PART I. FINANCIAL INFORMATION This section presents unaudited condensed consolidated financial statements, notes, and management's discussion and analysis Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total assets | $218,873 | $221,725 | -$2,852 | | Total liabilities | $55,193 | $55,803 | -$610 | | Total shareholders' equity | $163,680 | $165,922 | -$2,242 | | Cash and cash equivalents | $15,791 | $18,860 | -$3,069 | | Short-term investments | $9,116 | $8,927 | +$189 | | Accounts receivable, net | $15,120 | $15,941 | -$821 | | Net property and equipment | $51,219 | $51,907 | -$688 | | Broadcast licenses | $91,478 | $91,497 | -$19 | | Long-term debt | $5,000 | $5,000 | $0 | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Net operating revenue | $28,229 | $29,716 | -$1,487 (-5.0%) | $52,441 | $55,010 | -$2,569 (-4.7%) | | Station operating expenses | $22,226 | $23,305 | -$1,079 (-4.6%) | $44,189 | $45,764 | -$1,575 (-3.4%) | | Operating income (loss) | $1,409 | $2,143 | -$734 (-34.3%) | $(889) | $(274) | -$615 (224.5%) | | Net income (loss) | $1,128 | $2,501 | -$1,373 (-54.9%) | $(447) | $924 | -$1,371 (-148.4%) | | Basic EPS | $0.18 | $0.40 | -$0.22 (-55.0%) | $(0.07) | $0.15 | -$0.22 (-146.7%) | | Diluted EPS | $0.18 | $0.40 | -$0.22 (-55.0%) | $(0.07) | $0.15 | -$0.22 (-146.7%) | | Dividends declared per share | $0.25 | $0.25 | $0.00 | $0.50 | $1.10 | -$0.60 | Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including retained earnings, paid-in capital, and treasury stock Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | December 31, 2024 | June 30, 2025 | Change (in thousands) | | :-------------------- | :---------------- | :------------ | :-------------------- | | Total Shareholders' Equity | $165,922 | $163,680 | -$2,242 | | Retained Earnings | $128,216 | $124,554 | -$3,662 | | Additional Paid-In Capital | $74,334 | $74,747 | +$413 | | Treasury Stock | $(36,710) | $(35,703) | +$1,007 | - Net loss for the six months ended June 30, 2025, was $(447) thousand14 - Dividends declared per common share for the six months ended June 30, 2025, totaled $(3,215) thousand14 - Compensation expense related to restricted stock awards for the six months ended June 30, 2025, was $1,130 thousand14 Condensed Consolidated Statements of Cash Flows This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | :-------------------------- | | Net cash provided by operating activities | $2,119 | $5,047 | -$2,928 | | Net cash used in investing activities | $(1,973) | $(4,846) | +$2,873 | | Net cash used in financing activities | $(3,215) | $(14,391) | +$11,176 | | Net decrease in cash and cash equivalents | $(3,069) | $(14,190) | +$11,121 | | Cash and cash equivalents, end of period | $15,791 | $15,392 | +$399 | - Acquisition of broadcast properties was $0 in 2025, compared to $(5,705) thousand in 202416 - Cash dividends paid were $(3,215) thousand in 2025, compared to $(19,391) thousand in 202416 Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the unaudited condensed consolidated financial statements 1. Summary of Significant Accounting Policies This section outlines the key accounting principles and methods used in preparing the financial statements - The company owns or operates broadcast properties in 28 markets, including 82 FM and 31 AM radio stations and 79 metro signals20 - Earnings per share are calculated using the two-class method, allocating earnings to common shares and participating securities (restricted stock units)22 - Held-to-maturity U.S. Treasury Bills were $9.1 million at June 30, 2025, and $8.9 million at December 31, 2024, recorded at amortized cost26 - Allowance for credit losses increased slightly to $1,099,000 at June 30, 2025, from $1,071,000 at December 31, 202429 - The company operates as one reportable business segment: Radio31 2. Recent Accounting Pronouncements This section details recently issued accounting standards and their potential impact on the company's financial reporting - ASU 2023-09 (Income Taxes): Effective for annual periods beginning after January 1, 2025, requiring expanded disclosure of income rate reconciliation and income taxes paid38 - ASU 2024-03 (Expense Disaggregation Disclosures): Effective for annual periods beginning January 1, 2027, and interim periods beginning after January 1, 2028, requiring disclosures about specific types of expenses39 - ASU 2025-05 (Credit Losses for Accounts Receivable and Contract Assets): Effective for annual periods beginning January 1, 2026, and interim periods within that year, simplifying credit loss estimation40 3. Revenue This section disaggregates revenue by type and explains the company's revenue recognition policies and contract liabilities Revenue (in thousands) | Type of Revenue | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Broadcast Advertising, net | $21,626 | $23,167 | -$1,541 | $40,480 | $43,649 | -$3,169 | | Digital Advertising | $4,558 | $4,254 | +$304 | $8,053 | $7,333 | +$720 | | Other Revenue | $2,045 | $2,295 | -$250 | $3,908 | $4,028 | -$120 | | Net Revenue | $28,229 | $29,716 | -$1,487 | $52,441 | $55,010 | -$2,569 | - Primary revenue source is from the sale of advertising for broadcast on stations, recognized upon airing41 - Interactive advertising revenue from digital initiatives (targeted digital advertising, search engine management, online promotions, etc.) is recognized over time as performance obligations are met42 - Contract liabilities, primarily prepayments for advertising, are generally recognized within one year and are immaterial47 4. Broadcast Licenses, Goodwill and Other Intangible Assets This section describes the company's policies for valuing and testing impairment of broadcast licenses, goodwill, and other intangible assets - FCC licenses are evaluated for impairment annually or more frequently if circumstances indicate, using a discounted cash flow approach49 - Goodwill is evaluated for impairment annually using an income approach based on discounted cash flow analysis50 - No triggering events for interim impairment tests were identified during the six months ended June 30, 202554 - Amortizable intangible assets (favorable lease agreements, other intangibles, customer relationships) are amortized using the straight-line method over 1 to 26 years56 5. Common Stock and Treasury Stock This section details the company's common stock structure, dividend policies, and treasury stock activities, including buyback programs - All Class B Common Stock automatically converted to Class A Common Stock upon the founder's passing; no Class B shares are outstanding or will be issued57 - Shareholders are entitled to receive equal dividends on all classes of Common Stock58 - The company has a Stock Buy-Back Program with $17.7 million remaining authorization as of June 30, 202564 - No shares were repurchased under the Buy-Back Program during the three and six months ended June 30, 2025, or 202464 - The company intends to use proceeds from potential non-core asset sales to fund future stock buybacks64 6. Leases This section provides information on the company's lease arrangements, including right-of-use assets, lease liabilities, and rental commitments - Right-of-use (ROU) assets were $6.2 million at June 30, 2025, down from $6.9 million at December 31, 202466 - Lease liabilities were $6.5 million at June 30, 2025, down from $7.3 million at December 31, 202466 - Total lease expense for the six months ended June 30, 2025, was $887,000, compared to $950,000 in 202469 Minimum Annual Rental Commitments (in thousands) at June 30, 2025 | Years Ending December 31, | Amount (in thousands) | | :------------------------ | :-------------------- | | 2025 (remaining 6 months) | $915 | | 2026 | $1,795 | | 2027 | $1,613 | | 2028 | $1,212 | | 2029 | $784 | | Thereafter | $1,465 | | Total lease payments | $7,784 | | Less: Interest | $1,262 | | Present value of lease liabilities | $6,522 | - Weighted average remaining lease term and discount rate were 5.9 years and 5.9%, respectively, at June 30, 202574 7. Acquisitions and Dispositions This section outlines the company's recent acquisitions and dispositions of broadcast properties and their financial impact - In 2025, the company canceled the FCC license for WVAX-AM, resulting in a $19,000 loss73 - In 2024, the company acquired assets of six radio stations in Lafayette, Indiana, for $5.3 million, recognizing $76,000 in goodwill77 - In 2024, the company disposed of WNDN-FM for $150,000 (loss of $20,000), WYSE-AM and translators for $10,000 (loss of $147,000), and canceled the FCC license for KBAI-AM (loss of $800,000)777879 Pro Forma Results of Operations for Acquisitions (Unaudited) - Six Months Ended June 30, 2024 (in thousands, except per share data) | Metric | Actual 2024 (in thousands) | Pro Forma 2024 (in thousands) | | :-------------------- | :------------------------- | :---------------------------- | | Net operating revenue | $55,010 | $56,178 | | Net income (loss) | $924 | $846 | | Diluted EPS | $0.15 | $0.13 | 8. Income taxes This section presents the company's income tax benefit/expense and effective tax rates for the reported periods Income Tax (Benefit) Expense (in thousands) | Period | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :--------------------------- | :------------------ | :------------------ | :-------------------- | | Three Months Ended June 30 | $385 | $955 | -$570 | | Six Months Ended June 30 | $(200) | $375 | -$575 | Effective Tax Rate | Period | 2025 | 2024 | | :--------------------------- | :----- | :----- | | Three Months Ended June 30 | 25.4% | 27.6% | | Six Months Ended June 30 | 30.9% | 28.9% | - A new tax law signed on July 4, 2025, extending several business tax provisions, is not anticipated to have a material impact on financial statements89 9. Stock-Based Compensation