Salem Media Group, Inc. Announces Fourth Quarter 2021 Total Revenue of $69.1 Million

IRVING, Texas--()--Salem Media Group, Inc. (NASDAQ: SALM) released its results for the three and twelve months ended December 31, 2021.

Fourth Quarter 2021 Results

For the quarter ended December 31, 2021 compared to the quarter ended December 31, 2020:

Consolidated

  • Total revenue increased 7.2% to $69.1 million from $64.5 million;
  • Total operating expenses decreased 16.2% to $48.7 million from $58.1 million;
  • 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, depreciation expense and amortization expense (1) increased 6.8% to $58.3 million from $54.6 million;
  • Operating income increased 220.0% to $20.5 million from $6.4 million;
  • The company’s net income increased $13.5 million to $16.8 million, or $0.61 net income per diluted share compared to $3.3 million, or $0.12 net income per diluted share;
  • EBITDA (1) increased 131.2% to $22.7 million from $9.8 million;
  • Adjusted EBITDA (1) increased 9.3% to $10.8 million from $9.9 million; and
  • Net cash provided by operating activities increased to $7.7 million from net cash used for operating activities of $0.3 million.

Broadcast

  • Net broadcast revenue increased 6.1% to $51.0 million from $48.1 million;
  • SOI (1) increased 3.6% to $12.3 million from $11.8 million;
  • Same Station (1) net broadcast revenue increased 5.7% to $50.6 million from $47.8 million; and
  • Same Station SOI (1) increased 0.8% to $12.2 million from $12.1 million.

Digital Media

  • Digital media revenue increased 2.9% to $11.6 million from $11.2 million; and
  • Digital Media Operating Income (1) increased 15.5% to $3.0 million from $2.6 million.

Publishing

  • Publishing revenue increased 27.1% to $6.5 million from $5.2 million; and
  • Publishing Operating Income (1) increased 148.3% to $0.2 million from a loss of $0.4 million.

Included in the results for the quarter ended December 31, 2021 are:

  • A $13.0 million ($9.6 million, net of tax, or $0.35 per diluted share) net gain on the disposition of assets relates to a $12.9 million pre-tax gain on the sale of land in Tampa, Florida as well as various other fixed asset disposals;
  • The company repurchased an additional $38.6 million of the 6.75% senior secured notes due 2024 (“2024 Notes”) for $39.3 million in cash, recognizing a net loss of $1.0 million ($0.7 million, net of tax or $0.03 per share); and
  • A $0.1 million non-cash compensation charge ($0.1 million, net of tax) related to the expensing of stock options.

Included in the results for the quarter ended December 31, 2020 are:

  • A $0.1 million net loss on the disposition of assets which reflects various fixed asset disposals; and
  • A $0.1 million non-cash compensation charge related to the expensing of stock options.

Per share numbers are calculated based on 27,534,329 diluted weighted average shares for the quarter ended December 31, 2021, and 26,791,353 diluted weighted average shares for the quarter ended December 31, 2020.

Year to Date 2021 Results

For the twelve months ended December 31, 2021 compared to the twelve months ended December 31, 2020:

Consolidated

  • Total revenue increased 9.3% to $258.2 million from $236.2 million;
  • Total operating expenses decreased 13.1% to $212.0 million from $244.0 million;
  • 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, depreciation expense and amortization expense (1) increased 4.5% to $219.9 million from $210.5 million;
  • Operating income increased 696.4% to $46.2 million from a loss of $7.8 million;
  • The company’s net income increased to $41.5 million, or $1.52 net income per diluted share from a net loss of $54.1 million, or $2.03 net loss per share;
  • EBITDA (1) increased 993.5% to $69.4 million from $6.3 million;
  • Adjusted EBITDA (1) increased 48.8% to $38.3 million from $25.8 million; and
  • Net cash provided by operating activities decreased 1.6% to $22.5 million from $22.9 million.

Broadcast

  • Net broadcast revenue increased 7.5% to $191.4 million from $178.1 million;
  • SOI (1) increased 23.0% to $45.7 million from $37.2 million;
  • Same station (1) net broadcast revenue increased 7.5% to $190.0 million from $176.8 million; and
  • Same station SOI (1) increased 19.0% to $45.7 million from $38.4 million.

