Gray Television (GTN) Misses Q1 EPS by 6c, Revenues Beat; Offers Q2 Revenue Mid-Point Outlook Below Consensus

Gray Television (NYSE: GTN) reported Q1 EPS of ($0.31), $0.06 worse than the analyst estimate of ($0.25). Revenue for the quarter came in at $518 million versus the consensus estimate of $498.51 million.

• Record First Quarter Revenue - Our revenue for the first quarter of 2019 was $518 million, increasing $292 million, or 129%, from the first quarter of 2018. During the first quarter of 2019, revenue attributable to the Raycom Merger (as defined below) was $280 million. Furthermore, on a Combined Historical Basis (as defined below) excluding the $13 million of advertising revenue attributable to the Winter Olympics in the first quarter of 2018, our first quarter local and national advertising revenue grew by $7 million from the year-earlier period, representing a 3% increase. Our guidance for the second quarter of 2019 reflects continued revenue growth resulting from both the Raycom Merger and organic growth in our businesses.
• Operating Results and Effect of Transaction Expenses. Our net loss attributable to common stockholders for the first quarter of 2019 was $31 million, and our net loss per common share was $0.31. During the first quarter of 2019, in connection with the Raycom Merger, we incurred $18 million of incentive and severance compensation, $28 million in third-party contract termination fees and $22 million of professional fees. Excluding these transaction related costs, and using a blended statutory tax rate, our net income attributable to common stockholders for the first quarter of 2019 would have been our best first quarter ever, of approximately $27 million, and our diluted net income per common share would have been approximately $0.27. Our Broadcast Cash Flow (a non-GAAP financial measure, defined below) for the first quarter of 2019 was $123 million, and was our best first quarter ever.
• Total Leverage Ratio - As of March 31, 2019, our total leverage ratio, as defined in our senior credit facility, was 4.86 times on a trailing eight-quarter basis, netting our total cash balance of $225 million.

Revenue (less agency commissions) on Combined Historical Basis.

On a Combined Historical Basis, total revenue increased $34 million to $518 million in the first quarter of 2019 compared to $484 million in the first quarter of 2018. On a Combined Historical Basis, the changes in revenue for the first quarter of 2019 compared to the first quarter of 2018 were approximately as follows:

• Local advertising revenue (including internet/digital/mobile) decreased $3 million, or 1%, to $211 million.
• National advertising revenue decreased $3 million, or 6%, to $50 million.
• Political advertising revenue decreased $6 million, or 67%, to $3 million.
• Retransmission consent revenue increased $42 million, or 26%, to $204 million.
• Production company revenue increased $2 million, or 6%, to $37 million.
• Other revenue increased $2 million, or 18%, to $13 million.

GUIDANCE:

Gray Television sees Q2 2019 revenue of $502-512 million, versus the consensus of $511.7 million.

Comments on Second Quarter of 2019 Guidance:

Revenue (less agency commissions) On As-Reported Basis.

• Based on our current forecasts for the second quarter of 2019, we anticipate the following changes from the second quarter of 2018 as outlined below:
• We believe our second quarter of 2019 local advertising revenue (including internet/digital/mobile) will change to be within a range of approximately $223 million to $228 million, or +98% to +102%.
• We believe our second quarter of 2019 national advertising revenue will change to be within a range of approximately $55 million to $56 million, or +84% to 88%.
• We believe our second quarter of 2019 political revenue will be within a range of approximately $3 million to $4 million.
• We believe our second quarter of 2019 retransmission consent revenue will be within a range of approximately $205 million to $206 million.

Revenue (less agency commissions) on Combined Historical Basis.

• We believe our second quarter of 2019 total revenue will be within a range of approximately $502 million to $512 million (or increase approximately +0% to +2% from $503 million in the second quarter of 2018).
• We believe our second quarter of 2019 local advertising revenue (including internet/digital/mobile) will be within a range of approximately $223 million to $228 million (or decrease approximately -2% to +0% from $228 million in the second quarter of 2018).
• We believe our second quarter of 2019 national advertising revenue will be within a range of approximately $55 million to $56 million (or decrease approximately -9% to -8% from $60 million in the second quarter of 2018).
• We believe our second quarter of 2019 political advertising revenue will be within a range of approximately $3 million to $4 million. Our political advertising revenue was approximately $31 million in the second quarter of 2018 and approximately $6 million in the second quarter of 2017.
• We believe our second quarter of 2019 retransmission consent revenue will be within a range of approximately $205 million to $206 million (or increase approximately +26% to +27% from $162 million in the second quarter of 2018).

For earnings history and earnings-related data on Gray Television (GTN) click here.

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