This section details the company's stock-based compensation plans, including restricted stock awards and related expenses - The 2023 Incentive Compensation Plan replaced the 2005 Plan, authorizing up to 600,000 shares of Class A Common Stock for awards92 - No stock options were granted or outstanding during 2025 or 202493 Restricted Stock Compensation Expense (in thousands) | Period | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------- | :------------------ | :------------------ | | Three Months Ended June 30 | $603 | $520 | | Six Months Ended June 30 | $1,130 | $973 | - As of June 30, 2025, 277,243 non-vested restricted shares were outstanding with a weighted average grant date fair value of $15.6395 10. Long-Term Debt This section describes the company's long-term debt arrangements, including its revolving credit facility and compliance with covenants - Long-term debt remained at $5.0 million at June 30, 2025, and December 31, 202496 - The revolving credit facility matures on December 19, 2027, with interest rates based on SOFR (4.45% at June 30, 2025) plus a spread96100 - The company was in compliance with all financial covenants at June 30, 2025101 - Approximately $45 million of unused borrowing capacity was available under the Credit Facility at June 30, 2025101 11. Litigation This section confirms that the company is not currently involved in any material legal proceedings - The company is not a party to any current legal proceedings that are material to its financial condition102 12. Dividends This section reports dividends declared on common stock and outlines the company's future dividend policy Dividends Declared on Class A Common Stock | Period | Per Share | Total (in millions) | | :--------------------------- | :-------- | :------------------ | | Six Months Ended June 30, 2025 | $0.50 | $3.2 | | Six Months Ended June 30, 2024 | $1.10 | $6.9 (plus $12.5 special dividend) | - The company intends to declare regular quarterly cash dividends and variable dividends, with future declarations subject to Board discretion based on financial results and cash requirements105 13. Other Income and Loss This section details significant non-operating income or loss items, such as gains from investment sales - A one-time gain of $1,133,000 was recorded in Q2 2024 from the sale of an investment in Broadcast Music, Inc. (BMI), with no comparable gain in 2025107 14. Commitments and Contingencies This section outlines the company's future financial obligations and potential liabilities from various agreements - A $480,000 payment was made on July 31, 2025, for the former CEO's estate's income tax obligation related to a life insurance policy payout108 - A new Interim License Agreement with Broadcast Music, Inc. (BMI) for 2022-2026 is expected to be finalized in Q3 or Q4 2025, potentially incurring additional expenses109 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed analysis of the company's financial performance, condition, and liquidity, highlighting a decline in revenue and net income for the first half of 2025 Cautionary Note Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements identified by terms such as "will," "may," "believes," "intends," "expects," "anticipates," "plans," "projects," "estimates," and "guidance"111 - Actual results may materially differ due to various risks and uncertainties, including adverse changes in interest rates, financial leverage, dependence on key personnel/stations, economic conditions, market volatility, competition, regulatory requirements, tax laws, technological advances, cyber-attacks, and geopolitical events111 Introduction This section provides context for the discussion, advising readers to review it with the accompanying financial statements and prior annual report - This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes in this report, and the audited financial statements and Management's Discussion and Analysis in the annual report on Form 10-K for the year ended December 31, 2024112 Critical Accounting Policies and Estimates This section discusses key accounting policies and estimates, noting no significant changes since the prior annual report - No significant changes to critical accounting policies have occurred since the annual report on Form 10-K for the year ended December 31, 2024113 - The company uses "station operating income" (a non-GAAP measure) to assess financial performance, market-level performance, and for incentive-based compensation114115 Financial Condition and Results of Operations This section analyzes the company's financial health and performance, including revenue, expenses, and profitability trends General This section provides an overview of Saga Communications as a media company primarily engaged in broadcast property operations - Saga Communications is a media company primarily engaged in acquiring, developing, and operating broadcast