Digital media

  • Digital media revenue increased 6.5% to $42.2 million from $39.6 million; and
  • Digital Media Operating Income (1) increased 6.3% to $8.4 million from $7.9 million.

Publishing

  • Publishing revenue increased 33.1% to $24.6 million from $18.5 million; and
  • Publishing Operating Income (1) increased 141.4% to $1.4 million from a loss of $3.4 million.

     

Included in the results for the twelve months ended December 31, 2021 are:

  • A $2.5 million ($1.9 million, net of tax, or $0.07 per share) charge for debt modification costs. On September 10, 2021, the company refinanced $112.8 million of the 2024 Notes by exchanging into $114.7 million (reflecting a call premium of 1.688%) of 7.125% Senior Secured Notes due 2028 (“2028 Notes”). The transaction was assessed on a lender-specific level and was accounted for as a debt modification in accordance with ASC 470 with $2.5 million of fees paid to third parties included in operating expenses for the period;
  • A $23.6 million ($17.4 million, net of tax, or $0.64 per diluted share) net gain on the disposition of assets relates to $12.9 million pre-tax gain on the sale of land in Tampa, Florida, a $10.5 million pre-tax gain on the sale of land in Lewisville, Texas, a $0.5 million pre-tax gain on the sale of Singing News Magazine and Singing News Radio and a $0.1 million pre-tax gain on the sale of the Hilary Kramer Financial Newsletter and related assets that was offset by a $0.4 million of additional costs recorded upon closing on the radio station WKAT-AM and an FM translator in Miami, Florida as well as various other fixed asset disposals;
  • The company repurchased an additional $43.3 million of the 2024 Notes for $44.0 million in cash, recognizing a net loss of $1.0 million ($0.8 million, net of tax or $0.03 per share); and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax or $0.01 per share) related to the expensing of stock options.

Included in the results for the twelve months ended December 31, 2020 are:

  • A $1.6 million ($1.2 million, net of tax, or $0.04 per share) net loss on the disposition of assets which includes a $1.4 million estimated pre-tax loss for the write-off of Miami assets as a result of the company’s plan to exit the market and reflects various fixed asset disposals;
  • A $17.3 million impairment charge ($12.8 million, net of tax, or $0.48 per share), of which $0.3 million related to impairment of mastheads, and the remainder to broadcast licenses due to the financial impact of the COVID-19 pandemic;
  • A $0.3 million impairment charge ($0.2 million, net of tax, or $0.01 per share) related to the company’s goodwill; and
  • A $0.3 million non-cash compensation charge ($0.2 million, net of tax, or $0.01 per share) related to the expensing of stock options.

Per share numbers are calculated based on 27,296,618 diluted weighted average shares for the twelve months ended December 31, 2021, and 26,683,363 weighted average shares for the twelve months ended December 31, 2020.

Balance Sheet

As of December 31, 2021, the company had $114.7 million outstanding on the 2028 Notes, $60.2 million outstanding on 2024 Notes, and no outstanding balance on the ABL Facility.

Acquisitions and Divestitures

The following transactions were completed since October 1, 2021:

  • On February 15, 2022, the company closed on the acquisition of WLCC-AM in Brandon, Florida for $600,000 in cash.
  • On January 10, 2022, the company closed on the sale of 4.5 acres of land in Phoenix, Arizona for $2.0 million in cash.
  • On November 30, 2021, the company closed on the sale of approximately 77 acres of land in Tampa, Florida for $13.5 million in cash.

Pending transactions

  • On August 23, 2021, the company entered into an agreement to sell just over nine acres of land in the Denver area for $8.2 million. The company expects to close this sale early in 2022 and plans to continue broadcasting both KRKS-AM and KBJD-AM from this site.
  • On June 2, 2021, the company entered into an agreement to acquire radio station KKOL-AM in Seattle, Washington for $0.5 million. The company paid $0.1 million of cash into an escrow account and began operating the station under a Local Marketing Agreement (“LMA”) on June 7, 2021.
  • On February 5, 2020, the company entered into an agreement with Word Broadcasting to sell radio stations WFIA-AM, WFIA-FM and WGTK-AM in Louisville, Kentucky for $4.0 million with credits applied from amounts previously paid, including a portion of the monthly fees paid under a Time Brokerage Agreement (“TBA”). Due to changes in debt markets, the transaction was not funded, and it is uncertain when, or if, the transaction will close. Word Broadcasting continues to program the stations under a TBA that began in January 2017.

