Exhibit 99.1

 

LOGO

Salem Media Group, Inc. Announces First Quarter 2020

Total Revenue of $58.3 Million

CAMARILLO, CA June 1, 2020 – Salem Media Group, Inc. (Nasdaq: SALM) released its results for the three months ended March 31, 2020.

First Quarter 2020 Results

For the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019:

Consolidated

 

   

Total revenue decreased 3.7% to $58.3 million from $60.5 million;

 

   

Total operating expenses increased 24.1% to $76.3 million from $61.5 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, depreciation expense and amortization expense (1) increased 3.4% to $54.8 million from $53.0 million;

 

   

Operating loss decreased to $18.0 million from $1.0 million;

 

   

Net (loss) was $55.2 million, or $2.07 net loss per share compared to net income of $0.3 million, or $0.01 net income per diluted share;

 

   

EBITDA (1) decreased to $(14.3) million from $3.7 million;

 

   

Adjusted EBITDA (1) decreased 55.0% to $3.4 million from $7.6 million; and

 

   

Net cash used by operating activities decreased 13.8% to $7.7 million from $9.0 million.

Broadcast

 

   

Net broadcast revenue decreased 2.0% to $45.2 million from $46.1 million;

 

   

Station Operating Income (“SOI”) (1) decreased 18.6% to $7.9 million from $9.6 million;

 

   

Same Station (1) net broadcast revenue increased 0.6% to $44.3 million from $44.0 million; and

 

   

Same Station SOI (1) decreased 18.8% to $8.0 million from $9.9 million.

Digital Media

 

   

Digital media revenue decreased 11.1% to $9.1 million from $10.2 million; and

 

   

Digital Media Operating Income (1) decreased 64.3% to $0.8 million from $2.2 million.

Publishing

 

   

Publishing revenue decreased 4.1% to $4.0 million from $4.1 million; and

 

   

Publishing Operating Loss (1) increased 59.8% to $1.1 million from $0.7 million.

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

 

   

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 $0.1 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 March 31, 2019 are:

 

   

A $4.0 million ($3.0 million, net of tax, or $0.11 per share) net loss on the disposition of assets including a $3.8 million estimated pre-tax loss for the sale of WSPZ-AM in Washington, D.C., a $0.2 million pre-tax loss on the sale of Mike Turner’s line of investment products and a $0.2 million pre-tax loss on the sale of HumanEvents.com offset by a $0.1 million pre-tax gain on the sale of Newport Natural Health;

 

   

A $0.4 million gain ($0.3 million, net of tax, or $0.01 per diluted share) on early redemption of long-term debt due to the repurchase of the company’s 6.75% senior secured notes due 2024;

 

   

A $0.2 million one-time expense associated with the adoption of ASC 842 ($0.1 million, net of tax) and

 

   

A $0.2 million non-cash compensation charge ($0.1 million, net of tax) related to the expensing of stock options and restricted stock consisting of:

 

   

$0.1 million non-cash compensation charge included in corporate expenses; and

 

   

the remaining $0.1 million non-cash compensation charge included in broadcast, digital media and publishing operating expenses.

Per share numbers are calculated based on 26,683,363 diluted weighted average shares for the quarter ended March 31, 2020, and 26,193,307 diluted weighted average shares for the quarter ended March 31, 2019.

Balance Sheet

As of March 31, 2020, the company had $216.3 million outstanding on the 6.75% senior secured notes due 2024 (the “Notes”) and $14.0 million outstanding on the Asset Based Revolving Credit Facility (“ABL Facility”). On April 7, 2020 the company amended its asset-based revolver to increase the amount available under the revolver from 85% of eligible receivables to 90%. In addition, the company extended the maturity date to March 1, 2024.

Acquisitions and Divestitures

The following transactions were completed since January 1, 2020:

 

   

On April 6, 2020, the company closed on the sale of radio station WBZW-AM and an FM translator construction permit in Orlando, Florida, for $0.2 million in cash.

Pending transactions:

 

   

On February 5, 2020, we entered an APA with Word Broadcasting to sell radio stations WFIA-AM, WFIA-FM and WGTK-AM in Louisville, Kentucky for $4.0 million with a $250,000 credit applied to the sale price if closing occurs before March 31, 2020. Additionally, Word Broadcasting would receive a credit toward the purchase price of a sum equal to the monthly fees paid under the TBA that began in January 2017 for months 4-29 of the TBA and a sum equal to $2,000 per month for each monthly fee payment for months 30 and thereafter of the TBA; and a credit of the $450,000 option payment. We estimated the loss on sale to be approximately $0.5 million net of tax if the sale closed by March 31, 2020 and $0.3 million net of tax if the sale closes later. Due to changes in debt markets, the transaction was not funded and it is uncertain when or if the transaction will close.