properties, including digital, e-commerce, and non-traditional revenue initiatives116 - The company owns or operates broadcast properties in 28 markets, including 82 FM and 31 AM radio stations and 79 metro signals116 Radio Stations This section details revenue sources, advertising trends, seasonality, and digital strategy for the company's radio station operations - The primary source of revenue for radio stations is from the sale of advertising, with most contracts being short-term117118 - Approximately 90% of gross radio station revenue for the six months ended June 30, 2025, was from local advertising118 - Revenue varies seasonally, with the first quarter typically being the lowest, and political revenue is expected to decrease in 2025 due to fewer elections119 - Interactive advertising revenue increased by $720,000 (9.9%) to $8,053,000 for the six months ended June 30, 2025, compared to $7,333,000 in 2024127 - The company's "Blended Advertising" digital strategy focuses on providing simple digital advertising solutions (SEM, SEO, Targeted Display) in conjunction with radio127 - The five largest markets (Charleston, Columbus, Des Moines, Milwaukee, Norfolk) represented approximately 35% of consolidated net operating revenue and 38% of consolidated station operating income for the six months ended June 30, 2025129130 Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 This section compares the company's financial performance for the three-month periods, highlighting revenue and expense changes Financial Performance (3 Months Ended June 30, 2025 vs. 2024) (in thousands) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Net operating revenue | $28,229 | $29,716 | $(1,487) | (5.0)% | | Station operating expenses | $22,226 | $23,305 | $(1,079) | (4.6)% | | Operating income | $1,409 | $2,143 | $(734) | (34.3)% | | Net income | $1,128 | $2,501 | $(1,373) | (54.9)% | | Diluted EPS | $0.18 | $0.40 | $(0.22) | (55.0)% | - Same-station revenue decreased by $1,883,000, primarily due to decreases in gross local revenue ($1,634,000), political revenue ($237,000), and national revenue ($182,000)133 - Gross interactive revenue increased by $265,000133 - Same-station operating expense decreased by $1,469,000, mainly from lower compensation-related expenses ($675,000) and digital services expenses ($283,000)134 - Net income decrease was also impacted by a $1,132,000 decrease in other income due to a one-time gain from BMI investment sale in 2024136 Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 This section compares the company's financial performance for the six-month periods, detailing revenue, expense, and net income changes Financial Performance (6 Months Ended June 30, 2025 vs. 2024) (in thousands) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----- | :----- | :--------- | :--------- | | Net operating revenue | $52,441 | $55,010 | $(2,569) | (4.7)% | | Station operating expenses | $44,189 | $45,764 | $(1,575) | (3.4)% | | Operating income (loss) | $(889) | $(274) | $(615) | 224.5% | | Net income (loss) | $(447) | $924 | $(1,371) | (148.4)% | | Diluted EPS | $(0.07) | $0.15 | $(0.22) | (146.7)% | - Same-station revenue decreased by $3,548,000, primarily from gross local revenue ($3,443,000), national revenue ($613,000), and political revenue ($277,000)139 - Gross interactive revenue increased by $609,000139 - Same-station operating expense decreased by $2,582,000, mainly due to lower compensation-related expenses ($1,308,000) and digital services expenses ($426,000)140 - The net loss was significantly impacted by the absence of the $1,133,000 gain from the BMI investment sale in 2024142 Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations Debt Arrangements and Debt Service Requirements This section details the company's debt structure, including its credit facility, interest rates, and covenant compliance - The Credit Facility, maturing December 19, 2027, has $5.0 million debt outstanding at June 30, 2025, and December 31, 2024143147 - Interest rates are based on SOFR (4.45% at June 30, 2025) plus a spread, or the base rate plus a spread146 - The company was in compliance with all financial covenants at June 30, 2025147 - Approximately $45 million of unused borrowing capacity was available under the Credit Facility at June 30, 2025148 Sources and Uses of Cash This section analyzes the company's cash flows from operating, investing, and financing activities, including capital expenditures and dividends - Net cash provided by operating activities was $2,119,000 for the six months ended June 30, 2025, down from $5,047,000 in 2024149 - Capital expenditures (exclusive of acquisitions) were $2,010,000 for H1 2025, with an anticipated $3.0 million to $3.5 million for the full year 2025152 - Cash dividends paid totaled $3.2 million for H1 2025, significantly lower than $19.4 million for H1 2024 (which included a $12.5 million special