10-Q 1 gtn20230630_10q.htm FORM 10-Q gtn20230630_10q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark one)

 

☒

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023 or

 

☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________ .

 

Commission file number: 1-13796

 

 

Gray Television, Inc.

 
 

(Exact name of registrant as specified in its charter)

 

 

Georgia

 

58-0285030

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

   

4370 Peachtree Road, NE, Atlanta, Georgia

 

30319

(Address of principal executive offices)

 

(Zip code)

 

 

(404) 504-9828

 
 

(Registrant's telephone number, including area code)

 

 

 

Not Applicable

 
 

(Former name, former address and former fiscal year, if changed since last report.)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock (no par value)

GTN.A

New York Stock Exchange

common stock (no par value)

GTN

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒ Accelerated filer ☐
   
Non-accelerated filer ☐ Smaller reporting company ☐
   
Emerging growth company ☐  

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

 

Common Stock (No Par Value)

 

Class A Common Stock (No Par Value)

87,263,755 shares outstanding as of July 28, 2023

 

8,191,073 shares outstanding as of July 28, 2023

 

 
 
 

 

 

INDEX

 

GRAY TELEVISION, INC.

 

 

     

PART I.

FINANCIAL INFORMATION

PAGE
     

Item 1.

Financial Statements

  
     
 

Condensed consolidated balance sheets (Unaudited) - June 30, 2023 and December 31, 2022

3
     
 

Condensed consolidated statements of operations (Unaudited) - three-months and six-months ended June 30, 2023 and 2022

5
     
 

Condensed consolidated statements of comprehensive income (loss) (Unaudited) – three-months and six-months ended June 30, 2023 and 2022

     6
     
 

Condensed consolidated statements of stockholders' equity (Unaudited) – three-months and six-months ended June 30, 2023 and 2022

7
     
 

Condensed consolidated statements of cash flows (Unaudited) - six-months ended June 30, 2023 and 2022

8
     
 

Notes to condensed consolidated financial statements (Unaudited)

9
     

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

23
     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29
     

Item 4.

Controls and Procedures

30
     

PART II.

OTHER INFORMATION

  
     

Item 1A.

Risk Factors

30
     

Item 5.

Other Information

30
     

Item 6.

Exhibits

 31
     

SIGNATURES

32

 

2
 

 

 

PART I.         FINANCIAL INFORMATION

 

Item 1.         Financial Statements

 

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)

 

  

June 30,

  

December 31,

 
  

2023

  

2022

 

Assets:

        

Current assets:

        

Cash

 $36  $61 

Accounts receivable, less allowance for credit losses of $32 and $16, respectively

  329   650 

Current portion of program broadcast rights, net

  7   27 

Income tax refunds receivable

  21   22 

Prepaid income taxes

  67   43 

Prepaid and other current assets

  52   54 

Total current assets

  512   857 
         

Property and equipment, net

  1,574   1,466 

Operating leases right of use asset

  79   75 

Broadcast licenses

  5,320   5,331 

Goodwill

  2,660   2,663 

Other intangible assets, net

  537   636 

Investments in broadcasting and technology companies

  108   105 

Deferred pension assets

  5   5 

Other

  15   14 

Total assets

 $10,810  $11,152 

 

See notes to condensed consolidated financial statements.

 

3
 

 

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except for share data)

 

  

June 30,

  

December 31,

 
  

2023

  

2022

 

Liabilities and stockholders’ equity:

        

Current liabilities:

        

Accounts payable

 $33  $55 

Employee compensation and benefits

  71   98 

Accrued interest

  62   60 

Accrued network programming fees

  40   39 

Other accrued expenses

  51   50 

Federal and state income taxes

  12   15 

Current portion of program broadcast obligations

  8   29 

Deferred revenue

  40   24 

Dividends payable

  14   14 

Current portion of operating lease liabilities

  11   10 

Current portion of long-term debt

  15   15 

Total current liabilities

  357   409 
         

Long-term debt, less current portion and deferred financing costs

  6,197   6,440 

Program broadcast obligations, less current portion

  1   1 

Deferred income taxes

  1,448   1,454 

Operating lease liabilities, less current portion

  71   68 

Other

  26   14 

Total liabilities

  8,100   8,386 
         

Commitments and contingencies (Note 10)

