Yahoo Finance Saga Communications Inc (SGA) Reports Decline in Q4 and Full-Year Revenue Amid Political Revenue Dip
Net Revenue: Q4 net revenue fell by 3.3% year-over-year to $29.1 million; full-year net revenue down 1.8% to $112.8 million.
Operating Income: Q4 operating income decreased to $2.8 million from $4.9 million; full-year operating income at $11.5 million compared to $13.1 million.
Net Income: Q4 net income dropped to $2.5 million from $4.3 million; however, full-year net income rose slightly to $9.5 million from $9.2 million.
Earnings Per Share (EPS): Diluted EPS for Q4 was $0.37; full-year EPS remained steady at $1.52.
Dividends: A variable dividend of $0.60 per share declared, with a total dividend payout of over $130 million to shareholders since 2012.
Balance Sheet: Cash and short-term investments stood at $40.2 million at year-end, decreasing to $30.4 million by March 4, 2024.
Capital Expenditures: Reduced to $4.4 million for the full year from $6.0 million the previous year.
On March 7, 2024, Saga Communications Inc (NASDAQ:SGA) released its 8-K filing, detailing its financial results for the fourth quarter and full year of 2023. The company, which specializes in acquiring, developing, and operating broadcast properties, faced a challenging year with a decrease in net revenue and operating income, primarily due to a significant reduction in political revenue.
Saga Communications Inc operates top-billing radio stations in mid-sized markets and generates the majority of its revenue from advertising. The company's financial performance is a critical indicator of its ability to attract advertisers and maintain profitability in the competitive media landscape.
Financial Performance and Challenges
The company reported a 3.3% decrease in net revenue for the fourth quarter, amounting to $29.1 million, compared to $30.1 million in the same period last year. This decline was attributed to a decrease in political revenue, which fell from $1.9 million in the previous year to $407 thousand. Excluding political revenue, the company's gross revenue for the quarter would have shown an approximate 1% increase year-over-year.
For the full year, net revenue decreased by 1.8% to $112.8 million, compared to $114.9 million in the previous year. The decrease in political revenue also impacted the annual performance, with only $944 thousand generated compared to $3.6 million in the prior year. Without the political revenue, the company's gross revenue for the year would have been roughly flat.
Station operating expenses increased by 1.9% for the quarter and 3.0% for the full year, contributing to the decline in operating income and station operating income, which is a non-GAAP financial measure. Operating income for the quarter was $2.8 million, down from $4.9 million, while the full-year operating income was $11.5 million compared to $13.1 million in the previous year. Station operating income decreased by 17.2% to $7.1 million for the quarter and by 15.0% to $27.4 million for the year.
Financial Achievements and Importance
Despite the challenges, Saga Communications Inc managed to report a modest increase in net income for the full year, rising to $9.5 million from $9.2 million. This increase is important as it demonstrates the company's ability to control costs and maintain profitability despite revenue headwinds. Diluted earnings per share remained stable at $1.52 for the year.
The company's commitment to shareholder returns was evident with the declaration of a variable dividend of $0.60 per share, in line with its variable dividend policy. The dividend will be paid on April 5, 2024, with a record date of March 18, 2024, and will be funded by cash on the company's balance sheet. This move underscores the importance of dividends as a component of shareholder value in the media industry, particularly for a company like Saga that has paid over $130 million in dividends since 2012.
Balance Sheet and Cash Flow Highlights
The balance sheet as of December 31, 2023, showed $40.2 million in cash and short-term investments, which decreased to $30.4 million by March 4, 2024. The company expects to spend approximately $5.0 to $5.5 million for capital expenditures during 2024. Capital expenditures for the twelve months of 2023 were lower at $4.4 million compared to $6.0 million for the same period last year, reflecting prudent capital management.
Net cash provided by operating activities for the full year was $15.4 million, and the company used $2.5 million in investing activities, mainly due to the purchase of short-term investments and capital expenditures. Financing activities used $20.1 million of cash, primarily for paying dividends.
Forward Outlook and Strategic Moves
Saga Communications Inc has announced an agreement to purchase stations serving the Lafayette, IN radio market for $5.3 million, expected to close during the second quarter of 2024. This acquisition aligns with the company's strategy to expand its broadcast portfolio and enhance its market presence.
The company's management remains focused on maintaining a strong balance sheet and returning value to shareholders through regular and special dividends, variable dividends, and stock buybacks. The company's financial health and strategic acquisitions are crucial for its growth and competitiveness in the diversified media industry.
In conclusion, Saga Communications Inc's financial results for 2023 reflect the challenges of decreased political revenue but also highlight the company's resilience and commitment to shareholder value. The company's strategic focus on expanding its broadcast portfolio and maintaining a strong balance sheet positions it well for future growth.
Explore the complete 8-K earnings release (here) from Saga Communications Inc for further details.
This article first appeared on GuruFocus.
