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Gray Reports Solid 2021 Performance and is Poised for a Strong 2022

Gray Reports Solid 2021 Performance and is Poised for a Strong 2022

Research, News, and Market Data on Gray Television

 

ATLANTA, Feb. 25, 2022 (GLOBE NEWSWIRE) -- Gray Television, Inc. (“Gray,” “we,” “us” or “our”) (NYSE: GTN) today announced financial results for the fourth quarter ended December 31, 2021. While the quarter did not include political advertising revenue at the robust levels experienced in the fourth quarter of 2020, our total revenues of $721 million were strong for an off-year of the two-year political advertising cycle, and higher than our anticipated results due to continued improvement in economic conditions and our acquisition of the Local Media Group of Meredith Corporation on December 1, 2021, and Quincy Media on August 2, 2021. Most notably, in the fourth quarter 2021 our combined local and national broadcast advertising revenue, excluding political advertising revenue (“Total Core Revenue”) increased by 26%, and our retransmission consent revenue increased by 35%. Our total revenue for the year ended December 31, 2021 was $2.4 billion, the highest we have ever reported.

Due to the significant effect that material transactions have had on our results of our operations, we present the financial information herein consistent with both U.S. Generally Accepted Accounting Principles (“GAAP” or “As Reported Basis”) and on a Combined Historical Basis (“CHB”), which incorporates certain historical results of acquired businesses, less the historical results of divested businesses. We also furnish certain other detailed non-GAAP metrics to provide more meaningful period-over-period comparisons to assist the public in its analysis and valuation of the Company. This additional information includes a summary of incremental expenses that were specific to our acquisitions, divestitures, and related financing activities (“Transaction Related Expenses”), non-cash stock-based compensation expenses and certain non-GAAP terms common in our industry. Please refer to the detailed discussion of the foregoing terms and concepts included elsewhere herein.

Summary of Operating Results

As Reported Basis (the respective 2021 periods reflect the “off-year” of the two year political advertising cycle):

For the fourth quarter of 2021:

  • Total revenue was $721 million, a decrease of 9% from the fourth quarter of 2020, primarily due to the cyclical decline in political advertising revenue.

  • Net income attributable to common stockholders was $16 million, or $0.17 per fully diluted share, a decrease of 92% from the fourth quarter of 2020. Excluding Transaction Related Expenses and non-cash stock compensation totaling $59 million, our net income attributable to common stockholders would have been $60 million.

  • Broadcast Cash Flow was $258 million, a decrease of 39% from the fourth quarter of 2020.

  • Adjusted EBITDA was $224 million, a decrease of 45% from the fourth quarter of 2020.

For the full year 2021:

  • Revenue was $2.4 billion, an increase of 1% from 2020, marking our highest ever annual revenue.

  • Net income attributable to common stockholders was $38 million, a decrease of 89% from 2020. Excluding Transaction Related Expenses and non-cash stock compensation totaling $95 million, our net income attributable to common stockholders would have been $109 million.

  • Broadcast Cash Flow was $813 million, a decrease of 19% from 2020.

  • Adjusted EBITDA was $739 million, a decrease of 21% from 2020.

Combined Historical Basis (the respective 2021 periods reflect the “off-year” of the two year political advertising cycle):

For the fourth quarter of 2021:

  • Revenue was $857 million, a decrease of 24% from the fourth quarter of 2020. Total Core Revenue increased by 11% from the fourth quarter of 2020.

  • Broadcast Cash Flow was $311 million, a decrease of 50% from the fourth quarter of 2020.

For the full year 2021:

  • Revenue was $3.2 billion, a decrease of 6% from 2020. Total Core Revenue increased by 18% from 2020.

  • Broadcast Cash Flow was $1.1 billion, a decrease of 24% from 2020.

Other Key Metrics

  • As of December 31, 2021, our Total Leverage Ratio, Net of all Cash, was 5.47 times on a trailing eight-quarter basis, netting our total cash balance of $189 million and giving effect to all Transaction Related Expenses.

  • During the fourth quarter of 2021, we repurchased 1,501,088 shares of our common stock at an average price of $19.98 per share, including commissions, for a total cost of approximately $30 million. We have not repurchased any shares since the close of the fourth quarter. Currently, we have 87,742,758 common shares and 7,560,937 Class A common shares outstanding and $174 million remaining under our share repurchase authorization.