Conference Call Information

Salem will host a teleconference to discuss its results on March 3, 2022 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 Fourth 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 March 17, 2022 and can be heard by dialing (877) 660-6853, passcode 13725291 or on the investor relations portion of the company’s website, located at investor.salemmedia.com.

Follow us on Twitter @SalemMediaGrp.

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.

First Quarter 2022 Outlook

For the first quarter of 2022, the company is projecting total revenue to increase between 3% and 5% from the first quarter of 2021 total revenue of $59.4 million. 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 6% and 9% compared to the first quarter of 2021 non-GAAP operating expenses of $51.4 million.

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 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 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

Twelve Months Ended

December 31,

December 31,

2020

2021

2020

2021

(Unaudited)

Net broadcast revenue

$

48,086

 

$

51,021

 

$

178,127

 

$

191,443

 

Net digital media revenue

11,238

 

11,561

 

39,593

 

42,164

 

Net publishing revenue

5,153

 

6,547

 

18,519

 

24,640

 

Total revenue

64,477

 

69,129

 

236,239

 

258,247

 

Operating expenses:

 

 

 

 

Broadcast operating expenses

36,238

 

38,752

 

140,942

 

145,720

 

Digital media operating expenses

8,602

 

8,517

 

31,725

 

33,797

 

Publishing operating expenses

5,507

 

6,376

 

21,950

 

23,220

 

Unallocated corporate expenses

4,285

 

4,719

 

16,194

 

17,483

 

Change in the estimated fair value of contingent earn-out consideration

 

 

(12

)

 

Debt modification costs

 

 

 

 

 

179

 

 

 

 

 

 

2,526

 

Impairment of indefinite-lived long-term assets other than goodwill

 

 

 

 

 

 

 

 

17,254

 

 

 

 

Impairment of goodwill

 

 

 

 

 

 

 

 

307

 

 

 

 

Depreciation and amortization

3,372

 

3,157

 

14,058

 

12,828

 

Net (gain) loss on the disposition of assets

81

 

(13,023

)

1,575

 

(23,575

)

Total operating expenses

58,085

 

48,677

 

243,993

 

211,999

 

Operating income (loss)

6,392

 

 

 

20,452

 

 

 

(7,754

)

 

 

46,248

 

Other income (expense):

 

 

 

 

Interest income

 

9

 

1

 

10

 

Interest expense

(4,006

)

 

 

(3,912

)

 

 

(16,075

)

 

 

(15,799

)

Gain on the forgiveness of PPP loans

 

 

 

 

 

 

 

 

 

 

 

11,212

 

Gain (loss) on early retirement of long-term debt

 

 

 

(970

)

 

 

49

 

 

 

(1,026

)

Net miscellaneous income and (expenses)

36

 

 

 

23

 

 

 

(9

)

 

 

110

 

Net income (loss) before income taxes

2,422

 

15,602

 

(23,788

)

40,755

 

Provision for (benefit from) income taxes

(906

)

(1,238

)

30,274

 

(759

)

Net income (loss)

$

3,328

 

$

16,840

 

$

(54,062

)

$

41,514

 

 

 

 

 

Basic income (loss) per share Class A and Class B common stock

$

0.12

 

$

0.62

 

$

(2.03

)

$

1.54

 

Diluted income (loss) per share Class A and Class B common stock

$

0.12

 

$

0.61

 

$

(2.03

)

$

1.52

 

 

 

 

 

Basic weighted average Class A and Class B common stock shares outstanding

26,683,363

 

27,093,713

 

26,683,363

 

26,892,540

 

Diluted weighted average Class A and Class B common stock shares outstanding

26,791,353

 

27,534,329

 

26,683,363

 

27,296,618

 

Salem Media Group, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

December 31, 2021

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Cash

 

$

6,325

 

$

1,785

Accounts receivable, net

 

 

24,469

 

 

25,663

Other current assets

 

 

15,002

 

 

14,066

Property and equipment, net

 

 

79,122

 

 

79,339

Operating and financing lease right-of-use assets

 

 

48,355

 

 

43,665

Intangible assets, net

 

 

347,547

 

 

346,438

Deferred financing costs

 

 

213

 

 