          
         

Series A Perpetual Preferred Stock, no par value; cumulative; redeemable; designated 1,500,000 shares, issued and outstanding 650,000 shares at each date and $650 aggregate liquidation value at each date

  650   650 
         

Stockholders’ equity:

        

Common stock, no par value; authorized 200,000,000 shares, issued 107,179,827 shares and 105,104,057 shares, respectively, and outstanding 87,263,755 shares and 85,467,271 shares, respectively

  1,168   1,150 

Class A common stock, no par value; authorized 25,000,000 shares, issued 10,413,993 shares and 9,675,139 shares, respectively, and outstanding 8,191,073 shares and 7,544,415 shares, respectively

  45   45 

Retained earnings

  1,175   1,242 

Accumulated other comprehensive loss, net of income tax benefit

  (15)  (12)
   2,373   2,425 

Treasury stock at cost, common stock, 19,916,072 shares and 19,636,786 shares, respectively

  (281)  (278)

Treasury stock at cost, Class A common stock, 2,222,920 shares and 2,130,724 shares, respectively

  (32)  (31)

Total stockholders’ equity

  2,060   2,116 

Total liabilities and stockholders’ equity

 $10,810  $11,152 

 

See notes to condensed consolidated financial statements.

 

4
 

 

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except for per share data)

 

 
   

Three Months Ended

    

Six Months Ended

  
   

June 30,

    

June 30,

  
   

2023

    

2022

    

2023

    

2022

  
                                 

Revenue (less agency commissions):

                                

Broadcasting

   $ 801     $ 855     $ 1,580     $ 1,659  

Production companies

     12       13       34       36  

Total revenue (less agency commissions)

     813       868       1,614       1,695  

Operating expenses before depreciation, amortization and gain on disposal of assets, net:

                                

Broadcasting

     552       528       1,107       1,058  

Production companies

     11       14       70       40  

Corporate and administrative

     30       25       56       53  

Depreciation

     35       31       70       63  

Amortization of intangible assets

     50       52       99       104  

Loss (gain) on disposal of assets, net

     16       -       26       (5 )

Operating expenses

     694       650       1,428       1,313  

Operating income

     119       218       186       382  

Other expense:

                                

Miscellaneous expense, net

     (1 )     -       (3 )     (2 )

Interest expense

     (109 )     (81 )     (213 )     (160 )

Loss from early extinguishment of debt

     -       -       (3 )     -  

Income (loss) before income taxes

     9       137       (33 )     220  

Income tax expense (benefit)

     5       38       (6 )     59  

Net income (loss)

     4       99       (27 )     161  

Preferred stock dividends

     13       13       26       26  

Net (loss) income attributable to common stockholders

   $ (9 )   $ 86     $ (53 )   $ 135  
                                 

Basic per share information:

                                

Net (loss) income attributable to common stockholders

   $ (0.10 )   $ 0.92     $ (0.58 )   $ 1.45  

Weighted-average shares outstanding

     93       93       92       93  
                                 

Diluted per share information:

                                

Net (loss) income attributable to common stockholders

   $ (0.10 )   $ 0.91     $ (0.58 )   $ 1.44  

Weighted-average shares outstanding

     93       94       92       94  
                                 

Dividends declared per common share

   $ 0.08     $ 0.08     $ 0.16     $ 0.16  

 

See notes to condensed consolidated financial statements.

 

5
 

 

 

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

 

   

Three Months Ended

    

Six Months Ended

  
   

June 30,

    

June 30,

  
   

2023

    

2022

    

2023

    

2022

  
                                 

Net income (loss)

   $ 4     $ 99     $ (27 )   $ 161  
                                 

Other comprehensive income (loss):

                                

Adjustment - fair value of interest rate caps

     11       -       (4 )     -  

Income tax expense (benefit)

     3       -       (1 )     -  

Other comprehensive income (loss), net

     8       -       (3 )     -  
                                 

Comprehensive income (loss)

   $ 12     $ 99     $ (30 )   $ 161  

 

See notes to condensed consolidated financial statements.