  • Throughout 2021 and 2020, we incurred Transaction Related Expenses on an As Reported Basis that included but were not limited to legal and professional fees, severance and incentive compensation and contract termination fees. In addition, we recorded certain non-cash stock-based compensation expenses. These expenses are summarized as follows (in millions):


Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020

Transaction Related Expenses:








Broadcasting

$

3


$

-


$

3


$

-

Corporate and administrative

52


1


71


1

Miscellaneous expense

-


-


7


-

Total Transaction Related Expenses

$

55


$

1


$

81


$

1









Total non-cash stock-based compensation

$

4


$

4


$

14


$

16

Taxes

  • During 2021 and 2020, we made aggregate federal and state income tax payments (net of refunds) of $149 million and $70 million, respectively. During 2022, we anticipate making income tax payments (net of refunds) within a range of $170 million to $190 million.

  • As of December 31, 2021, we have $10 million of federal operating loss carryforwards, which we expect to utilize in 2022. In addition, we have an aggregate of $424 million of various state operating loss carryforwards, of which we expect that approximately half will be utilized.

Guidance for the Three-Months Ending March 31, 2022

Based on our current forecasts for the quarter ending March 31, 2022, we anticipate the following key financial results, as outlined below in approximate ranges. We present revenue net of agency commissions. We present operating expenses net of depreciation, amortization and gain/loss on disposal of assets.

  • Revenue:

    • Local revenue of $270 to $275 million, and national revenue of $81 to $86 million.

      • Total Core Revenue of $351 to $361 million, which reflects an increase by 0% to 3% on a Combined Historical Basis.

    • Retransmission revenue of $380 to $385 million.

    • Political revenue of $20 to $25 million.

    • Production company revenue of $20 to $22 million.

    • Total revenue of $789 to $812 million.

  • Operating Expenses:

    • Broadcasting expenses of $535 to $545 million, including retransmission expense of approximately $225 million and transaction related expenses of approximately $3 million and non-cash stock-based compensation expense of approximately $1 million.

    • Production company expenses of approximately $25 million.

    • Corporate expenses of $29 to $33 million, including transaction related expenses of approximately $1 million and non-cash stock-based compensation expense of approximately $4 million.


Selected Operating Data on As Reported Basis (Unaudited)


Three Months Ended December 31,


2021


2020


% Change
2021 to
2020


2019


% Change
2021 to
2019


(dollars in millions)

Revenue (less agency commissions):










Broadcasting

$

692


$

763


(9

)%


$

554


25

%

Production companies


29



29


0

%



25


16

%

Total revenue

$

721


$

792


(9

)%


$

579


25

%











Political advertising revenue

$

20


$

245


(92

)%


$

38


(47

)%











Operating expenses (1):










Broadcasting

$

449


$

355


26

%


$

339


32

%

Production companies

$

23


$

20


15

%


$

17


35

%

Corporate and administrative

$

84


$

18


367

%


$

21


300

%











Net income

$

29


$

224


(87

)%


$

94


(69

)%











Non-GAAP Cash Flow (2):










Broadcast Cash Flow

$

258


$

424


(39

)%


$

229


13

%

Broadcast Cash Flow Less Cash Corporate Expenses

$

177


$

409


(57

)%


$

212


(17

)%

Free Cash Flow

$

59


$

300


(80

)%


$

108


(45

)%






















Year Ended December 31,


2021


2020


% Change
2021 to
2020


2019


% Change
2021 to
2019


(dollars in millions)

Revenue (less agency commissions):










Broadcasting

$

2,340


$

2,320


1

%


$

2,035


15

%

Production companies


73



61


20

%



87


(16

)%

Total revenue

$

2,413


$

2,381


1

%


$

2,122


14

%











Political advertising revenue

$

44


$

430


(90

)%


$

68


(35

)%











Operating expenses (1):










Broadcasting

$

1,548


$

1,340


16

%


$

1,325


17

%

Production companies

$

62


$

52


19

%


$

74


(16

)%

Corporate and administrative

$

159


$

65


145

%


$

104


53

%











Net income

$

90


$

410


(78

)%


$

179


(50

)%











Non-GAAP Cash Flow (2):










Broadcast Cash Flow

$

813


$

999


(19

)%


$

729


12

%

Broadcast Cash Flow Less Cash Corporate Expenses

$

666


$

945


(30

)%


$

636


5

%

Free Cash Flow

$

238


$

559


(57

)%


$

273


(13

)%

(1) Excludes depreciation, amortization and gain on disposal of assets, net.
(2) See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included herein.


