Gray Media, Inc. · NYSE:GTN
Gray Media — Gray Television — Guggenheim Media Day 2018
32 slides from Gray Media's conference presentation, Jun 5, 2018
Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN May 21, 2018 Edition Updated for March 31, 2018 Financial Information If Appendix is not included, see full presentation located at www.gray.tv for Non- GAAP Reconciliations. 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261.
Slide 2: Table of Contents
Table of Contents Company Overview 3 Investment Highlights 7 Financial Overview 15 Glossary 21 ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This presentation contains certain forward looking statements that are based largely
Slide 3: An Industry Leading Power
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY An Industry Leading Power 33
Slide 4: High Quality, Diverse Station Group
High Quality, Diverse Station Group 57 200+ 100+ 24 40 channels 29 channels 57 markets Over 200 Over 100 24 markets with owned total “Big 4” with two or and/or program network more “Big operated streams program 4” network 20 channels stations across 103 streams affiliations stations 14 channels 4 4
Slide 5: Gray Continues to Prudently Grow its Scale
Gray Continues to Prudently Grow its Scale… (2) $3,908 62% (3) $2,471 39% $1,949 (TV Only) 33% 2016 / 2017 Blended $1,133 19% U.S. Household Revenue(1) $1,076 16% Reach (Gross) ($ in millions) (4) $921 $921 10% $808 19% (TV Only) $784 11% $618 (TV Only) 11% Gray has Completed $410 7% over $1.5 Billi
Slide 6: Gray National Footprint
Gray National Footprint Ranked #1 or #2 in all of our 57 Markets | Reaching approximately 10.4% of US TV households Lincoln, NE Sioux Falls, SD Omaha, NE Bismarck, ND Cedar Rapids, IA Rapid City, SD Fargo, ND Davenport, IA Burlington, VT La Crosse-Eau Claire, WI North Platte, NE Wausau-Rhinelander,
Slide 7: Investment Highlights
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Investment Highlights 7 7
Slide 8: The Importance of #1 Highly Ranked News Franchises Drive Traffic
The Importance of #1 Highly Ranked News Price Leadership Franchises Drive Traffic • Dominate local and political revenue with highly-rated news platforms • #1 Stations can secure more than Share of Market Ad $ half of a market’s political ad buys • Greater purchasing power and leverage with MVPDs, p
Slide 9: Gray Leads in Household Ratings – November 2017
Gray Leads in Household Ratings – November 2017 Gray’s primary stations had the HIGHEST average all-day #1 DMA Household Rating (M-S 6a-2a) across ALL network and affiliate group owners Gray’s national Household Share average exceeds all major #1 affiliate news programs #1 or #2 In ALL 57 markets in
Slide 10: Network Programs Over-Index on Gray's Stations
CBS vs. Gray | November ’17 Household Share 19 16 11 13 13 9 Gray 10 9 CBS The Morning Show Network News Prime (Mon-Sun) The Late Show Network Programs Over-Index on NBC vs. Gray | November ’17 Household Share 26 Gray’s Stations 23 Gray 12 12 12 10 11 6 NBC ABC, CBS, and NBC perform far better on Th
Slide 11: Revenue Diversified Across Networks and Markets
Revenue Diversified Across Networks and Markets 2017CHB Revenue by 2017CHB BCF by Affiliate: $895mm Affiliate: $332mm All Non-Big All Non-Big Four Channels Four Channels + Other + Other 7% 4% 4% 2% 34% 20% 21% 38% Increasing Diversification 34% 36% of Revenue Sources 2008: As Reported • 96% of reven
Slide 12: A Leading Beneficiary of Political Revenue
A Leading Beneficiary of Political Revenue Gray Political Revenue Gray Markets with at Least One 2018 Election ($ in millions) As Reported Combined Historical Basis Governor 81% 2018 is a Non- $143 Presidential $118 Political Year US Senate 65% $90 and Presents an $82 Attractive Upside House 100% Op
Slide 13: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue Retransmission Revenue ($ in millions) $350 to Gross Retransmission Revenue $353 Network “Reverse Comp.” $280 “Net Retransmission Revenue” $226 171-173 $189 139 $116 112 86 34 179-180 114 141 82 103 2014CHB 2015CHB 2016CHB 2017CHB 2018 EST. Retrans Renewals for
Slide 14: Successful Digital Media Initiatives
Successful Digital Media Initiatives • 3.4 billion total page views in 2017 Gray Digital 7.5 million Facebook followers, up (up 23% over 2016) 17% from Q1 2017 Media • Mobile makes up 82% of all digital traffic 2.3 million Twitter followers, up 18% from Q1 2017, Likes=57k, Tweets=3.4 million • 300%
Slide 15: Financial Overview
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Financial Overview 15 15
Slide 16: 2015/2016/2017 Snapshot