 

6
 

GRAY TELEVISION, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

(in millions, except for number of shares)
 
                                                                             

Accumulated

          
     

Class A

                            

Class A

    

Common

    

Other

          
     

Common Stock

    

Common Stock

    

Retained

    

Treasury Stock

    

Treasury Stock

    

Comprehensive

          
     

Shares

    

Amount

    

Shares

    

Amount

    

Earnings

    

Shares

    

Amount

    

Shares

    

Amount

    

Loss

    

Total

  
                                                                                           

Balance at December 31, 2021

       9,424,691     $ 39       104,286,324     $ 1,127     $ 869       (1,998,179 )   $ (28 )     (16,747,268 )   $ (223 )   $ (27 )   $ 1,757  
                                                                                           

Net income

       -       -       -       -       62       -       -       -       -       -       62  
                                                                                           

Preferred stock dividends

       -       -       -       -       (13 )     -       -       -       -       -       (13 )
                                                                                           

Common stock dividends

       -       -       -       -       (8 )     -       -       -       -       -       (8 )
                                                                                           

Issuance of common stock:

                                                                                          

401(k) Plan

       -       -       307,885       7       -       -       -       -       -       -       7  

2017 Equity and Incentive

                                                                                          

Compensation Plan:

                                                                                          

Restricted stock awards

       250,448       -       333,382       -       -       (103,738 )     (2 )     (138,959 )     (3 )     -       (5 )

Restricted stock unit awards

       -       -       108,921       -       -       -       -       (32,958 )     (1 )     -       (1 )
                                                                                           

Stock-based compensation

       -       2       -       3       -       -       -       -       -       -       5  
                                                                                           

Balance at March 31, 2022

       9,675,139     $ 41       105,036,512     $ 1,137     $ 910       (2,101,917 )   $ (30 )     (16,919,185 )   $ (227 )   $ (27 )   $ 1,804  
                                                                                           

Net income

       -       -       -       -       99       -       -       -       -       -       99  
                                                                                           

Preferred stock dividends

       -       -       -       -       (13 )     -       -       -       -       -       (13 )
                                                                                           

Common stock dividends

       -       -       -       -       (8 )     -       -       -       -       -       (8 )
                                                                                           

Issuance of common stock:

                                                                                          

2017 Equity and Incentive

                                                                                          

Compensation Plan:

                                                                                          

Restricted stock awards

       -       -       67,545       -       -       -       -       (17,463 )     -       -       -  
                                                                                           

Repurchase of common stock

                                                 (2,646,193 )     (50 )           (50 )
                                                                                           

Stock-based compensation

       -       2       -       4       -       -       -       -       -       -       6  
                                                                                           

Balance at June 30, 2022

       9,675,139     $ 43       105,104,057     $ 1,141     $ 988       (2,101,917 )   $ (30 )     (19,582,841 )   $ (277 )   $ (27 )   $ 1,838  
                                                                                           
                                                                                           

Balance at December 31, 2022

       9,675,139     $ 45       105,104,057     $ 1,150     $ 1,242       (2,130,724 )   $ (31 )     (19,636,786 )   $ (278 )   $ (12 )   $ 2,116  
                                                                                           

Net loss

       -       -       -       -       (31 )     -       -       -       -       -       (31 )
                                                                                           

Preferred stock dividends

       -       -       -       -       (13 )     -       -       -       -       -       (13 )
                                                                                           

Common stock dividends

       -       -       -       -       (7 )     -       -       -       -       -       (7 )
                                                                                           

Adjustment to fair value of interest rate cap, net of tax

       -       -       -       -       -       -       -       -       -       (11 )     (11 )
                                                                                           

Issuance of common stock:

                                                                                          

