283 
Net cash used in investing activities (362)  (664)
Net cash used in financing activities (279)  (70)
Net decrease in cash$(45) $(451)
    
 As of
 September 30, 2022 December 31, 2021
 (in millions)
  
Cash$144  $189 
Long-term debt, including current portion, less deferred  
financing costs$6,605  $6,755 
Series A Perpetual Preferred Stock$650  $650 
Borrowing availability under Revolving Credit Facility$496  $497 
    

The Company

We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households.  This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo Media Group (formerly Tupelo Honey), PowerNation Studios, as well as the studio production facilities Assembly Atlanta and Third Rail Studios.

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

This press release contains certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by us. These statements are statements other than those of historical fact and may be identified by words such as “estimates,” “expect,” “anticipate,” “will,” “implied,” “assume” and similar expressions. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include our inability to achieve expected synergies from recent transactions on a timely basis or at all, the impact of recently completed transactions, estimates of future revenue, future expenses and other future events. We are subject to additional risks and uncertainties described in our quarterly and annual reports filed with the Securities and Exchange Commission from time to time, including in the “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained therein, which reports are made publicly available via our website, www.gray.tv. Any forward-looking statements in this press release should be evaluated in light of these important risk factors. This press release reflects management’s views as of the date hereof. Except to the extent required by applicable law, Gray undertakes no obligation to update or revise any information contained in this press release beyond the published date, whether as a result of new information, future events or otherwise. 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, 2021, 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 third quarter operating results on November 4, 2022. The call will begin at 11:00 AM Eastern Time. The live dial-in number is 1 (800) 285-6670. 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 (888) 556-3470, Confirmation Code: 898476# until November 24, 2022.

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 January 1, 2020 through December 31, 2021, we completed several acquisition and divestiture transactions. As more fully described in our Form 10-Q to be filed with the Securities and Exchange Commission today and in our prior disclosures, these transactions materially affected our operations. We refer to all television stations acquired or divested from January 1, 2020 through December 31, 2021, as the “Acquisitions”.

Due to the significant effect that the Acquisitions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present herein certain financial information on a Combined Historical Basis (or “CHB”). Combined Historical Basis gives effect to the revenue and broadcast expenses of all completed acquisitions and divestitures as if they had been acquired or divested, respectively, on the first day of the earliest period presented. 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. Combined Historical Basis financial information does not include any adjustments for other events attributable to the Acquisitions unless otherwise described. Certain of the Combined Historical Basis financial information has been derived from, and adjusted based on unaudited, unreviewed 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 the Combined Historical Basis financial information if the Acquisitions had been completed at the stated date. In addition, the presentation of Combined Historical Basis may not comply with United States Generally Accepted Accounting Principles (“GAAP”) or the requirements for proforma financial information under Regulation S-X under the Securities Act of 1933.

From time to time, we supplement our 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 and non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights. CHB Broadcast Cash Flow also includes adjustments for Transaction Related Expenses and other adjustments.

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 and non-cash 401(k) expense, less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights. CHB Broadcast Cash Flow Less Cash Corporate Expenses also includes adjustments for broadcasting Transaction Related Expenses, synergies and other adjustments.

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, loss from unrestricted subsidiaries and other adjustments 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 and income from unrestricted subsidiaries.

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, certain pension expenses, 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 stock dividends, common stock dividends, purchase of property and equipment (net of reimbursements and certain defined purchases, including related capitalized construction period interest) and income taxes paid (net of any refunds received and certain defined payments). CHB Free Cash Flow also includes adjustments for Transaction Related Expenses, synergies, unrestricted subsidiaries and other adjustments.

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 on As Reported Basis (Unaudited):
      
 Three Months Ended
 September 30,
  2022   2021   2020 
 (in millions)
      
Net income (loss)$108  $(17) $122 
Adjustments to reconcile from net income (loss) to     
  Free Cash Flow:     
Depreciation 33   26   27 
Amortization of intangible assets 52   28   26 
Non-cash stock-based compensation 6   3   5 
(Gain) loss on disposal of assets, net (1)  51   (10)
Miscellaneous expense, net 1   1   2 
Interest expense 94   48   45 
Income tax expense 42   35   43 
Amortization of program broadcast rights 11   9   9 
Payments for program broadcast rights (11)  (9)  (9)
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation 22   29   11 
Broadcast Cash Flow 357   204   271 
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation (22)  (29)  (11)
Broadcast Cash Flow Less Cash Corporate Expenses 335   175   260 
Contributions to pension plans (4)  (4)  (3)
Interest expense (94)  (48)  (45)
Amortization of deferred financing costs 4   3   3 
Preferred stock dividends (13)  (13)  (13)
Common stock dividends (7)  (8)  - 
Purchase of property and equipment (1) (52)  (22)  (19)
Reimbursements of property and equipment purchases 2   3   5 
Income taxes paid, net of refunds (2) (9)  (91)  (49)
Free Cash Flow (1) (2)$ 162  $ (5) $ 139 
      

(1) Excludes $87 million and $11 million of capitalized construction and related interest payments for the Assembly Atlanta project in the 2022 and 2021 three-month periods, respectively.
(2) Includes $72 million of income tax payments in the 2021 three-month period, related to the divestiture of certain stations acquired from Quincy Media.