Conference Call Information

Salem will host a teleconference to discuss its results on June 1, 2020 at 2:00 p.m. Pacific Time. To access the teleconference, please dial (877) 524-8416, and then ask to be joined into the Salem Media Group First Quarter 2020 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 June 15, 2020 and can be heard by dialing (877) 660-6853, passcode 13704689 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 (@SalemMediaGrp).

Company Contact:

Evan D. Masyr

Executive Vice President and Chief

Financial Officer

(805) 384-4512

evan@salemmedia.com

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 are 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
March 31,
 
     2019     2020  
     (Unaudited)  

Net broadcast revenue

   $ 46,093     $ 45,180  

Net digital media revenue

     10,240       9,104  

Net publishing revenue

     4,136       3,966  
  

 

 

   

 

 

 

Total revenue

     60,469       58,250  
  

 

 

   

 

 

 

Operating expenses:

    

Broadcast operating expenses

     36,449       37,327  

Digital media operating expenses

     8,058       8,326  

Publishing operating expenses

     4,822       5,062  

Unallocated corporate expenses

     3,871       4,210  

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

     —         (5

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

     —         17,254  

Impairment of goodwill

     —         307  

Depreciation and amortization

     4,229       3,700  

Net (gain) loss on the disposition of assets

     4,024       79  
  

 

 

   

 

 

 

Total operating expenses

     61,453       76,260  
  

 

 

   

 

 

 

Operating loss

     (984     (18,010

Other income (expense):

    

Interest income

     1       —    

Interest expense

     (4,425     (4,032

Gain on early retirement of long-term debt

     426       49  

Net miscellaneous income and (expenses)

     1       (52
  

 

 

   

 

 

 

Net loss before income taxes

     (4,981     (22,045

Provision for (benefit from) income taxes

     (5,303     33,159  
  

 

 

   

 

 

 

Net income (loss)

   $ 322     $ (55,204
  

 

 

   

 

 

 

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

   $ 0.01     $ (2.07

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

   $ 0.01     $ (2.07

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

     26,186,112       26,683,363  
  

 

 

   

 

 

 

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

     26,193,307       26,683,363  
  

 

 

   

 

 

 


Salem Media Group, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     December 31, 2019      March 31, 2020  
        (Unaudited)  

Assets

     

Cash

   $ 6      $ 1,253  

Trade accounts receivable, net

     30,824        26,862  

Other current assets

     10,893        11,173  

Property and equipment, net

     87,673        86,630  

Operating and financing lease right-of-use assets

     54,730        52,586  

Intangible assets, net

     369,216        350,668  

Deferred financing costs

     224        183  

Other assets

     4,864        5,308  
  

 

 

    

 

 

 

Total assets

   $ 558,430      $ 534,663  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities

   $ 53,134      $ 57,834  

Long-term debt

     216,468        213,212  

Operating and financing lease liabilities, less current portion

     54,174        51,668  

Deferred income taxes

     38,778        71,862  

Other liabilities

     6,213        6,192  
  

 

 

    

 

 

 

Stockholders’ Equity

     189,663        133,895  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 558,430      $ 534,663  
  

 

 

    

 

 

 


SALEM MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands, except share and per share data)

 

     Class A
Common Stock
     Class B
Common Stock
     Additional
Paid-In
Capital
     Accumulated
Earnings
(Deficit)
    Treasury
Stock
    Total  
     Shares      Amount      Shares      Amount  

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  

Options exercised

     —          —          —          —          —          —         —         —    

Lapse of restricted shares

     —          —          —          —          —          —         —         —    

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               
  

 

 

       

 

 

              
     Class A
Common Stock
     Class B
Common Stock
     Additional
Paid-In
Capital
     Accumulated
Earnings
(Deficit)
    Treasury
Stock
    Total  
     Shares      Amount      Shares      Amount  

Stockholders’ equity, December 31, 2018

     22,950,066      $  227        5,553,696      $ 56      $  245,220      $ 10,372     $ (34,006   $  221,869  

Stock-based compensation

     —          —          —          —          176        —         —         176  

Cash distributions

     —          —          —          —          —          (1,702     —         (1,702

Net income

     —          —          —          —          —          322       —         322  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Stockholders’ equity, March 31, 2019

     22,950,066      $ 227        5,553,696      $ 56      $ 245,396      $ 8,992     $ (34,006   $ 220,665  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Distributions per share

   $ 0.065         $ 0.065               
  

 

 

       

 

 

