Gray Television Delivers Solid Second Quarter Operating Results

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ATLANTA, Aug. 05, 2022 (GLOBE NEWSWIRE) -- Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announced its strong financial results for the second quarter ended June 30, 2022, including a 231% increase in net income attributable to common stockholders, compared to the second quarter of 2021. Overall, the second quarter of 2022 produced record results, including $868 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. We anticipate continued strong financial results for the remainder of the year, especially political advertising revenue. Based on our current forecasts, we now anticipate that our political advertising revenue for calendar year 2022 will match the $652 million of political advertising revenue that our current portfolio of stations recorded in 2020, a presidential election year.  

Gray’s strong cash flow in the second quarter of 2022 enabled us to return $125 million of capital to our shareholders during the second quarter by, paying down $54 million of outstanding debt; repurchasing $50 million of our common stock in the open market; and paying $21 million of cash dividends to our preferred and common shareholders. Even after these actions, Gray ended the quarter with $162 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.

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 the Company. 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 Second Quarter Operating Results

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

  • Total revenue was $868 million, an increase of 59% from the second quarter of 2021.
  • Net income attributable to common stockholders was $86 million, or $0.91 per fully diluted share, an increase of 231% from the second quarter of 2021.
  • Broadcast Cash Flow was $327 million, an increase of 79% from the second quarter of 2021.
  • Adjusted EBITDA was $309 million, an increase of 82% from the second quarter of 2021.

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

  • Revenue was $868 million, an increase of 15% from the second quarter of 2021.
  • Core Advertising Revenue decreased less than 1% from the second quarter of 2021.
  • Broadcast Cash Flow was $330 million, an increase of 25% from the second quarter of 2021.

Other Key Metrics

  • As of June 30, 2022, our Total Leverage Ratio, Net of all Cash, was 5.16 times on a trailing eight-quarter basis, netting our total cash balance of $162 million and giving effect to all Transaction Related Expenses, which is calculated as set forth in our Senior Credit Facility.
  • During the three and six-months ended June 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 Six Months Ended
 June 30, June 30,
 2022 2021 2022 2021
 (in millions)
Transaction Related Expenses:       
Broadcasting$2 $- $4 $-
Corporate and administrative- 7 1 8
Miscellaneous expense, net- 7 - 7
Total Transaction Related Expenses$2 $14 $5 $15
        
Total non-cash stock-based compensation$6 $4 $11 $7
        

Taxes

  • During the six-months ended June 30, 2022 and 2021, we made income tax payments of $119 million and $38 million, respectively. During the remainder of 2022, based on our current forecasts, we anticipate making income tax payments (net of our expected $21 million refund) within a range of $70 million to $90 million.
  • As of June 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.

FOX Network Affiliation Agreement Renewal

On August 4, 2022, we renewed the network affiliations for all of our FOX affiliated television stations across 27 markets, including Portland, Oregon; Cincinnati, Ohio; Greenville-Spartanburg, South Carolina; West Palm Beach, Florida; Las Vegas, Nevada; Birmingham, Alabama; and New Orleans, Louisiana.

Guidance for the Three-Months Ending September 30, 2022

Based on our current forecasts for the quarter ending September 30, 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 $345 million to $355 million.
    • Retransmission revenue of $365 million to $370 million.
    • Political revenue of $193 million to $195 million.
    • Production company revenue of $20 million to $21 million.
    • Total revenue of $940 million to $959 million.
  • Operating Expenses:
    • Broadcasting expenses of $545 million to $550 million, including retransmission expense of approximately $225 million and transaction related expenses of approximately $1 million and non-cash stock-based compensation expense of approximately $1 million.
    • Production company expenses of approximately $17 million.
    • Corporate expenses of $30 million to $35 million, including transaction related expenses of approximately $1 million and non-cash stock-based compensation expense of approximately $5 million.