Reconciliation of Non-GAAP Terms on As Reported Basis (Unaudited):
      
 Nine Months Ended
 September 30,
  2022   2021   2020 
 (in millions)
      
Net income$269  $61  $186 
Adjustments to reconcile from net income to     
  Free Cash Flow:     
Depreciation 96   76   69 
Amortization of intangible assets 156   81   78 
Non-cash stock-based compensation 17   10   12 
Non-cash 401(k) expense -   1   - 
(Gain) loss on disposal of assets, net (6)  46   (23)
Miscellaneous expense, net 3   7   5 
Interest expense 254   143   143 
Income tax expense 101   65   67 
Amortization of program broadcast rights 36   26   28 
Payments for program broadcast rights (37)  (27)  (29)
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation 66   66   39 
Broadcast Cash Flow 955   555   575 
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation (66)  (66)  (39)
Broadcast Cash Flow Less Cash Corporate Expenses 889   489   536 
Pension income (2)  -   - 
Contributions to pension plans (4)  (4)  (3)
Interest expense (254)  (143)  (143)
Amortization of deferred financing costs 12   9   9 
Preferred stock dividends (39)  (39)  (39)
Common stock dividends (23)  (23)  - 
Purchase of property and equipment (1) (119)  (63)  (70)
Reimbursements of property and equipment purchases 7   10   19 
Income taxes paid, net of refunds (2) (128)  (129)  (50)
Free Cash Flow (1) (2)$ 339  $ 107  $ 259 
      

(1) Excludes approximately $179 million and $91 million of capitalized construction and related interest payments for the Assembly Atlanta project in 2022 and 2021, respectively.
(2) Includes $72 million of income tax payments in 2021, related to the divestiture of certain stations acquired from Quincy Media.

Reconciliation of Non-GAAP Terms on Combined Historical Basis (Unaudited):
      
 Three Months Ended
 September 30,
  2022   2021   2020 
 (in millions)
      
Net income$108  $66  $180 
Adjustments to reconcile from net income to Free Cash Flow:     
Depreciation 33   32   35 
Amortization of intangible assets 52   30   28 
Non-cash stock-based compensation 6   4   4 
Gain on disposal of assets, net (1)  (1)  (11)
Miscellaneous expense, net 1   1   1 
Interest expense 94   78   78 
Income tax expense 42   20   39 
Amortization of program broadcast rights 11   14   14 
Payments for program broadcast rights (11)  (13)  (15)
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation 22   29   11 
Broadcast Transaction Related Expenses 1   -   - 
Broadcast other adjustments -   17   17 
Broadcast Cash Flow 358   277   381 
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation (22)  (29)  (11)
Broadcast Cash Flow Less Cash Corporate Expenses 336   248   370 
Contributions to pension plans (4)  (4)  (3)
Adjustments for unrestricted subsidiaries 1   1   - 
Corporate Transaction Related Expenses -   11   1 
Operating Cash Flow as defined in the Senior Credit Agreement 333   256   368 
Interest expense (94)  (78)  (78)
Amortization of deferred financing costs 4   3   3 
Preferred dividends (13)  (13)  (13)
Common stock dividends (7)  (8)  - 
Purchase of property and equipment (1) (52)  (23)  (22)
Reimbursement of purchases of property and equipment 2   3   7 
Income taxes paid, net of refunds (9)  (30)  (71)
Free Cash Flow (1)$ 164  $ 110  $ 194 
      

(1) Excludes approximately $87 million and $11 million of capitalized construction and related interest payments for the Assembly Atlanta project in 2022 and 2021 three-month periods, respectively.

Reconciliation of Non-GAAP Terms on Combined Historical Basis (Unaudited):
      
 Nine Months Ended
 September 30,
  2022   2021   2020 
 (in millions)
  
Net income$269  $208  $271 
Adjustments to reconcile from net income to Free Cash Flow:     
Depreciation 96   96   94 
Amortization of intangible assets 156   86   85 
Non-cash stock-based compensation 17   12   13 
Non-cash 401(k) expense, excluding corporate portion -   1   - 
Gain on disposal of assets, net (6)  (8)  (27)
Miscellaneous expense, net 3   7   26 
Interest expense 254   233   233 
Income tax expense 101   37   51 
Amortization of program broadcast rights 36   41   43 
Payments for program broadcast rights (37)  (42)  (45)
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation 66   66   39 
Broadcast Transaction Related Expenses 5   -   - 
Broadcast other adjustments -   57   52 
Broadcast Cash Flow 960   794   835 
Corporate and administrative expenses before     
depreciation, amortization of intangible assets and     
non-cash stock-based compensation (66)  (66)  (39)
Broadcast Cash Flow Less Cash Corporate Expenses 894   728   796 
Pension income (2)  -   - 
Contributions to pension plans (4)  (4)  (3)
Adjustments for unrestricted subsidiaries 5   1   - 
Corporate Transaction Related Expenses 1   19   1 
Operating Cash Flow as defined in the Senior Credit Agreement 894   744   794 
Interest expense (254)  (233)  (233)
Amortization of deferred financing costs 12   9   9 
Preferred dividends (39)  (39)  (39)
Common stock dividends (23)  (23)  - 
Purchase of property and equipment (1) (119)  (70)  (81)
Reimbursement of purchases of property and equipment 7   12   25 
Income taxes paid, net of refunds (128)  (96)  (89)
Free Cash Flow (1)$ 350  $ 304  $ 386 
      