843

Other assets

 

 

3,538

 

 

4,313

Total assets

 

$

524,571

 

$

516,112

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

$

50,860

 

$

51,455

Long-term debt

 

 

213,764

 

 

170,581

Operating and financing lease liabilities, less current portion

 

 

47,847

 

 

42,273

Deferred income taxes

 

 

68,883

 

 

67,012

Other liabilities

 

 

7,938

 

 

6,580

Stockholders’ Equity

 

 

135,279

 

 

178,211

Total liabilities and stockholders’ equity

 

$

524,571

 

$

516,112

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

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

72

 

 

 

 

 

 

 

 

72

 

Net income

 

 

 

 

 

 

 

 

 

 

 

3,328

 

 

 

 

 

 

3,328

 

Stockholders’ equity, December 31, 2020

 

23,447,317

 

$

227

 

 

5,553,696

 

$

56

 

$

247,025

 

$

(78,023

)

 

$

(34,006

)

 

$

135,279

 

SALEM MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONT’D)

(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, 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

Stock-based compensation

 

 

 

 

 

 

 

79

 

 

 

 

 

 

 

 

79

Options exercised

283,150

 

 

3

 

 

 

 

 

691

 

 

 

 

 

 

 

 

694

Net income

 

 

 

 

 

 

 

 

 

16,840

 

 

 

 

 

 

16,840

Stockholders’ equity, December 31, 2021

23,922,974

 

$

232

 

5,553,696

 

$

56

 

$

248,438

 

$

(36,509

)

 

$

(34,006

)

 

$

178,211

SALEM MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

 

 

2020

 

2021

2020

2021

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

$

3,328

 

$

16,840

 

$

(54,062

)

$

41,514

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Non-cash stock-based compensation

 

72

 

 

79

 

 

345

 

 

319

 

Depreciation and amortization

 

3,372

 

 

3,157

 

 

14,058

 

 

12,828

 

Amortization of deferred financing costs

 

214

 

 

361

 

 

889

 

 

1,051

 

Non-cash lease expense

 

2,210

 

 

2,186

 

 

8,955

 

 

8,713

 

Provision for bad debts

 

217

 

 

(13

)

 

4,339

 

 

(261

)

Deferred income taxes

 

(849

)

 

(2,275

)

 

30,105

 

 

(1,871

)

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

)

Change in the estimated fair value of contingent earn-out consideration

 

 

 

 

 

(12

)

 

 

Net (gain) loss on the disposition of assets

 

81

 

 

(13,023

)

 

1,575

 

 

(23,575

)

Gain (loss) on early retirement of long-term debt

 

 

 

970

 

 

(49

)

 

1,026

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and unbilled revenue

 

(1,049

)

 

(1,034

)

 

1,516

 

 

(1,101

)

Inventories

 

123

 

 

(53

)

 

222

 

 

(465

)

Prepaid expenses and other current assets

 

386

 

 

1,198

 

 

(957

)

 

(20

)

Accounts payable and accrued expenses

 

(2,030

)

 

258

 

 

3,841

 

 

2,854

 

Operating lease liabilities

 

(2,758

)

 

(2,463

)

 

(9,154

)

 

(9,780

)

Contract liabilities

 

(3,011

)

 

874

 

 

2,263

 

 

1,656

 

Deferred rent income

 

(40

)

 

(237

)

 

(308

)

 

(209

)

Other liabilities

 

(562

)

 

2

 

 

1,692

 

 

43

 

Income taxes payable

 

2

 

 

918

 

 

32

 

 

981

 

Net cash provided by (used in) operating activities

$

(294

)

$

7,745

 

$

22,851

 

$

22,491

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Cash paid for capital expenditures net of tenant improvement allowances

 

(1,051

)

 

(3,832

)

 

(4,616

)

 

(10,784

)

Capital expenditures reimbursable under tenant improvement allowances

 

(11

)

 

8

 

 

(151

)

 

(130

)

Deposit on broadcast assets and radio station acquisitions

 

 

 

(60

)

 

 

 

(160

)

Purchases of broadcast assets and radio stations

 

 

 

 

 

 

 

(600

)

Deferred payments on acquisitions

 

 

 

(700

)

 

 

 

(700

)

Purchases of digital media businesses and assets

 

 

 

 

 

(400

)

 