              


SALEM MEDIA GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended
March 31,
 
     2019     2020  

OPERATING ACTIVITIES

    

Net income (loss)

   $ 322     $ (55,204

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

    

Non-cash stock-based compensation

     176       103  

Depreciation and amortization

     4,229       3,700  

Amortization of deferred financing costs

     258       227  

Non-cash lease expense

     2,267       2,252  

Accretion of acquisition-related deferred payments and contingent consideration

     1       —    

Provision for bad debts

     320       1,900  

Deferred income taxes

     (5,304     33,084  

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

     —         (5

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

     —         17,254  

Impairment of goodwill

     —         307  

Gain on early retirement of long-term debt

     (426     (49

Net (gain) loss on the disposition of assets

     4,024       79  

Changes in operating assets and liabilities:

    

Accounts receivable and unbilled revenue

     1,758       2,419  

Inventories

     (256     70  

Prepaid expenses and other current assets

     1,387       (587

Accounts payable and accrued expenses

     3,449       4,478  

Operating lease liabilities

     (3,458     (2,407

Contract liabilities

     133       133  

Deferred rent income

     (43     (84

Other liabilities

     —         6  

Income taxes payable

     130       57  
  

 

 

   

 

 

 

Net cash provided by operating activities

     8,967       7,733  
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Cash paid for capital expenditures net of tenant improvement allowances

     (2,404     (1,587

Capital expenditures reimbursable under tenant improvement allowances and trade agreements

     —         (84

Purchases of digital media businesses and assets

     (100     —    

Proceeds from sale of assets

     1,255       2  

Other

     (139     (428
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,388     (2,097
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Payments to repurchase 6.75% Senior Secured Notes

     (6,123     (3,392

Proceeds from borrowings under ABL Facility

     22,189       33,319  

Payments on ABL Facility

     (25,849     (31,745

Refund (payments) of debt issuance costs

     (13     (1

Payments on financing lease liabilities

     (21     (18

Payment of cash distribution on common stock

     (1,702     (667

Book overdraft

     3,827       (1,885
  

 

 

   

 

 

 

Net cash used in financing activities

     (7,692     (4,389
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (113     1,247  

Cash and cash equivalents at beginning of year

     117       6  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 4     $ 1,253  
  

 

 

   

 

 

 


Salem Media Group, Inc.

Supplemental Information

(in thousands)

 

     Three Months Ended
March 31,
 
     2019     2020  
     (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 and Depreciation and Amortization Expense (Recurring Operating Expenses)

 

Operating Expenses

   $ 61,453     $ 76,260  

Less depreciation and amortization expense

     (4,229     (3,700

Less change in estimated fair value of contingent earn-out

consideration

     —         5  

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

     (4,024     (79

Less stock-based compensation expense

     (176     (103
  

 

 

   

 

 

 

Total Recurring Operating Expenses

   $ 53,024     $ 54,822  
  

 

 

   

 

 

 

Reconciliation of Net Broadcast Revenue to Same Station Net Broadcast Revenue

 

Net broadcast revenue

   $ 46,093     $ 45,180  

Net broadcast revenue – acquisitions

     —         —    

Net broadcast revenue – dispositions

     (1,457     (24

Net broadcast revenue – format change

     (592     (845
  

 

 

   

 

 

 

Same Station net broadcast revenue

   $ 44,044     $ 44,311  
  

 

 

   

 

 

 

Broadcast operating expenses

   $ 36,449     $ 37,327  

Broadcast operating expenses – acquisitions

     —         (1

Broadcast operating expenses – dispositions

     (1,659     (83

Broadcast operating expenses – format change

     (646     (969
  

 

 

   

 

 

 

Same Station broadcast operating expenses

   $ 34,144     $ 36,274  
  

 

 

   

 

 

 

Reconciliation of SOI to Same Station SOI

    

Station Operating Income

   $ 9,644     $ 7,853  

Station operating loss – acquisitions

     —         1  

Station operating loss – dispositions

     202       59  

Station operating loss – format change

     54       124  
  

 

 

   

 

 

 

Same Station - Station Operating Income

   $ 9,900     $ 8,037  
  

 

 

   

 

 

 

Salem Media Group, Inc.