Selected Operating Data for the Fourth Quarter of 2021 on As Reported Basis
(Unaudited)



Three Months Ended December 31,




2021




2020



Amount


Percent





Percent




Percent


Increase


Increase



Amount


of Total


Amount


of Total


(Decrease)


(Decrease)



(dollars in millions)

Revenue (less agency commissions):













Local (including internet/digital/mobile)


$

277


38

%


$

222


28

%


$

55



25

%

National



82


11

%



62


8

%



20



32

%

Political



20


3

%



245


31

%



(225

)


(92

)%

Retransmission consent



294


41

%



217


27

%



77



35

%

Production companies



29


4

%



29


4

%



-



0

%

Other



19


3

%



17


2

%



2



12

%

Total


$

721


100

%


$

792


100

%


$

(71

)


(9

)%














Total local and national revenue













combined ("Total Core Revenue")


$

359


50

%


$

284


36

%


$

75



26

%


Operating Expenses (before

















depreciation, amortization and

















gain on disposal of assets, net):

















Broadcasting:

















Station expenses


$

274


61

%


$

230


65

%


$

44



19

%

Retransmission expense


171


38

%


125


35

%


46



37

%

Transaction Related Expenses


3


1

%


-


0

%


3





Non-cash stock-based compensation


1


0

%


-


0

%


1





Total broadcasting expense


$

449


100

%


$

355


100

%


$

94



26

%


















Production companies expense


$

23





$

20





$

3



15

%


















Corporate and administrative:

















Corporate expenses


$

29


35

%


$

13


72

%


$

16



123

%

Transaction Related Expenses


52


61

%


1


6

%


51



5100

%

Non-cash stock-based compensation


3


4

%


4


22

%



(1

)


(25

)%

Total corporate and

















administrative expense


$

84


100

%


$

18


100

%


$

66



367

%


Selected Operating Data for the Full Year 2021 on As Reported Basis
(Unaudited)



Year Ended December 31,




2021




2020



Amount


Percent





Percent




Percent


Increase


Increase



Amount


of Total


Amount


of Total


(Decrease)


(Decrease)



(dollars in millions)

Revenue (less agency commissions):













Local (including internet/digital/mobile)


$

934


39

%


$

771


32

%


$

163



21

%

National



256


11

%



198


8

%



58



29

%

Political



44


2

%



430


18

%



(386

)


(90

)%

Retransmission consent



1,049


43

%



867


36

%



182



21

%

Production companies



73


3

%



61


3

%



12



20

%

Other



57


2

%



54


3

%



3



6

%

Total


$

2,413


100

%


$

2,381


100

%


$

32



1

%














Total Core Revenue


$

1,190


50

%


$

969


40

%


$

221



23

%



Operating Expenses (before

















depreciation, amortization and

















gain on disposal of assets, net):

















Broadcasting:

















Station expenses


$

928


60

%


$

839


63

%


$

89



11

%

Retransmission expense


615


40

%


496


37

%


119



24

%

Transaction Related Expenses


3


0

%


-


0

%


3





Non-cash stock-based compensation


2


0

%


5


0

%


(3

)


(60

)%

Total broadcasting expense


$

1,548


100

%


$

1,340


100

%


$

208



16

%


















Production companies expense


$

62





$

52





$

10



19

%


















Corporate and administrative:

















Corporate expenses


$

76


48

%


$

53


81

%


$

23



43

%

Transaction Related Expenses


71


45

%


1


2

%


70



7000

%

Non-cash stock-based compensation


12


7

%


11


17

%


1



9

%

Total corporate and

















administrative expense


$

159


100

%


$

65


100

%


$

94



145

%


Detail Table of Operating Results on As Reported Basis
(Unaudited)