(3,980

)

Proceeds from sale of long-lived assets

 

1

 

 

13,507

 

 

189

 

 

29,278

 

Proceeds from the cash surrender value of life insurance policies

 

 

 

 

 

2,363

 

 

 

Other

 

24

 

 

(87

)

 

(329

)

 

(1,314

)

Net cash provided by (used in) investing activities

$

(1,037

)

$

8,836

 

$

(2,944

)

$

11,610

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from 2028 Notes

 

 

 

 

 

 

 

114,731

 

Payments to repurchase or exchange 2024 Notes

 

 

 

(39,256

)

 

(3,392

)

 

(158,699

)

Proceeds from borrowings under ABL Facility

 

1,268

 

 

 

 

39,894

 

 

16

 

Payments on ABL Facility

 

(12,868

)

 

 

 

(47,320

)

 

(5,016

)

Proceeds from borrowings under PPP loans

 

 

 

 

 

 

 

11,195

 

Payments under PPP loans

 

 

 

 

 

 

 

17

 

Refund (payments) of debt issuance costs

 

(17

)

 

 

 

(141

)

 

(1,921

)

Payments of acquisition-related contingent earn-out consideration

 

(7

)

 

 

 

(7

)

 

 

Proceeds from the exercise of stock options

 

 

 

694

 

 

 

 

1,099

 

Payments on financing lease liabilities

 

(18

)

 

(15

)

 

(70

)

 

(63

)

Payment of cash distribution on common stock

 

 

 

 

 

(667

)

 

 

Book overdraft

 

 

 

 

 

(1,885

)

 

 

Net cash used in financing activities

$

(11,642

)

$

(38,577

)

$

(13,588

)

$

(38,641

)

Net increase (decrease) in cash and cash equivalents

$

(12,973

)

$

(21,996

)

$

6,319

 

$

(4,540

)

Cash and cash equivalents at beginning of year

 

19,298

 

 

23,781

 

 

6

 

 

6,325

 

Cash and cash equivalents at end of period

$

6,325

 

$

1,785

 

$

6,325

 

$

1,785

 

Salem Media Group, Inc.

Supplemental Information

(in thousands)

 

Three Months Ended

Twelve Months Ended

December 31,

December 31,

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

$

58,085

 

$

48,677

 

$

243,993

 

$

211,999

 

Less debt modification costs

 

 

 

 

 

(179

)

 

 

 

 

 

(2,526

)

Less depreciation and amortization expense

 

 

(3,372

)

 

 

(3,157

)

 

 

(14,058

)

 

 

(12,828

)

Less change in estimated fair value of contingent earn-out consideration

 

 

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

(81

)

13,023

 

(1,575

)

23,575

 

Less stock-based compensation expense

 

 

(72

)

 

 

(79

)

 

 

(345

)

 

 

(319

)

Total Recurring Operating Expenses

$

54,560

 

$

58,285

 

$

210,466

 

$

219,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue

Net broadcast revenue

 

$

48,086

 

 

$

51,021

 

 

$

178,127

 

 

$

191,443

 

Net broadcast revenue – acquisitions

 

(265

)

 

(608

)

Net broadcast revenue – dispositions

 

 

(128

)

 

 

(2

)

 

 

(763

)

 

 

(38

)

Net broadcast revenue – format change

(136

)

(198

)

(520

)

(759

)

Same Station net broadcast revenue

 

$

47,822

 

 

$

50,556

 

 

$

176,844

 

 

$

190,038

 

 

 

 

 

Reconciliation of Broadcast Operating Expenses to Same Station Broadcast Operating Expenses

Broadcast operating expenses

 

$

36,238

 

 

$

38,752

 

 

$

140,942

 

 

$

145,720

 

Broadcast operating expenses – acquisitions

 

(131

)

 

(337

)

Broadcast operating expenses – dispositions

 

 

(237

)

 

 

(31

)

 

 

(1,462

)

 

 

(230

)

Broadcast operating expenses – format change

(260

)

(209

)

(1,031

)

(802

)

Same Station broadcast operating expenses

 

$

35,741

 

 

$

38,381

 

 

$

138,449

 

 

$

144,351

 

 

 

 

 

Reconciliation of SOI to Same Station SOI

 

 

 

 

 

 

 

 

 

 

 

 

Station Operating Income

$

11,848

 

$

12,269

 

$

37,185

 

 

$

45,723

 

Station operating (income) loss – acquisitions

 

 

 

 

(134

)

 

 

 

 

(271

)

Station operating loss – dispositions

109

 

29

 

699

 

192

 

Station operating loss – format change

 

 

124

 

 

 

11

 

 

 

511

 

 

 

43

 

Same Station - Station Operating Income

$

12,081

 

$

12,175

 

$

38,395

 

$

45,687

 

Salem Media Group, Inc.