Selected Operating Data on As Reported Basis (Unaudited)
    
 Three Months Ended June 30,
     % Change    % Change 
     2022 to    2022 to 
 2022 2021 2021  2020 2020 
 (dollars in millions)
Revenue (less agency commissions):           
Broadcasting$855 $537 59% $449 90%
Production companies13 10 30% 2 550%
Total revenue$868 $547 59% $451 92%
            
Political advertising revenue$90 $6 1400% $21 329%
            
Operating expenses (1):           
Broadcasting$528 $354 49% $324 63%
Production companies$14 $9 56% $5 180%
Corporate and administrative$25 $25 0% $17 47%
            
Net income$99 $39 154% $11 800%
            
Non-GAAP cash flow (2):           
Broadcast Cash Flow$327 $183 79% $123 166%
Broadcast Cash Flow Less           
Cash Corporate Expenses$306 $161 90% $108 183%
Free Cash Flow$38 $34 12% $35 9%
            
 Six Months Ended June 30,
     % Change    % Change 
     2022 to    2022 to 
 2022 2021 2021  2020 2020 
 (dollars in millions)
Revenue (less agency commissions):           
Broadcasting$1,659 $1,067 55% $964 72%
Production companies36 24 50% 21 71%
Total revenue$1,695 $1,091 55% $985 72%
            
Political advertising revenue$116 $15 673% $57 104%
            
Operating expenses (1):           
Broadcasting$1,058 $715 48% $659 61%
Production companies$40 $26 54% $24 67%
Corporate and administrative$53 $43 23% $32 66%
            
Net income$161 $78 106% $64 152%
            
Non-GAAP cash flow (2):           
Broadcast Cash Flow$598 $351 70% $304 97%
Broadcast Cash Flow Less           
Cash Corporate Expenses$554 $314 76% $276 101%
Free Cash Flow$177 $112 58% $120 48%

(1)   Excludes depreciation, amortization and gain on disposal of assets.
(2)   See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included elsewhere herein.

Selected Operating Data on As Reported Basis (Unaudited)
               
 Three Months Ended June 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 advertising$366 42% $279 51% $87 31%
Political90 10% 6 1% 84 1400%
Retransmission consent382 44% 242 44% 140 58%
Production companies13 1% 10 2% 3 30%
Other17 3% 10 2% 7 70%
Total$868 100% $547 100% $321 59%


Operating expenses (before               
depreciation, amortization and               
gain on disposal of assets):               
Broadcasting:               
Station expenses$300 57% $209 59% $91  44%
Retransmission expense225 43% 144 41% 81  56%
Transaction Related Expenses2 0% - 0% 2  100%
Non-cash stock-based               
compensation1 0% 1 0% -  0%
Total broadcasting expense$528 100% $354 100% $174  49%
                
Production companies expense$14    $9    $5  56%
                
Corporate and administrative:               
Corporate expenses$20 80% $15 60% $5  33%
Transaction Related Expenses- 0% 7 28% (7) (100)%
Non-cash stock-based compensation5 20% 3 12% 2  67%
Total corporate and               
administrative expense$25 100% $25 100% $            -  0%


Selected Operating Data on As Reported Basis (Unaudited)
               
 Six Months Ended June 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 advertising$731 43% $539 49% $192 36%
Political116 7% 15 1% 101 673%
Retransmission consent775 46% 489 45% 286 58%
Production companies36 2% 24 2% 12 50%
Other37 2% 24 3% 13 54%
Total$1,695 100% $1,091 100% $604 55%


Operating expenses (before               
depreciation, amortization and               
gain on disposal of assets):               
Broadcasting:               
Station expenses$600 57% $425 60% $175  41%
Retransmission expense452 43% 289 40% 163  56%
Transaction Related Expenses4 0% - 0% 4  100%
Non-cash stock-based               
compensation2 0% 1 0% 1  100%
Total broadcasting expense$1,058 100% $715 100% $343  48%
                
Production companies expense$40    $26    $14  54%
                
Corporate and administrative:               
Corporate expenses$43 81% $29 67% $14  48%
Transaction Related Expenses1 2% 8 19% (7) (88)%
Non-cash stock-based               
compensation9 17% 6 14% 3  50%
Total corporate and               
administrative expense$53 100% $43 100% $10  23%

 

Detail Table of Operating Results on As Reported Basis (Unaudited)
          