Three Months Ended


Year Ended


December 31,


December 31,










2021


2020


2021


2020


(in millions, except for net income per share data)

Revenue (less agency commissions):








Broadcasting

$

692


$

763


$

2,340


$

2,320


Production companies

29


29


73


61


Total revenue (less agency commissions)

721


792


2,413


2,381


Operating expenses before depreciation, amortization and gain on








disposal of assets, net:








Broadcasting

449


355


1,548


1,340


Production companies

23


20


62


52


Corporate and administrative

84


18


159


65


Depreciation

28


27


104


96


Amortization of intangible assets

36


27


117


105


(Gain) loss on disposal of assets, net

(4

)


(6

)

42


(29

)

Operating expenses

616


441


2,032


1,629


Operating income

105


351


381


752


Other (expense) income:








Miscellaneous (expense) income, net

(1

)

-



(8

)

(5

)

Interest expense

(62

)


(48

)


(205

)

(191

)

Loss on early extinguishment of debt

-



(12

)

-


(12

)

Income before income tax

42


291


168


544


Income tax expense

13


67


78


134


Net income

29


224


90


410


Preferred stock dividends

13


13


52


52


Net income attributable to common stockholders

$

16


$

211


$

38


$

358










Basic per share information:








Net income attributable to common stockholders

$

0.17


$

2.24


$

0.40


$

3.73


Weighted-average shares outstanding

95


94


95


96










Diluted per share information:








Net income attributable to common stockholders

$

0.17


$

2.22


$

0.40


$

3.69


Weighted-average shares outstanding

95


95


95


97



Selected Operating Data on Combined Historical Basis (Unaudited)


Three Months Ended December 31,


2021


2020


% Change
2021 to
2020


2019


% Change
2021 to
2019


(dollars in millions)

Revenue (less agency commissions):










Broadcast

$

828


$

1,104


(25

)%


$

774


7

%

Production companies


29



30


(3

)%



25


16

%

Total revenue

$

857


$

1,134


(24

)%


$

799


7

%











Political advertising revenue

$

25


$

383


(93

)%


$

45


(44

)%











Operating expenses (1):










Broadcast

$

536


$

518


3

%


$

481


11

%

Production companies

$

23


$

21


10

%


$

17


35

%

Corporate and administrative

$

84


$

18


367

%


$

20


320

%











Non-GAAP Cash Flow (2):










Broadcast Cash Flow

$

311


$

624


(50

)%


$

336


(7

)%

Broadcast Cash Flow Less Cash Corporate Expenses

$

230


$

609


(62

)%


$

319


(28

)%

Operating Cash Flow as Defined in our Senior Credit Agreement

$

285


$

609


(53

)%


$

320


(11

)%

Free Cash Flow

$

139


$

423


(67

)%


$

168


(17

)%












Year Ended December 31,


2021


2020


% Change
2021 to
2020


2019


% Change
2021 to
2019


(dollars in millions)

Revenue (less agency commissions):










Broadcast

$

3,080


$

3,291


(6

)%


$

2,854


8

%

Production companies


73



61


20

%



87


(16

)%

Total revenue

$

3,153


$

3,352


(6

)%


$

2,941


7

%











Political advertising revenue

$

60


$

652


(91

)%


$

79


(24

)%











Operating expenses (1):










Broadcast

$

2,059


$

1,923


7

%


$

1,885


9

%

Production companies

$

62


$

53


17

%


$

74


(16

)%

Corporate and administrative

$

160


$

65


146

%


$

104


54

%











Non-GAAP Cash Flow (2):










Broadcast Cash Flow

$

1,105


$

1,459


(24

)%


$

1,121


(1

)%

Broadcast Cash Flow Less Cash Corporate Expenses

$

958


$

1,405


(32

)%


$

1,028


(7

)%

Operating Cash Flow as Defined in our Senior Credit Agreement

$

1,029


$

1,403


(27

)%


$

1,060


(3

)%

Free Cash Flow

$

443


$

809


(45

)%


$

533


(17

)%

(1) Excludes depreciation, amortization and gain on disposal of assets, net.
(2) See definition of non-GAAP terms and a reconciliation of the non-GAAP amounts to net income included herein.