Supplemental Information

(in thousands)

 

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2021

2020

2021

(Unaudited)

Calculation of Station Operating Income, Digital Media Operating Income and Publishing Operating Income (Loss)

Net broadcast revenue

$

48,086

 

$

51,021

 

$

178,127

 

$

191,443

 

Less broadcast operating expenses

 

 

(36,238

)

 

 

(38,752

)

 

 

(140,942

)

 

 

(145,720

)

Station Operating Income

$

11,848

 

$

12,269

 

$

37,185

 

$

45,723

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net digital media revenue

$

11,238

 

$

11,561

 

$

39,593

 

$

42,164

 

Less digital media operating expenses

 

 

(8,602

)

 

 

(8,517

)

 

 

(31,725

)

 

 

(33,797

)

Digital Media Operating Income

$

2,636

 

$

3,044

 

$

7,868

 

$

8,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net publishing revenue

$

5,153

 

$

6,547

 

$

18,519

 

$

24,640

 

Less publishing operating expenses

 

 

(5,507

)

 

 

(6,376

)

 

 

(21,950

)

 

 

(23,220

)

Publishing Operating Income (Loss)

$

(354

)

$

171

 

$

(3,431

)

$

1,420

 

The company defines EBITDA (1) as net income (loss) 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 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 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
December 31,

 

Twelve Months Ended
December 31,

 

 

2020

2021

2020

 

 

2021

 

(Unaudited)

Net income (loss)

$

3,328

 

$

16,840

 

$

(54,062

)

$

41,514

 

Plus interest expense, net of capitalized interest

4,006

 

3,912

 

16,075

 

 

15,799

 

Plus provision for (benefit from) income taxes

 

(906

)

 

(1,238

)

 

30,274

 

 

(759

)

Plus depreciation and amortization

3,372

 

3,157

 

14,058

 

 

12,828

 

Less interest income

 

 

 

(9

)

 

(1

)

 

(10

)

EBITDA

$

9,800

 

$

22,662

 

$

6,344

 

$

69,372

 

Less net (gain) loss on the disposition of assets

 

81

 

 

(13,023

)

 

1,575

 

 

(23,575

)

Less debt modification costs

 

 

 

179

 

 

 

 

2,526

 

Less change in the estimated fair value of contingent earn-out consideration

 

 

(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

 

 

 

970

 

 

(49

)

 

1,026

 

Plus net miscellaneous (income) and expenses

(36

)

(23

)

9

 

 

(110

)

Plus gain on the forgiveness of PPP loans

 

 

 

 

 

 

 

(11,212

)

Plus non-cash stock-based compensation

 

72

 

 

79

 

 

345

 

 

319

 

Adjusted EBITDA

$

9,917

 

$

10,844

 

$

25,773

 

$

38,346

 

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

Twelve Months Ended

December 31,

December 31,

2020

 

2021

2020

 

2021

(Unaudited)

Net cash provided (used) by operating activities

 

$

(294

)

 

$

7,745

 

 

$

22,851

 

 

$

22,491

 

Non-cash stock-based compensation

(72

)

(79

)

(345

)

(319

)

Depreciation and amortization

 

 

(3,372

)

 

 

(3,157

)

 

 

(14,058

)

 

 

(12,828

)

Amortization of deferred financing costs

(214

)

(361

)

 

 

(889

)

 

 

(1,051

)

Non-cash lease expense

 

 

(2,210

)

 

 

(2,186

)

 

 

(8,955

)

 

 

(8,713

)

Provision for bad debts

 

 

(217

)

 

 

13

 

 

 

(4,339

)

 

 

261

 

Deferred income taxes

849

 

2,275

 

 

 

(30,105

)

 

 

1,871

 

Change in the estimated fair value of contingent earn-out consideration

 

 

 