 Three Months Ended
 Six Months Ended
 June 30,
 June 30,
 2022 2021 2022 2021
 (in millions, except for per share information)
Revenue (less agency commissions):           
Broadcasting$855  $537  $1,659  $1,067 
Production companies13  10  36  24 
Total revenue (less agency commissions)868  547  1,695  1,091 
Operating expenses before depreciation, amortization           
and gain on disposal of assets, net:           
Broadcasting528  354  1,058  715 
Production companies14  9  40  26 
Corporate and administrative25  25  53  43 
Depreciation31  25  63  50 
Amortization of intangible assets52  27  104  53 
Gain on disposal of assets, net-  (1) (5) (5)
Operating expenses650  439  1,313  882 
Operating income218  108  382  209 
Other expense:           
Miscellaneous expense, net-  (7) (2) (6)
Interest expense(81) (47) (160) (95)
Income before income taxes137  54  220  108 
Income tax expense38  15  59  30 
Net income99  39  161  78 
Preferred stock dividends13  13  26  26 
Net income attributable to common stockholders$86  $26  $135  $52 
            
Basic per share information:           
Net income attributable to common stockholders$0.92  $0.27  $1.45  $0.55 
Weighted-average shares outstanding93  95  93  94 
            
Diluted per share information:           
Net income attributable to common stockholders$0.91  $0.27  $1.44  $0.55 
Weighted-average shares outstanding94  95  94  95 


Selected Operating Data on Combined Historical Basis (Unaudited)
    
 Three Months Ended June 30,
     % Change    % Change 
     2022 to    2022 to 
 2022 2021 2021  2020 2020 
 (dollars in millions)
Revenue (less agency commissions):           
            
Broadcast$855 $744 15% $626 37%
Production companies13 10 30% $2 550%
Total$868 $754 15% $628 38%
            
Operating expenses (1):           
Broadcast$528 $499 6% $455 16%
Production companies$14 $9 56% $5 180%
Corporate and administrative$25 $25 0% $17 47%
            
Non-GAAP cash flow (2):           
Broadcast Cash Flow$330 $264 25% $186 77%
Broadcast Cash Flow Less Cash           
Corporate Expenses$309 $242 28% $171 81%
Operating Cash Flow as defined in           
the 2019 Senior Credit Facility$310 $249 24% $171 81%
Free Cash Flow$43 $75 (43)% $57 (25)%
            
 Six Months Ended June 30,
     % Change    % Change 
     2022 to    2022 to 
 2022 2021 2021  2020 2020 
 (dollars in millions)
Revenue (less agency commissions):           
            
Broadcast$1,659 $1,483 12% $1,351 23%
Production companies36 24 50% $21 71%
Total$1,695 $1,507 12% $1,372 24%
            
Operating expenses (1):           
Broadcast$1,058 $1,004 5% $932 14%
Production companies$40 $26 54% $24 67%
Corporate and administrative$53 $44 20% $32 66%
            
Non-GAAP cash flow (2):           
Broadcast Cash Flow$602 $517 16% $454 33%
Broadcast Cash Flow Less Cash           
Corporate Expenses$558 $480 16% $426 31%
Operating Cash Flow as defined in           
the 2019 Senior Credit Facility$561 $488 15% $426 32%
Free Cash Flow$186 $194 (4)% $192 (3)%
            

(1)   Excludes depreciation, amortization and gain on disposal of assets.
(2)   See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included elsewhere herein.

Selected Operating Data on Combined Historical Basis (Unaudited)
                
 Three Months Ended June 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 advertising$366 42% $369 49% $(3) (1)%
Political90 10% 8 1% 82  1025%
Retransmission consent382 44% 351 47% 31  9%
Production companies13 1% 10 1% 3  30%
Other17 3% 16 2% 1  6%
Total$868 100% $754 100% $114  15%


Operating expenses (before               
depreciation, amortization and               
gain on disposal of assets):               
Broadcasting:               
Station expenses$300 57% $291 58% $9  3%
Retransmission expense225 43% 207 42% 18  9%
Transaction Related Expenses2 0% - 0% 2  100%
Non-cash stock-based               
compensation1 0% 1 0% -  0%
Total broadcasting expense$528 100% $499 100% $29  6%
                
Production companies expense$14    $9    $5  56%
                
Corporate and administrative:               
Corporate expenses$20 80% $15 60% $5  33%
Transaction Related Expenses- 0% 7 28% (7) (100)%
Non-cash stock-based               
compensation5 20% 3 12% 2  67%
Total corporate and               
administrative expense$25 100% $25 100% $            -  0%