401(k) Plan

       -       -       819,898       9       -       -       -       -       -       -       9  

2022 Equity and Incentive

                                                                                          

Compensation Plan:

                                                                                          

Restricted stock awards

       25,022       -       12,227       -       -       (92,196 )     (1 )     (129,636 )     (2 )     -       (3 )

Restricted stock unit awards

       -       -       247,953       -       -       -       -       (80,622 )     (1 )     -       (1 )
                                                                                           

Stock-based compensation

       -       -       -       2       -       -       -       -       -       -       2  
                                                                                           

Balance at March 31, 2023

       9,700,161     $ 45       106,184,135     $ 1,161     $ 1,191       (2,222,920 )   $ (32 )     (19,847,044 )   $ (281 )   $ (23 )   $ 2,061  
                                                                                           

Net income

       -       -       -       -       4       -       -       -       -       -       4  
                                                                                           

Preferred stock dividends

       -       -       -       -       (13 )     -       -       -       -       -       (13 )
                                                                                           

Common stock dividends

       -       -       -       -       (7 )     -       -       -       -       -       (7 )
                                                                                           

Adjustment to fair value of interest rate cap, net of tax

       -       -       -       -       -       -       -       -       -       8       8  
                                                                                           

Issuance of common stock:

                                                                                          

401(k) Plan

       -       -       -       -       -       -       -       -       -       -       -  

2022 Equity and Incentive

                                                                                          

Compensation Plan:

                                                                                          

Restricted stock awards

       713,832       -       995,692       -       -       -       -       (69,028 )     -       -       -  
                                                                                           

Stock-based compensation

       -       -       -       7       -       -       -       -       -       -       7  
                                                                                           

Balance at June 30, 2023

       10,413,993     $ 45       107,179,827     $ 1,168     $ 1,175       (2,222,920 )   $ (32 )     (19,916,072 )   $ (281 )   $ (15 )   $ 2,060  

 

See notes to condensed consolidated financial statements.

 

7
 

 

GRAY TELEVISION, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 

(in millions) 

 

 
   

Six Months Ended

  
   

June 30,

  
   

2023

   

2022

 

Operating activities:

                

Net (loss) income

   $ (27 )   $ 161  

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

                

Depreciation

     70       63  

Amortization of intangible assets

     99       104  

Amortization of deferred loan costs

     7       8  

Amortization of restricted stock awards

     9       11  

Amortization of program broadcast rights

     20       25  

Payments on program broadcast obligations

     (21 )     (26 )

Deferred income taxes

     (6 )     -  

Loss (gain) on disposal of assets, net

     26       (5 )

Loss from early extinguishment of debt

     3       -  

Other

     11       6  

Changes in operating assets and liabilities:

                

Accounts receivable

     321       10  

Income taxes receivable or prepaid

     (24 )     (67 )

Other current assets

     4       18  

Accounts payable

     (21 )     7  

Employee compensation, benefits and pension cost

     (27 )     (8 )

Accrued network fees and other expenses

     9       7  

Accrued interest

     2       1  

Income taxes payable

     (3 )     7  

Deferred revenue

     7       8  

Net cash provided by operating activities

     459       330  
                 

Investing activities:

                

Acquisitions of television businesses and licenses, net of cash acquired

     (6 )     (40 )

Proceeds from sale of television station

     6       -  

Purchases of property and equipment

     (213 )     (159 )

Proceeds from asset sales

     22       2  

Reimbursement of development costs

     11       -  

Proceeds from Repack reimbursement (Note 1)

     -       5  

Investment in broadcast, production and technology companies

     (7 )     (9 )

Net cash used in investing activities

     (187 )     (201 )
                 

Financing activities:

                

Proceeds from borrowings on long-term debt

     150       -  

Repayments of borrowings on long-term debt

     (403 )     (58 )

Repurchase of common stock

     -       (50 )

Payment of common stock dividends

     (14 )     (16 )

Payment of preferred stock dividends

     (26 )     (26 )

Payment of taxes related to net share settlement of equity awards

     (4 )     (