 

 

 

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

 

Gain (loss) on the disposition of assets

(81

)

13,023

 

 

 

(1,575

)

 

 

23,575

 

Gain (loss) on early retirement of debt

 

 

 

 

 

(970

)

 

 

49

 

 

 

(1,026

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and unbilled revenue

 

 

1,049

 

 

 

1,034

 

 

 

(1,516

)

 

 

1,101

 

Inventories

(123

)

53

 

 

 

(222

)

 

 

465

 

Prepaid expenses and other current assets

 

 

(386

)

 

 

(1,198

)

 

 

957

 

 

 

20

 

Accounts payable and accrued expenses

2,030

 

(258

)

 

 

(3,841

)

 

 

(2,854

)

Contract liabilities

 

 

3,011

 

 

 

(874

)

 

 

(2,263

)

 

 

(1,656

)

Operating lease liabilities (deferred rent)

2,758

 

2,463

 

 

 

9,154

 

 

 

9,780

 

Deferred rent income

 

 

40

 

 

 

237

 

 

 

308

 

 

 

209

 

Other liabilities

 

 

562

 

 

 

(2

)

 

 

(1,692

)

 

 

(43

)

Income taxes payable

 

(2

)

 

(918

)

 

 

(32

)

 

 

(981

)

Net income (loss)

 

$

3,328

 

 

$

16,840

 

 

$

(54,062

)

 

$

41,514

 

Plus interest expense, net of capitalized interest

4,006

 

3,912

 

16,075

 

15,799

 

Plus provision for (benefit from) income taxes

 

 

(906

)

 

 

(1,238

)

 

 

30,274

 

 

 

(759

)

Plus depreciation and amortization

3,372

 

3,157

 

14,058

 

12,828

 

Less interest income

 

 

 

 

 

(9

)

 

 

(1

)

 

 

(10

)

EBITDA

$

9,800

 

$

22,662

 

$

6,344

 

$

69,372

 

Plus (gain) loss on the disposition of assets

 

 

81

 

 

 

(13,023

)

 

 

1,575

 

 

 

(23,575

)

Plus debt modification costs

 

 

 

 

 

179

 

 

 

 

 

 

2,526

 

Plus change in the estimated fair value of contingent earn-out consideration

 

 

 

 

 

 

(12

)

 

 

 

Plus impairment of indefinite-lived long-term assets other than goodwill

 

 

 

 

 

 

 

 

17,254

 

 

 

 

Plus impairment of goodwill

 

 

 

 

 

 

 

 

307

 

 

 

 

Plus (gain) loss on the early retirement of long-term debt

 

 

 

 

 

970

 

 

 

(49

)

 

 

1,026

 

Plus gain on the forgiveness of PPP loans

 

 

 

 

 

 

 

 

 

 

 

(11,212

)

Plus net miscellaneous (income) and expenses

(36

)

(23

)

9

 

(110

)

Plus non-cash stock-based compensation

 

 

72

 

 

 

79

 

 

 

345

 

 

 

319

 

Adjusted EBITDA

$

9,917

 

$

10,844

 

$

25,773

 

$

38,346

 

Less net cash paid for capital expenditures (1)

 

 

(1,051

)

 

 

(3,832

)

 

 

(4,616

)

 

 

(10,784

)

Plus cash (paid) received for taxes

59

 

(118

)

(137

)

(131

)

Less cash paid for interest, net of capitalized interest

 

 

(7,428

)

 

 

(5,271

)

 

 

(15,165

)

 

 

(14,905

)

Adjusted Free Cash Flow

$

1,497

 

$

1,623

 

$

5,855

 

$

12,526

 

(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

December 31, 2021

Senior Secured Notes due 2028 (1)

$

114,731,000

7.125%

Senior Secured Notes due 2024 (2)

$

60,174,000

 

 

6.750%

(1) $114.7 million notes with semi-annual interest payments at an annual rate of 7.125%.

(2) $60.2 million notes with semi-annual interest payments at an annual rate of 6.750%.

 

Contacts

Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com

Release Summary

Salem Media Group, Inc. Announces Fourth Quarter 2021 Total Revenue of $69.1 Million

Social Media Profiles

Contacts

Evan D. Masyr
Executive Vice President and Chief Financial Officer
(805) 384-4512
evan@salemmedia.com