Selected Operating Data on Combined Historical Basis (Unaudited)
               
 Six Months Ended June 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 advertising$731 43% $720 48% $11 2%
Political116 7% 21 1% 95 452%
Retransmission consent775 46% 707 47% 68 10%
Production companies36 2% 24 2% 12 50%
Other37 2% 35 2% 2 6%
Total$1,695 100% $1,507 100% $188 12%


Operating expenses (before               
depreciation, amortization and               
gain on disposal of assets):               
Broadcasting:               
Station expenses$601 57% $586 58% $15  3%
Retransmission expense451 43% 416 42% 35  8%
Transaction Related Expenses4 0% - 0% 4  100%
Non-cash stock-based compensation2 0% 2 0% -  0%
Total broadcasting expense$1,058 100% $1,004 100% $54  5%
                
Production companies expense$40    $26    $14  54%
                
Corporate and administrative:               
Corporate expenses$43 81% $30 68% $13  43%
Transaction Related Expenses1 2% 8 18% (7) (88)%
Non-cash stock-based compensation9 17% 6 14% 3  50%
Total corporate and               
administrative expense$53 100% $44 100% $9  20%


Other Financial Data on As Reported Basis (Unaudited)
      
 Six Months Ended June 30,
 2022 2021
 (in millions)
      
Net cash provided by operating activities$330  $238 
Net cash used in investing activities(201) (177)
Net cash used in financing activities(156) (49)
Net (decrease) increase in cash$(27) $12 
      
 As of
 June 30, December 31,
 2022 2021
 (in millions)
      
Cash$162  $189 
Long-term debt, including current portion, less deferred     
financing costs$6,705  $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 second quarter operating results on August 5, 2022. The call will begin at 11:00 AM Eastern Time. The live dial-in number is 1-800-289-0720 and the confirmation code is 7144937. 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 1-888-203-1112 and the confirmation code is 7144937, until September 4, 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 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 Stated Generally Accepted Accounting Principles (“GAAP”) or the requirements for proforma financial information under Regulation S-X under the Securities Act.

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, non-cash 401(k) expense, Broadcast Transactions Related Expenses and broadcast other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

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, non-cash 401(k) expense, Transaction Related Expenses and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

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 and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, pension income and contributions to pension plans.

Operating Cash Flow as defined in our Senior Credit Agreement gives effect to the revenue and broadcast expenses of all completed acquisitions and divestitures as if they had been acquired or divested, respectively, on July 1, 2020. 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. Certain of the financial information related to the acquisitions has been derived from, and adjusted based on, unaudited, un-reviewed 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 this financial information if the acquisitions had been completed on the stated date. In addition, the presentation of Operating Cash Flow as defined in the Senior Credit Agreement and the adjustments to such information, including expected synergies resulting from such transactions, may not comply with GAAP or the requirements for pro forma financial information under Regulation S-X under the Securities Act of 1933.

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, Transactions Related Expenses, broadcast other adjustments, certain pension expenses, synergies, other adjustments and 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 dividends, purchase of property and equipment (net of reimbursements and certain defined purchases) and income taxes paid (net of any refunds received and certain defined payments).

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:
 
 Three Months Ended June 30,
 2022 2021 2020
 (in millions)
         
Net income$            99  $            39  $         11 
Adjustments to reconcile from net income to        
  Free Cash Flow:        
Depreciation              31                25             21 
Amortization of intangible assets              52                27             26 
Non-cash stock-based compensation               6                 3               3 
Gain on disposal of assets, net                -                (1)            (7)
Miscellaneous expense, net                -                 7               2 
Interest expense              81                47             46 
Income tax expense              38                15               6 
Amortization of program broadcast rights              12                 8             10 
Payments for program broadcast rights            (13)               (9)           (10)
Corporate and administrative expenses before        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation              21                22             15 
Broadcast Cash Flow           327              183            123  
Corporate and administrative expenses before        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation            (21)             (22)           (15)
Broadcast Cash Flow Less Cash Corporate Expenses           306              161            108  
Pension benefit              (1)                 -               - 
Interest expense            (81)             (47)           (46)
Amortization of deferred financing costs               4                 3               3 
Preferred stock dividends            (13)             (13)           (13)
Common stock dividends              (8)               (7)              - 
Purchases of property and equipment (1)            (50)             (28)           (24)
Reimbursements of property and equipment purchases                -                 3               8 
Income taxes paid, net of refunds          (119)             (38)            (1)
Free Cash Flow$           38   $           34   $         35  