Selected Operating Data for the Fourth Quarter of 2021 on Combined Historical Basis
(Unaudited)




Three Months Ended December 31,




2021




2020



Amount


Percent





Percent




Percent


Increase


Increase



Amount


of Total


Amount


of Total


(Decrease)


(Decrease)



(dollars in millions)

Revenue (less agency commissions):













Local (including internet/digital/mobile)


$

317


37

%


$

287


25

%


$

30



10

%

National



105


12

%



92


8

%



13



14

%

Political



25


3

%



383


34

%



(358

)


(93

)%

Retransmission consent



358


42

%



319


28

%



39



12

%

Production companies



29


3

%



30


3

%



(1

)


(3

)%

Other



23


3

%



23


2

%



-



0

%

Total


$

857


100

%


$

1,134


100

%


$

(277

)


(24

)%



























Total Core Revenue


$

422


49

%


$

379


33

%


$

43



11

%









































Operating Expenses (before













depreciation, amortization and













gain on disposal of assets, net):













Broadcasting:













Station expenses


$

321


60

%


$

331


64

%


$

(10

)


(3

)%

Retransmission expense



211


39

%



186


36

%



25



13

%

Transaction Related Expenses



3


1

%



-


0

%



3




Non-cash stock-based compensation



1


0

%



1


0

%



-




Total broadcasting expense


$

536


100

%


$

518


100

%


$

18



3

%














Production companies expense


$

23




$

21




$

2



10

%














Corporate and administrative:













Corporate expenses


$

29


35

%


$

13


72

%


$

16



123

%

Transaction Related Expenses



52


61

%



1


6

%



51



5100

%

Non-cash stock-based compensation



3


4

%



4


22

%



(1

)


(25

)%

Total corporate and













administrative expense


$

84


100

%


$

18


100

%


$

66



367

%

Selected Operating Data for the Full Year 2021 on Combined Historical Basis
(Unaudited)



Year Ended December 31,




2021




2020



Amount


Percent





Percent




Percent


Increase


Increase



Amount


of Total


Amount


of Total


(Decrease)


(Decrease)



(dollars in millions)

Revenue (less agency commissions):













Local (including internet/digital/mobile)


$

1,158


37

%


$

1,000


30

%


$

158



16

%

National



357


11

%



289


9

%



68



24

%

Political



60


2

%



652


19

%



(592

)


(91

)%

Retransmission consent



1,429


45

%



1,276


38

%



153



12

%

Production companies



73


2

%



61


2

%



12



20

%

Other



76


3

%



74


2

%



2



3

%

Total


$

3,153


100

%


$

3,352


100

%


$

(199

)


(6

)%



























Total Core Revenue


$

1,515


48

%


$

1,289


38

%


$

226



18

%

Operating Expenses (before

















depreciation, amortization and

















gain on disposal of assets, net):

















Broadcasting:

















Station expenses


$

1,210


59

%


$

1,184


62

%


$

26



2

%

Retransmission expense


842


41

%


732


38

%


110



15

%

Transaction Related Expenses


3


0

%


-


0

%


3





Non-cash stock-based compensation


4


0

%


7


0

%


(3

)


(43

)%

Total broadcasting expense


$

2,059


100

%


$

1,923


100

%


$

136



7

%


















Production companies expense


$

62





$

53





$

9



17

%


















Corporate and administrative:

















Corporate expenses


$

77


48

%


$

53


81

%


$

24



45

%

Transaction Related Expenses


71


44

%


1


2

%


70



7000

%

Non-cash stock-based compensation


12


8

%


11


17

%


1



9

%

Total corporate and

















administrative expense


$

160


100

%


$

65


100

%


$

95



146

%


Other Financial Data,
As Reported Basis


As of December 31,


2021



2020


(in millions)






Cash

$

189



$

773


Long-term debt, including current portion, less deferred





financing costs

$

6,755



$

3,974


Series A perpetual preferred stock

$

650



$

650


Borrowing availability under senior credit facility

$

497



$

200








Year Ended December 31,


2021



2020


(in millions)






Net cash provided by operating activities

$

300



$

652


Net cash used in investing activities

(3,534

)


(211

)

Net cash provided by financing activities

2,650



120


Net (decrease) increase in cash

$

(584

)


$

561



Additional Information

The Company

We are a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo Honey, PowerNation Studios and Third Rail Studios.