Supplemental Information

(in thousands)

 

     Three Months Ended
March 31,
 
     2019     2020  
     (Unaudited)  

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

 

Net broadcast revenue

   $ 46,093     $ 45,180  

Less broadcast operating expenses

     (36,449     (37,327
  

 

 

   

 

 

 

Station Operating Income

   $ 9,644     $ 7,853  
  

 

 

   

 

 

 

Net digital media revenue

   $ 10,240     $ 9,104  

Less digital media operating expenses

     (8,058     (8,326
  

 

 

   

 

 

 

Digital Media Operating Income

   $ 2,182     $ 778  
  

 

 

   

 

 

 

Net publishing revenue

   $ 4,136     $ 3,966  

Less publishing operating expenses

     (4,822     (5,062
  

 

 

   

 

 

 

Publishing Operating Loss

   $ (686   $ (1,096
  

 

 

   

 

 

 


The company defines EBITDA (1) as net income 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.

Salem Media Group, Inc.

Supplemental Information

(in thousands)

 

     Three Months Ended
March 31,
 
     2019      2020  
     (Unaudited)  

Net income (loss)

   $ 322      $ (55,204

Plus interest expense, net of capitalized interest

     4,425        4,032  

Plus provision for (benefit from) income taxes

     (5,303      33,159  

Plus depreciation and amortization

     4,229        3,700  

Less interest income

     (1      —    
  

 

 

    

 

 

 

EBITDA

   $ 3,672      $ (14,313
  

 

 

    

 

 

 

Less net (gain) loss on the disposition of assets

     4,024        79  

Less change in the estimated fair value of contingent

earn-out consideration

     —          (5

Plus impairment of indefinite-lived long-term assets

other than goodwill

     —          17,254  

Plus impairment of goodwill

     —          307  

Plus gain on early retirement of long-term debt

     (426      (49

Plus net miscellaneous income and expenses

     (1      52  

Plus non-cash stock-based compensation

     176        103  

Plus ASC 842 lease adoption

     171        —    
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 7,616      $ 3,428  
  

 

 

    

 

 

 

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  
     March 31,  
     2019     2020  
     (Unaudited)  

Net cash provided by operating activities

   $ 8,967     $ 7,733  

Non-cash stock-based compensation

     (176     (103

Depreciation and amortization

     (4,229     (3,700

Amortization of deferred financing costs

     (258     (227

Non-cash lease expense

     (2,267     (2,252

Accretion of acquisition-related deferred payments and contingent earn-out consideration

     (1     —    

Provision for bad debts

     (320     (1,900

Deferred income taxes

     5,304       (33,084

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

     —         5  

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

     —         (17,254

Impairment of goodwill

     —         (307

Net (gain) loss on the disposition of assets

     (4,024     (79

Gain on early retirement of long-term debt

     426       49  

Changes in operating assets and liabilities:

    

Accounts receivable and unbilled revenue

     (1,758     (2,419

Inventories

     256       (70

Prepaid expenses and other current assets

     (1,387     587  

Accounts payable and accrued expenses

     (3,449     (4,478

Contract liabilities

     (133     (133

Operating lease liabilities (deferred rent)

     3,458       2,407  

Deferred rent income

     43       84  

Other liabilities

     —         (6

Income taxes payable

     (130     (57
  

 

 

   

 

 

 

Net income (loss)

   $ 322     $ (55,204
  

 

 

   

 

 

 

Plus interest expense, net of capitalized interest

     4,425       4,032  

Plus provision for (benefit from) income taxes

     (5,303     33,159  

Plus depreciation and amortization

     4,229       3,700  

Less interest income

     (1     —    
  

 

 

   

 

 

 

EBITDA

   $ 3,672     $ (14,313
  

 

 

   

 

 

 

Plus net (gain) loss on the disposition of assets

     4,024       79  

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

     —         (5

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

     —         17,254  

Plus impairment of goodwill

     —         307  

Plus gain on early retirement of long-term debt

     (426     (49

Plus net miscellaneous income and expenses

     (1     52  

Plus non-cash stock-based compensation

     176       103  

Plus ASC 842 lease adoption

     171       —    
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,616     $ 3,428  
  

 

 

   

 

 

 

Less net cash paid for capital expenditures (1)

     (2,404     (1,587

Plus cash received (paid) for taxes

     130       (18

Less cash paid for interest, net of capitalized interest

     (303     (165
  

 

 

   

 

 

 

Adjusted Free Cash Flow

   $ 5,039     $ 1,658  
  

 

 

   

 

 

 

 

(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
March 31, 2020
     Applicable
Interest Rate
 

Senior Secured Notes due 2024 (1)

   $ 216,341,000        6.75

Asset-based revolving credit facility (2)

   $ 14,000,000        2.71

 

(1)

$216.3 million notes with semi-annual interest payments at an annual rate of 6.75%.

(2)

Outstanding borrowings under the ABL Facility, with interest payments due at LIBOR plus 1.5% to 2.0% per annum or prime rate plus 0.5% to 1.0% per annum.