(1)   Excludes approximately $62 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

Reconciliation of Non-GAAP Terms on As Reported Basis:
 
 Six Months Ended June 30,
 2022 2021 2020
 (in millions)
         
Net income$161  $78  $64 
Adjustments to reconcile from net income to        
Free Cash Flow:        
Depreciation63  50  42 
Amortization of intangible assets104  53  52 
Non-cash stock-based compensation11  7  7 
Non-cash 401(k) expense-  1  - 
Gain on disposal of assets, net(5) (5) (13)
Miscellaneous expense, net2  6  3 
Interest expense160  95  98 
Income tax expense59  30  24 
Amortization of program broadcast rights25  17  19 
Payments for program broadcast rights(26) (18) (20)
Corporate and administrative expenses before        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation44  37  28 
Broadcast Cash Flow           598            351                304  
Corporate and administrative expenses before        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation(44) (37) (28)
Broadcast Cash Flow Less Cash Corporate Expenses           554            314                276  
Pension benefit(2) -  - 
Interest expense(160) (95) (98)
Amortization of deferred financing costs8  6  6 
Preferred stock dividends(26) (26) (26)
Common stock dividends(16) (15) - 
Purchases of property and equipment (1)(67) (41) (51)
Reimbursements of property and equipment purchases5  7  14 
Income taxes paid, net of refunds(119) (38) (1)
Free Cash Flow$         177   $       112   $           120  
         

(1)   Excludes approximately $92 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

Reconciliation of Non-GAAP Terms on Combined Historical Basis:
 
 Three Months Ended
 June 30,
  2022  2021 2020
 (in millions)
         
Net income$99  $69  $22 
Adjustments to reconcile from net income to        
Free Cash Flow:        
Depreciation31  32  30 
Amortization of intangible assets52  28  28 
Non-cash stock-based compensation6  4  4 
Gain on disposals of assets, net-  (3) (7)
Miscellaneous expense, net-  7  2 
Interest expense81  77  77 
Income tax expense (benefit)38  9  (2)
Amortization of program broadcast rights12  13  15 
Payments for program broadcast rights(13) (14) (15)
Corporate and administrative expenses excluding        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation21  22  15 
Broadcast Transaction Related Expenses2  -  - 
Broadcast other adjustments1  20  17 
Broadcast Cash Flow           330              264              186  
Corporate and administrative expenses excluding        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation(21) (22) (15)
Broadcast Cash Flow Less Cash Corporate Expenses           309              242              171  
Pension benefit(1) -  - 
Adjustments for unrestricted subsidiaries2  -  - 
Corporate Transaction Related Expenses-  7  - 
Operating Cash Flow as Defined in Senior Credit Agreement           310              249              171  
Interest expense(81) (77) (77)
Amortization of deferred financing costs4  3  3 
Preferred dividends(13) (13) (13)
Common stock dividends(8) (7) - 
Purchases of property and equipment (1)(50) (32) (27)
Reimbursements of property and equipment purchases-  4  9 
Income taxes paid, net of refunds(119) (52) (9)
Free Cash Flow$           43   $           75   $           57  

(1)   Excludes approximately $62 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

 
Reconciliation of Non-GAAP Terms on Combined Historical Basis:
 
 Six Months Ended
 June 30,
  2022  2021 2020
 (in millions)
         