2015/2016/2017 Snapshot Combined Historical Basis Year Ended December 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 Revenue (less agency commissions): Total $895,081 $946,001 (5)% $821,599 9% Political $16,539 $117,538 (86)% $21,934 (25)% Operating expenses (1) (2): Broadcast $570,57
Slide 17: Financial Scale Continues to Increase
Financial Scale Continues to Increase Revenue ($ in millions) As Reported Combined Historical Basis LTM L8QA LTM L8QA $883 $848 $946 $812 $921 $705 $895 $597 $553 $884 $508 $851 $405 $427 $822 $836 $356 $346 $376 2012 2013 2014 2015 2016 2017 2014 2015 2016 2017 Operating Cash Flow ($ in millions) A
Slide 18: Prudent Balance Sheet Management Leads to Deleveraging
Prudent Balance Sheet Management Leads to Deleveraging • Gray has significantly reduced secured and total leverage from historical levels • Gray has diversified its revenue base, allowing for significant free cash flow in both political and non-political years Financial Leverage Netting All Cash ($
Slide 19: Robust Free Cash Flow Generation and Conversion
Robust Free Cash Flow Generation and Conversion Non Presidential Election Year Non-Election Year Presidential Election Year Non-Election Year 2014 OCF Buildup 2015 OCF Buildup 2016 OCF Buildup 2017 OCF Buildup ($ in millions) ($ in millions) ($ in millions) ($ in millions) 64%(3) 58%(3) $374 $370 58
Slide 20: Capitalization
Capitalization Combined Historical Basis(1) ($ in millions) “L8QA” or “Last Eight Quarter Average” Estimated for the period ended March 31, As of Annual Cash 2018 March 31, Interest 2018 Expense Leverage OCF Cash $ 443 Debt: Revolving Credit Facility – Availability is $100 Million $ - Term Loan B du
Slide 21: Glossary
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Glossary 21 21
Slide 22: Glossary
Glossary “Combined Historical Basis” Combined Historical Basis reflects financial results that have been compiled by adding Gray’s historical or “CHB” revenue and broadcast expenses to the historical revenue and broadcast expenses of the stations acquired in the Completed Transactions and subtractin
Slide 23: Non-GAAP Terms
Non-GAAP Terms From time to time, Gray supplements its financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses,
Slide 24: Appendix: Non-GAAP Reconciliations
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Appendix: Non-GAAP Reconciliations 24 24
Slide 25: Annual Year-Over-Year Results As Reported Basis
Annual Year-Over-Year Results As Reported Basis As Reported Results Three Months Ended March 31 % Change % Change 2018 to 2018 to 2018 2017 2017 2016 2016 (dollars in thousands) Revenue (less agency commissions): Total $ 226,258 $ 203,461 11 % $ 173,723 30 % Political $ 5,775 $ 1,321 337 % $ 9,655 (
Slide 26: Annual Year-Over-Year Results As Reported Basis
Annual Year-Over-Year Results As Reported Basis As Reported Results Year Ended December 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue (less agency commissions): Total $ 882,728 $ 812,465 9% $ 597,356 48 % Political $ 16,498 $ 90,095 (82)% $ 17,163 (4)%
Slide 27: Annual Year-Over-Year Results Combined Historical Basis
Annual Year-Over-Year Results Combined Historical Basis Combined Historical Basis Year Ended December 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue (less agency commissions): Total $ 895,081 $ 946,001 (5)% $ 821,599 9% Political $ 16,539 $ 117,538 (86)%
Slide 28: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis Non-GAAP Reconciliation Three Months Ended March 31, 2018 2017 2016 (dollars in thousands) Net income $ 19,945 $ 10,505 $ 8,990 Depreciation 13,694 12,629 11,126 Amortization of intangible assets 5,436 5,567 3,888 Non-cash stock-based compensation 2,157 1,33
Slide 29: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Basis Year Ended December 31 2017 2016 2015 2014 (dollars in thousands) Net income $ 261,952 $ 62,273 $ 39,301 $ 48,061 Depreciation 51,973 45,923 36,712 30,248 Amortization of intangible assets 25,072 16,596 11,982 8,297 Non-cash stock-based com
Slide 30: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31 2017 2016 2015 2014 (dollars in thousands) Net income $ 260,133 $ 105,523 $ 65,202 $ 130,807 Depreciation 52,710 51,829 52,056 49,781 Amortization of intangible assets 25,098 17,904 19,261 16,705 Non-c
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation Eight Quarters Ended March 31, 2018 Operating Cash Flow as defined in the Senior Credit Agreement: (dollars in thousands) Net income $ 335,180 Adjustments to reconcile Net Income as reported to Operating Cash Flow as defined in our Senior Credit Facility on a Combined Histori
Slide 32: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 32