dividend)154155 - The company intends to use a portion of proceeds from potential non-core asset sales to fund stock buybacks under its Buy-Back Program151 Summary Disclosures About Contractual Obligations and Commercial Commitments This section outlines the company's future cash obligations from debt, leases, and other agreements, and their anticipated funding - Future cash obligations include those under the Credit Facility, operating leases, programming contracts, and employment agreements157 - These obligations are anticipated to be financed through funds generated from operations or additional borrowings under the Credit Facility158 Recent Accounting Pronouncements This section refers to detailed information on recent accounting pronouncements provided in the financial statement notes - Refer to Note 2 of the accompanying financial statements for details on recent accounting pronouncements159 Inflation This section discusses the impact of inflation on the company's operations, noting rising costs and potential future adverse effects - The impact of inflation on operations has not been significant to date, but the company is observing rising costs for most goods and services160 - A high rate of inflation in the future could have an adverse effect on operations160 Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the market risk information previously disclosed in the company's 2024 annual report on Form 10-K - No material changes to the market risk information previously disclosed in the 2024 annual report on Form 10-K161 Item 4. Controls and Procedures The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, with a previously identified material weakness remediated - Disclosure controls and procedures were effective as of June 30, 2025162 - A material weakness in internal control over financial reporting related to broadcast and digital revenue reconciliations, identified in the 2024 Form 10-K, has been fully remediated by June 30, 2025163165 - Remediation included enhancements to system access controls, new reconciliation procedures, and increased management monitoring164 PART II OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and corporate governance updates Item 1. Legal Proceedings The company is not currently involved in any legal proceedings that are considered material to its financial condition - The company is not a party to any current legal proceedings that are material to its financial condition, either individually or in the aggregate168 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 annual report on Form 10-K - No material changes to the risk factors previously disclosed in the annual report on Form 10-K for the year ended December 31, 2024169 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company made no unregistered sales of equity securities during the quarter ended June 30, 2025, and no shares were repurchased under its Stock Buy-Back Program - No unregistered sales of equity securities were made during the quarter ended June 30, 2025170 - No shares were repurchased under the Stock Buy-Back Program during the three months ended June 30, 2025171 - Remaining authorization for future repurchases under the Buy-Back Program is $17,686,383171 Item 5. Other Information On June 20, 2025, the company adopted amended and restated bylaws, significantly changing procedures for shareholder nominations of directors and proposals - On June 20, 2025, the company filed a Current Report on Form 8-K announcing the adoption of amended and restated bylaws172 - The Amended and Restated Bylaws enhance procedural mechanics and disclosure requirements for shareholder nominations of directors and submissions of other business proposals172 - Shareholder proposals and nominations for the 2026 Annual Meeting must be submitted by February 1, 2026, or within specific adjusted timelines if the meeting date changes174 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, XBRL documents, and references to previously filed documents such as the Articles of Incorporation and Amended and Restated Bylaws - Exhibits include certifications (31.1, 31.2, 32), Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE), and references to Articles of Incorporation and Amended and Restated Bylaws176 SIGNATURES This section confirms the official signing of the report by the company's Executive Vice President, CFO, and Chief Accounting Officer SIGNATURES The report was duly signed on August 8, 2025, by Samuel D. Bush, Executive Vice President and Chief Financial Officer, and Catherine A. Bobinski, Senior Vice President, Chief Accounting Officer and Corporate Controller - The report was signed on August 8, 2025, by Samuel D. Bush (Executive Vice President and Chief Financial Officer) and Catherine A. Bobinski (Senior Vice President, Chief Accounting Officer and Corporate Controller)180
Saga munications(SGA) - 2025 Q2 - Quarterly Report