Cautionary Statements for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act

This press release contains certain forward-looking statements that are based largely on our current expectations and reflect various estimates and assumptions by us. These statements are statements other than those of historical fact and may be identified by words such as “estimates,” “expect,” “anticipate,” “will,” “implied,” “assume” and similar expressions. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include our inability to achieve expected synergies from recent transactions on a timely basis or at all, the impact of recently completed transactions, estimates of future revenue, future expenses and other future events. We are subject to additional risks and uncertainties described in our quarterly and annual reports filed with the Securities and Exchange Commission from time to time, including in the “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained therein, which reports are made publicly available via our website, www.gray.tv. Any forward-looking statements in this press release should be evaluated in light of these important risk factors. This press release reflects management’s views as of the date hereof. Except to the extent required by applicable law, Gray undertakes no obligation to update or revise any information contained in this press release beyond the published date, whether as a result of new information, future events or otherwise.

Conference Call Information

We will host a conference call to discuss our fourth quarter operating results on February 25, 2022. The call will begin at 11:00 a.m. Eastern Time. The live dial-in number is 1-855-493-3489 and the confirmation code is 8667075. The call will be webcast live and available for replay at www.gray.tv. The taped replay of the conference call will be available at 1-855-859-2056, Confirmation Code is 8667075 until March 25, 2022.

Gray Contacts

Web site: www.gray.tv

Hilton H. Howell, Jr., Executive Chairman and Chief Executive Officer, 404-266-5513

Pat LaPlatney, President and Co-Chief Executive Officer, 334-206-1400

Jim Ryan, Executive Vice President and Chief Financial Officer, 404-504-9828

Kevin P. Latek, Executive Vice President, Chief Legal and Development Officer, 404-266-8333


Effects of Acquisitions and Divestitures on Our Results of Operations and Non-GAAP Terms

From January 1, 2019 through December 31, 2021, we completed several acquisition and divestiture transactions. As more fully described in our Form 10-K to be filed with the Securities and Exchange Commission today and in our prior disclosures, these transactions materially affected our operations. We refer to the 2021 Acquisitions collectively with all other television stations acquired or divested on or subsequent to January 1, 2019 as the “Acquisitions”.

Due to the significant effect that the Acquisitions have had on our results of operations, and in order to provide more meaningful period over period comparisons, we present herein certain financial information on a Combined Historical Basis (or “CHB”). Combined Historical Basis financial information does not include any adjustments for other events attributable to the Acquisitions unless otherwise described. Certain of the Combined Historical Basis financial information has been derived from, and adjusted based on unaudited, unreviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from the Combined Historical Basis financial information if the Acquisitions had been completed at the stated date. In addition, the presentation of Combined Historical Basis may not comply with United Stated Generally Accepted Accounting Principles (“GAAP”) or the requirements for proforma financial information under Regulation S-X under the Securities Act.

From time to time, we supplement our financial results prepared in accordance with GAAP by disclosing the non-GAAP financial measures Broadcast Cash Flow, Broadcast Cash Flow Less Cash Corporate Expenses, Operating Cash Flow as defined in the Senior Credit Agreement, Free Cash Flow, Adjusted EBITDA and Total Leverage Ratio, Net of All Cash. These non-GAAP amounts are used by us to approximate amounts used to calculate key financial performance covenants contained in our debt agreements and are used with our GAAP data to evaluate our results and liquidity.

We define Broadcast Cash Flow as net income or loss plus loss on early extinguishment of debt, non-cash corporate and administrative expenses, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Broadcast Transactions Related Expenses and broadcast other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

We define Broadcast Cash Flow Less Cash Corporate Expenses as net income or loss plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits and payments for program broadcast rights.

We define Operating Cash Flow as defined in our Senior Credit Agreement as net income or loss plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses, other adjustments, certain pension expenses, synergies and other adjustments less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, pension income and contributions to pension plans.

