Saga Communications, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Saga operates one reportable segment, radio, across 27 U.S. markets. The filing reports full-year results, not a standalone fourth-quarter financial summary.
Business context and financial results
Revenue is primarily from radio advertising; local advertising represented approximately 89% of 2021 gross revenue. Saga reported 2021 net operating revenue of $108.3 million, up 13.1% from $95.8 million in 2020, but below $123.1 million in 2019.
| Metric | 2021 | 2020 |
|---|---|---|
| Net operating revenue | $108.3 million | $95.8 million |
| Operating income (loss) | $15.1 million | $(1.2) million |
| Operating margin | 13.9% | (1.3)% |
| Net income (loss) | $11.2 million | $(1.9) million |
| Diluted earnings (loss) per share | $1.85 | $(0.32) |
| Cash from operating activities | $19.1 million | $12.1 million |
Revenue recovery reflected broad improvement from pandemic-disrupted 2020: local revenue rose $12.2 million, interactive revenue $2.9 million, and non-spot revenue $1.5 million. Political revenue fell $5.1 million year over year. Station operating expense increased 2.0% to $83.2 million, while corporate general and administrative expense fell 13.3% to $10.0 million.
Cash, debt, liquidity, and shareholder returns
At year-end, cash and cash equivalents were $54.8 million, current assets $74.4 million, and current liabilities $19.2 million. The company had no debt outstanding after repaying $10 million on its revolving credit facility in October 2021. The facility had $50 million of unused capacity and matures June 27, 2023; substantially all assets other than FCC licenses and certain assets are pledged. The company reported compliance with its credit covenants.
Capital expenditures were $4.0 million in 2021; management anticipated approximately $5.5–$6.0 million in 2022, funded from operations. Dividends declared were $0.98 per share in 2021, including a $0.50 special dividend. A $0.66-per-share dividend declared in December, totaling about $4.0 million, was payable in January 2022 and recorded as a year-end liability.
Changes, outlook, and notable items
- Compared with 2020, operating results rebounded as markets and events resumed activity. The 2020 comparison included a $5.1 million non-cash broadcast-license impairment and a $1.4 million gain on sale of property; neither item recurred in 2021.
- 2021 net income included $540,000 of insurance gains for weather-related antenna damage. Other income also included insurance proceeds; the filing identifies these as unusual items.
- Management said markets were operating at effectively full capacity, noted a renewed increase in non-spot events, and expressed optimism about future advertising revenue. It expected 2022 political revenue to exceed 2021 levels because of more elections. These are expectations, not quantified revenue or earnings guidance.
- COVID-19 effects, inflation, labor and supply-chain constraints, and geopolitical uncertainty could weigh on advertisers and costs. Management noted higher inflation was beginning to affect goods and services costs.
- FCC broadcast licenses were approximately $90.3 million, and goodwill approximately $19.2 million. No impairment was recorded in 2021; a 10% reduction in estimated license fair values would have triggered an estimated $284,000 impairment, while larger sensitivities were materially greater.
- License renewal applications for stations in Maine, Massachusetts, New Hampshire, Vermont, and New York were pending. Management reported timely filings and grants for other listed state groups.
- Legal claims arise in the ordinary course; management did not expect potential liabilities to materially affect the financial statements. A September 2021 ransomware incident at a third-party provider did not breach company data or materially affect operations.
Important facts for investors to verify
- Whether advertising recovery, digital revenue growth, and the forecast increase in 2022 political revenue materialized after year-end.
- Actual 2022 capital spending, dividend declarations, and cash use, including payment of the year-end dividend liability.
- Facility terms, covenant headroom, and refinancing or borrowing plans ahead of the June 2023 maturity.
- Progress and outcomes for pending FCC license renewals and any changes in broadcast-license impairment assumptions.
- Exposure to the five largest markets, which together generated 39% of 2021 net operating revenue, and sensitivity to local economic or advertising downturns.
- The filing reports that CEO Edward K. Christian held approximately 66% of combined voting power as of March 4, 2022; review the resulting control and governance implications.