Saga munications(SGA) - 2023 Q3 - Quarterly Report

Part I Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes. Condensed consolidated balance sheets Total assets and liabilities decreased, while shareholders' equity increased from December 2022 to September 2023. | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $234,367 | $240,753 | $(6,386) | | Total Liabilities | $52,432 | $62,224 | $(9,792) | | Total Shareholders' Equity | $181,935 | $178,529 | $3,406 | Condensed consolidated statements of operations Net income improved for both three and nine months ended September 30, 2023, due to lower corporate expenses and increased interest income. | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Net operating revenue | $29,149 | $29,980 | $(831) | $83,628 | $84,768 | $(1,140) | | Operating income | $3,492 | $1,055 | $2,437 | $8,693 | $8,146 | $547 | | Net income (loss) | $2,729 | $(104) | $2,833 | $6,999 | $4,923 | $2,076 | | Basic EPS | $0.45 | $(0.01) | $0.46 | $1.15 | $0.82 | $0.33 | | Diluted EPS | $0.45 | $(0.01) | $0.46 | $1.15 | $0.82 | $0.33 | Condensed consolidated statements of stockholders' equity Total shareholders' equity increased from December 2022 to September 2023, primarily due to net income, with all Class B shares converted to Class A in 2022. - Total Stockholders' Equity increased by $3,406 thousand from $178,529 thousand at December 31, 2022, to $181,935 thousand at September 30, 2023[14] - Net income for the three months ended September 30, 2023, was $2,729 thousand, contributing to the equity increase[14] - Dividends declared per common share for the three months ended September 30, 2023, was $0.25, totaling $1,530 thousand[11][14] Condensed consolidated statements of cash flows Operating cash flow slightly decreased, investing cash flow significantly improved, and financing cash flow increased due to higher dividends paid. | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change | | :------------------------------------ | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $13,921 | $14,362 | $(441) | | Net cash used in investing activities | $(2,663) | $(14,722) | $12,059 | | Net cash used in financing activities | $(16,816) | $(6,174) | $(10,642) | | Net increase (decrease) in cash | $(5,558) | $(6,534) | $976 | | Cash and cash equivalents, end of period | $31,244 | $48,226 | $(16,982) | Notes to unaudited condensed consolidated financial statements These notes detail accounting policies, financial instruments, revenue, intangible assets, capital structure, leases, acquisitions, taxes, stock compensation, debt, litigation, and dividends. - The company owns or operates broadcast properties in 27 markets, including 79 FM and 33 AM radio stations and 80 metro signals[19] - The passing of the founder and former CEO, Edward K. Christian, on August 19, 2022, resulted in the conversion of his Class B shares to Class A shares, eliminating all Class B Common Stock[49] - Shareholders approved the 2023 Incentive Compensation Plan, replacing the 2005 plan, authorizing up to 600,000 shares of Class A Common Stock for awards[76] - The company had no debt outstanding at December 31, 2022, or September 30, 2023, but maintains a Credit Facility with $50 million unused borrowing capacity[80][88] - The Board declared a quarterly cash dividend of $0.25 per share on Class A Common Stock on September 27, 2023, paid November 3, 2023[90] - In 2023, the company disposed of WPVQ-AM for $2,000 (loss of $43,000) and canceled WHMQ-AM license (loss of $22,000)[66][67] - The effective tax rate for the three months ended September 30, 2023, was 28.9% (vs. 108.7% in 2022), and for nine months was 27.9% (vs. 40.5% in 2022), with prior year impacted by former CEO's compensation[72] 1. Summary of Significant Accounting Policies This section outlines the company's accounting policies for interim financial statements, EPS calculation, financial instruments, doubtful accounts, income tax, and segment reporting. - Unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and are not necessarily indicative of full-year results[17][18] - Earnings per share is calculated using the two-class method, allocating earnings to common shares and participating securities (restricted stock units)[21] - Held-to-maturity U.S. Treasury Bills are recorded at amortized cost, totaling $10.5 million at September 30, 2023[25] - Allowance for doubtful accounts was $497,000 at September 30, 2023, and $519,000 at December 31, 2022[28] - The company operates as one reportable business segment (Radio) across 27 markets[30] 2. Recent Accounting Pronouncements Management has reviewed all recent accounting pronouncements and believes they will not materially affect the company's financial statements. - Management believes recent accounting pronouncements will not have a material effect on the Company's financial statements[32] 3. Revenue The company generates revenue primarily from broadcast and digital advertising, with net revenue slightly decreasing for both the three and nine months ended September 30, 2023. - Primary revenue sources include Broadcast Advertising, Digital Advertising, and Other Revenue (concerts, promotional events, tower rent)[34][35][36] | Type of Revenue | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Broadcast Advertising | $23,946 | $25,500 | $69,798 | $72,523 | | Digital Advertising | $2,757 | $2,142 | $7,140 | $6,124 | | Other Revenue | $2,446 | $2,338 | $6,690 | $