Slide 1: Gray Television, Inc. Investor Presentation
Gray Television, Inc. Investor Presentation NYSE:GTN May 2017 Edition Updated for March 31, 2017 Financial Information See full presentation located at www.gray.tv for Non-GAAP Reconcilations. 4370 Peachtree Road, NE, Atlanta, GA 30319 | P 404.504.9828 | F 404.261.9607 | www.gray.tv 1
Slide 2: Table of Contents
Table of Contents Company Overview 3 Investment Highlights 8 Financial Overview 16 Glossary 22 See Appendix for Non-GAAP Reconciliations ALL COMBINED HISTORICAL BASIS DATA PRESENTED FOR GRAY IS ADJUSTED FOR ALL COMPLETED TRANSACTIONS UNLESS OTHERWISE NOTED. This presentation contains certain forward
Slide 3: An Industry Leading Power
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY An Industry Leading Power 33
Slide 4: Gray National Footprint
Gray National Footprint Ranked #1 or #2 in 55 of 57 Markets | Reaching approximately 10.6% 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, WI
Slide 5: High Quality, Diverse Station Group
High Quality, Diverse Station Group 57 200+ 104 25 39 channels 29 channels 56 markets Over 200 104 “Big 4” 25 markets with owned total network with two or and/or program program more “Big operated streams streams 4” network 21 channels stations across 103 affiliations stations 15 channels Includes P
Slide 6: Focus on State Capitals and College Markets
Focus on State Capitals and College Markets Better demographics, more stable economies Gray stations cover 12 state capitals 12 Gray stations cover 37 university towns 37 Enrollment of approximately 808,000 students 808,000 NOTE: Includes Pending Acquisitions 6
Slide 7: Revenue Diversified Across Networks and Markets
Revenue Diversified Across Networks and Markets 2016CHB Revenue by 2016CHB BCF by Affiliate: $926mm Affiliate: $395mm All Non-Big All Non-Big Four Channels Four Channels + Other + Other 5% 3% 5% 3% 29% 22% 24% Increasing Diversification 34% of Revenue Sources 36% 39% 2008: As Reported • 96% of reven
Slide 8: Investment Highlights
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Investment Highlights 88
Slide 9: 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 10: Gray Leads in Household Ratings
Gray Leads in Household Ratings Gray’s national Household Share Gray’s Ratings Have average exceeds all major Remained Stable Over Time affiliate news programs 5.9 5.9 5.6 5.7 5.6 5.7 5.6 Amount by which Gray’s late +59% local newscasts outperform the national average Amount by which Gray’s 6PM +67%
Slide 11: Network Programs Over-Index on Gray's Stations
CBS vs. Gray | November ’16 Household Share 22 15 16 10 11 9 Gray 8 7 CBS The Morning Show Network News Prime (Mon-Sun) The Late Show Network Programs Over-Index on NBC vs. Gray | November ’16 Household Share 25 Gray’s Stations 24 Gray 13 14 13 13 7 8 CBS, NBC, and ABC NBC perform far better on The
Slide 12: Gray Excels at Retransmission Revenue
Gray Excels at Retransmission Revenue Retransmission Revenue in $Millions $280 Gross Retransmission Revenue $224 Network “Reverse Comp.” 136 $187 “Net Retransmission Revenue” 109 85 $115 34 144 102 115 81 2014CHB 2015CHB 2016CHB 2017CHB Estimate Big-4 Network Renewals 3 Markets 29 Markets 41 Markets
Slide 13: Significant Monetization of Spectrum Today
Significant Monetization of Spectrum Today Secondary Channel 2016 CHB Financials $120 MILLION IN REVENUE OVER 100 $74 MILLION IN BCF SECONDARY CHANNELS 62% MARGIN ON DIGITAL SECONDARY CHANNELS All secondary channels including “Big-4” secondary channels 13
Slide 14: Successful Digital Media Initiatives
Successful Digital Media Initiatives • Pacing for 3.4 billion total Gray Digital page views in 2017 6.5 million Facebook followers, up 28% from January 2016 Media (up 23% over 2016) 2.0 million Twitter followers, up 62% from • Mobile makes up 82% January 2016, Likes=41k, Tweets=2.9 of all digital tr
Slide 15: Gray Continues to Grow its Scale
Gray Continues to Grow its Scale 2 $4,353 72% 3 $2,300 39% $1,808 (TV Only) 32% $1,100 19% $1,050 16% 4 $866 11% 2015 / 2016 Blended $780 11% U.S. Household Revenue 1 ($MM) Reach (Gross) $779 18% (Excl. Radio) $569 (TV Only) 11% $384 7% (TV Only) $281 3% $178 3% $169 2% $5,000 $4,000 $3,000 $2,000 $
Slide 16: Financial Overview
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Financial Overview 16 16
Slide 17: 2014/2015/2016 Snapshot
2014/2015/2016 Snapshot Combined Historical Basis Year Ended December 31 % Change % Change 2016 to 2016 to 2016 2015 2015 2014 2014 Revenue: Total $925,588 $806,429 15% $834,285 11% Political $112,998 $21,276 431% $141,758 (20)% Operating expenses (1): Broadcast $536,828 $510,967 5% $469,544 14% Cor