Net income$         161  $         142  $          91 
Adjustments to reconcile from net income to        
Free Cash Flow:        
Depreciation63  64  59 
Amortization of intangible assets104  56  57 
Non-cash stock-based compensation11  8  9 
Non-cash 401(k) expense-  1  - 
Gain on disposals of assets, net(5) (7) (16)
Miscellaneous expense, net2  6  25 
Interest expense160  155  155 
Income tax expense59  17  12 
Amortization of program broadcast rights25  27  29 
Payments for program broadcast rights(26) (29) (30)
Corporate and administrative expenses excluding        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation44  37  28 
Broadcast Transaction Related Expenses4  -  - 
Broadcast other adjustments-  40  35 
Broadcast Cash Flow           602              517              454  
Corporate and administrative expenses excluding        
depreciation, amortization of intangible assets and        
non-cash stock-based compensation(44) (37) (28)
Broadcast Cash Flow Less Cash Corporate Expenses           558              480              426  
Pension benefit(2) -  - 
Adjustments for unrestricted subsidiaries4  -  - 
Corporate Transaction Related Expenses1  8  - 
Operating Cash Flow as defined in Senior Credit Agreement           561              488              426  
Interest expense(160) (155) (155)
Amortization of deferred financing costs8  6  6 
Preferred dividends(26) (26) (26)
Common stock dividends(16) (15) - 
Purchases of property and equipment (1)(67) (47) (59)
Reimbursements of property and equipment purchases5  9  18 
Income taxes paid, net of refunds(119) (66) (18)
Free Cash Flow$         186   $         194   $         192  

(1)   Excludes approximately $92 million and $80 million related to the Assembly Atlanta project in 2022 and 2021, respectively.

Reconciliation of Net Income to Adjusted EBITDA and the Effect of Transaction Related Expenses and Certain Non-Cash Expenses:
 
 Three Months Ended
 Six Months Ended
 June 30,
 June 30,
 2022 2021 2022 2021
 (in millions, except for per share information)
            
Net income$99  $39  $161  $78 
Adjustments to reconcile from net income to           
Adjusted EBITDA:           
Depreciation31  25  63  50 
Amortization of intangible assets52  27  104  53 
Non-cash stock-based compensation6  4  11  7 
Gain on disposal of assets, net-  (1) (5) (5)
Miscellaneous expense, net-  7  2  6 
Interest expense81  47  160  95 
Income tax expense38  15  59  30 
Total307  163  555  314 
Add: Transaction Related Expenses (1)2  7  5  8 
Adjusted EBITDA$        309   $       170   $       560   $       322  
            
Net income attributable to common stockholders$86  $26  $135  $52 
Add: Transaction Related Expenses and non-cash           
stock-based compensation8  18  16  22 
Less: Income tax expense related to Transaction Related           
Expenses and non-cash stock-based compensation(2) (5) (4) (6)
Net income attributable to common stockholders - excluding           
Transaction Related Expenses and non-cash stock-based           
compensation$92  $39  $147  $68 
            
Net income attributable to common stockholders common per share,           
diluted - excluding Transaction Related Expenses and non-cash           
stock-based compensation$0.98  $0.41  $1.56  $0.72 
            
Diluted weighted-average common shares outstanding94  95  94  95 

(1)     Excludes $7 million of Transaction Related Expenses included in miscellaneous expense, net for the three and six-month periods ended June 30, 2021, respectively.

Reconciliation of Total Leverage Ratio, Net of All Cash:
 
 Eight Quarters
 Ended
 June 30, 2022
 (dollars in millions)
   
Net income$                      595 
Adjustments to reconcile from net income to Operating Cash Flow as  
  defined in our Senior Credit Agreement:  
Depreciation                        221 
Amortization of intangible assets                        274 
Non-cash stock-based compensation                          32 
Gain on disposal of assets, net                          21 
Interest expense                        457 
Loss on early extinguishment of debt                          12 
Income tax expense                        248 
Amortization of program broadcast rights                          81 
Common stock contributed to 401(k) plan                          15 
Payments for program broadcast rights                        (83)
Pension benefit                          (4)
Contributions to pension plans                          (7)
Adjustments for unrestricted subsidiaries                           8 
Adjustments for stations acquired or divested, financings and expected  
synergies during the eight quarter period                        606 
Transaction Related Expenses                          87 
Other                           2 
Operating Cash Flow as defined in our Senior Credit Agreement$                  2,565  
Operating Cash Flow as defined in our Senior Credit Agreement,  
 divided by two$                  1,283  
   
 June 30, 2022 
Adjusted Total Indebtedness:  
Total outstanding principal$                    6,778 
Letters of credit outstanding                           4 
Cash                       (162)
Adjusted Total Indebtedness, Net of All Cash$                  6,620  
   
Total Leverage Ratio, Net of All Cash5.16 

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