(1) Excludes approximately $179 million and $91 million of capitalized construction and related interest payments for the Assembly Atlanta project in 2022 and 2021, respectively.

 Reconciliation of Net Income (Loss) to Adjusted EBITDA and the Effect of Transaction Related Expenses and Certain Non-cash Expenses, in millions, except for per share information (Unaudited): 
         
 Three Months Ended Nine Months Ended
 September 30, September 30,
  2022   2021   2022   2021 
 (in millions, except for per share information)
        
Net income (loss)$108  $(17) $269  $61 
Adjustments to reconcile from net income (loss) to       
Adjusted EBITDA:       
Depreciation 33   26   96   76 
Amortization of intangible assets 52   28   156   81 
Non-cash stock-based compensation 6   3   17   10 
(Gain) loss on disposal of assets, net (1)  51   (6)  46 
Miscellaneous expense, net 1   1   3   7 
Interest expense 94   48   254   143 
Income tax expense 42   35   101   65 
Total 335   175   890   489 
Add: Transaction Related Expenses (1) 1   11   6   19 
Adjusted EBITDA$ 336  $ 186  $ 896  $ 508 
        
Net income (loss) attributable to common stockholders$95  $(30) $230  $22 
Add: Transaction Related Expenses and non-cash       
stock-based compensation 7   14   23   29 
Less: Income tax expense related to Transaction Related       
Expenses and non-cash stock-based compensation (2)  (4)  (6)  (7)
Net income (loss) attributable to common stockholders - excluding       
Transaction Related Expenses and non-cash stock-based       
compensation$100  $(20) $247  $44 
        
Net income (loss) attributable to common stockholders per common share,      
diluted - excluding Transaction Related Expenses and non-cash       
stock-based compensation$1.09  $(0.21) $2.66  $0.46 
        
Diluted weighted-average shares outstanding 92   95   93   95 
        

(1) Excludes $7 million of Transaction Related Expenses included in miscellaneous (expense) income, net for the nine-month period ended September 30, 2021.

  
Reconciliation of Total Leverage Ratio, Net of All Cash (Unaudited):
  
 Eight Quarters Ended
 September 30, 2022
 (in millions)
Net income$583 
Adjustments to reconcile from net income to operating cash flow as 
  defined in our Senior Credit Agreement: 
Depreciation 226 
Amortization of intangible assets 300 
Non-cash stock-based compensation 35 
Loss on disposals of assets, net 31 
Interest expense 505 
Loss from early extinguishment of debt 12 
Income tax expense 246 
Amortization of program broadcast rights 83 
Non-cash 401(k) expense 15 
Payments for program broadcast rights (85)
Pension gain (5)
Contributions to pension plans (7)
Adjustments for unrestricted subsidiaries 9 
Adjustments for stations acquired or divested, financings and expected 
synergies during the eight quarter period 490 
Transaction Related Expenses 88 
Other 2 
Operating Cash Flow as defined in our Senior Credit Agreement$ 2,528 
Operating Cash Flow as defined in our Senior Credit Agreement, 
 divided by two$ 1,264 
  
 September 30, 2022
Adjusted Total Indebtedness: 
Total outstanding principal$6,674 
Letters of credit outstanding 4 
Cash (144)
Adjusted Total Indebtedness, Net of All Cash$ 6,534 
  
Total Leverage Ratio, Net of All Cash 5.17 
  

FAQ

What were Gray Television's Q3 2022 financial results?

Gray Television reported a total revenue of $909 million and a net income of $95 million, marking a 417% increase from Q3 2021.

How much did Gray Television earn from political advertising in Q3 2022?

Gray Television earned $144 million in political advertising revenue during Q3 2022, a 1500% increase compared to the previous year.

What is Gray Television's guidance for political advertising revenue in 2022?

Gray anticipates total political advertising revenue between $495 million and $505 million for the full year 2022.

How much capital did Gray Television return to shareholders in Q3 2022?

The company returned $124 million to shareholders in Q3 2022, including cash dividends and debt pre-payments.

What were the main factors behind Gray Television's revenue growth?

The revenue growth was driven by new acquisitions, increased scale, and a strong political advertising cycle.

Gray Television, Inc.

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Broadcasting
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ATLANTA