Slide 18: Financial Scale Continues to Increase
Financial Scale Continues to Increase Revenue ($ in millions) As Reported Combined Historical Basis LTM L8QA LTM L8QA $812 $705 $926 $597 $553 $866 $508 $405 $427 $834 $307 $327 $356 $346 $376 $820 $806 2011 2012 2013 2014 2015 2016 2014 2015 2016 Operating Cash Flow ($ in millions) As Reported Comb
Slide 19: 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 ($ in
Slide 20: Robust OCF and Free Cash Flow Generation
Robust OCF and Free Cash Flow Generation Non Presidential Election Year Non Election Year 2015 OCF Presidential Election Year 2014 OCF Buildup Buildup 2016 OCF Buildup ($ in millions) ($ in millions) ($ in millions) 63% 58% $369 57% $297 $364 49% $299 (2) 49% $192(2) $171 49% $234 $208 195(2) $148 $
Slide 21: Capitalization
Capitalization Combined Historical Basis(1) ($ in millions) “L8QA” or “Last Eight Quarter Estimated Average” Annual Cash for the period ending March 31, As of Interest 2017 March 31, 2017 Expense Leverage OCF Cash $ 24 Debt: Revolving Credit Facility – Availability is $100 Million $ - Term Loan B du
Slide 22: Glossary
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Glossary 22 22
Slide 23: Glossary
Glossary “Combined Historical Basis” Combined Historical Basis reflects financial results, position or statistics that have been prepared or “CHB” by adding Gray’s historical financial results, position or statistics with the historical financial results, position or statistics of the Completed Tran
Slide 24: 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 25: Appendix: Non-GAAP Reconciliations
COMPANY OVERVIEW INVESTMENT HIGHLIGHTS FINANCIAL OVERVIEW GLOSSARY Appendix: Non-GAAP Reconciliations 25 25
Slide 26: Three Months-Over-Three Months Results As Reported Basis
Three Months-Over-Three Months Results As Reported Basis As Reported Results Three Months Ended March 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue: Total $ 203,461 $ 173,723 17 % $ 133,303 53 % Political $ 1,321 $ 9,655 (86)% $ 1,159 14 % Operating exp
Slide 27: Three Months-Over-Three Months Results Combined Historical Basis
Three Months-Over-Three Months Results Combined Historical Basis Combined Historical Results Three Months Ended March 31 % Change % Change 2017 to 2017 to 2017 2016 2016 2015 2015 (dollars in thousands) Revenue: Total $ 209,484 $ 210,447 (0)% $ 185,721 13 % Political $ 1,346 $ 13,774 (90)% $ 1,327 1
Slide 28: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Three Months Ended March 31 2017 2016 2015 (dollars in thousands) Net income $ 10,505 $ 8,990 $ 5,595 Depreciation 12,629 11,126 8,798 Amortization of intangible assets 5,567 3,888 2,771 Non-cash stock-based compensation 1,338 1,284 993 Loss on d
Slide 29: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Three-Months Ended March 31 2017 2016 2015 (dollars in thousands) Net income $ 9,457 $ 13,335 $ 9,862 Depreciation 13,023 12,987 12,756 Amortization of intangible assets 5,592 4,858 4,650 Non-cash stock-based compensation 1,
Slide 30: 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 2016 to 2016 to 2016 2015 2015 2014 2014 (dollars in thousands) Revenue: Total $ 812,465 $ 597,356 36 % $ 508,134 60 % Political $ 90,095 $ 17,163 425 % $ 81,975 10 % Operating expenses (1):
Slide 31: 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 2016 to 2016 to 2016 2015 2015 2014 2014 (dollars in thousands) Revenue: Total $ 925,588 $ 806,429 15 % $ 834,285 11 % Political $ 112,998 $ 21,276 431 % $ 141,758 (20)% Operati
Slide 32: Non-GAAP Reconciliation As Reported Basis
Non-GAAP Reconciliation As Reported Basis As Reported Basis Year Ended December 31 2016 2015 2014 (dollars in thousands) Net income $ 62,273 $ 39,301 $ 48,061 Depreciation 45,923 36,712 30,248 Amortization of intangible assets 16,596 11,982 8,297 Non-cash stock-based compensation 5,101 4,020 5,012 L
Slide 33: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Year Ended December 31 2016 2015 2014 (dollars in thousands) Net income $ 102,153 $ 64,250 $ 128,582 Depreciation 51,025 51,138 48,794 Amortization of intangible assets 17,904 19,261 16,705 Non-cash stock-based compensation
Slide 34: Non-GAAP Reconciliation Combined Historical Basis
Non-GAAP Reconciliation Combined Historical Basis Combined Historical Basis Twenty-Four Months Ended March 31, 2017 Operating Cash Flow as defined in the Senior Credit Agreement: (dollars in thousands) Net income $ 165,998 Depreciation 102,430 Amortization of intangible assets 38,107 Non-cash stock-
Slide 35: Gray Television, Inc.
Gray Television, Inc. 4370 Peachtree Rd., NE Atlanta, Georgia 30319 www.gray.tv 35