Operating Cash Flow as defined in our Senior Credit Agreement gives effect to the revenue and broadcast expenses of all completed acquisitions and divestitures as if they had been acquired or divested, respectively, on January 1, 2019. It also gives effect to certain operating synergies expected from the acquisitions and related financings and adds back professional fees incurred in completing the acquisitions. Certain of the financial information related to the acquisitions has been derived from, and adjusted based on, unaudited, un-reviewed financial information prepared by other entities, which Gray cannot independently verify. We cannot assure you that such financial information would not be materially different if such information were audited or reviewed and no assurances can be provided as to the accuracy of such information, or that our actual results would not differ materially from this financial information if the acquisitions had been completed on the stated date. In addition, the presentation of Operating Cash Flow as defined in the Senior Credit Agreement and the adjustments to such information, including expected synergies resulting from such transactions, may not comply with GAAP or the requirements for pro forma financial information under Regulation S-X under the Securities Act of 1933.

We define Free Cash Flow as net income or loss, plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization (including amortization of intangible assets and program broadcast rights), any loss on disposal of assets, any miscellaneous expense, any income tax expense, non-cash 401(k) expense, Transactions Related Expenses, broadcast other adjustments, certain pension expenses, synergies, other adjustments and amortization of deferred financing costs less any gain on disposal of assets, any miscellaneous income, any income tax benefits, payments for program broadcast rights, pension income, contributions to pension plans, preferred dividends, purchase of property and equipment (net of reimbursements and certain defined purchases) and income taxes paid (net of any refunds received and certain defined payments).

We define Adjusted EBITDA as net income or loss, plus loss on early extinguishment of debt, non-cash stock-based compensation, depreciation and amortization of intangible assets, any loss on disposal of assets, any miscellaneous expense, interest expense, any income tax expense, non-cash 401(k) expense, Transaction Related Expenses less any gain on disposal of assets, any miscellaneous income and any income tax benefits.

Our Total Leverage Ratio, Net of All Cash is determined by dividing our Adjusted Total Indebtedness, Net of All Cash, by our Operating Cash Flow as defined in our Senior Credit Agreement, divided by two. Our Adjusted Total Indebtedness, Net of All Cash, represents the total outstanding principal of our long-term debt, plus certain other obligations as defined in our Senior Credit Agreement, less all cash (excluding restricted cash). Our Operating Cash Flow, as defined in our Senior Credit Agreement, divided by two, represents our average annual Operating Cash Flow as defined in our Senior Credit Agreement for the preceding eight quarters.

We define Transaction Related Expenses as incremental expenses incurred specific to acquisitions and divestitures, including but not limited to legal and professional fees, severance and incentive compensation, and contract termination fees. We present certain line items from our selected operating data, net of Transaction Related Expenses, in order to present a more meaningful comparison between periods of our operating expenses and our results of operations.

These non-GAAP terms are not defined in GAAP and our definitions may differ from, and therefore may not be comparable to, similarly titled measures used by other companies, thereby limiting their usefulness. Such terms are used by management in addition to, and in conjunction with, results presented in accordance with GAAP and should be considered as supplements to, and not as substitutes for, net income and cash flows reported in accordance with GAAP.

Reconciliation of Non-GAAP Terms on As Reported Basis, in millions:


Three Months Ended


December 31,


2021


2020


2019







Net income

$

29


$

224


$

94


Adjustments to reconcile from net income to






Free Cash Flow:






Depreciation

28


27


20


Amortization of intangible assets

36


27


29


Non-cash stock-based compensation

4


4


6


Non-cash 401(k) expense, excluding corporate portion

7


6


5


Gain on disposal of assets, net

(4

)

(6

)

(27

)

Miscellaneous expense, net

1


-


-


Interest expense

62


48


54


Loss on early extinguishment of debt

-


12


-


Income tax expense

13


67


32


Amortization of program broadcast rights

12


10


9


Payments for program broadcast rights

(11

)

(10

)

(10

)

Corporate and administrative expenses before






depreciation, amortization of intangible assets and






non-cash stock-based compensation

81


15


17


Broadcast Cash Flow

258


424


229


Corporate and administrative expenses excluding






depreciation, amortization of intangible assets and






non-cash stock-based compensation

(81

)

(15

)

(17

)

Broadcast Cash Flow Less Cash Corporate Expenses

177


409


212


Interest expense

(62

)

(48

)

(54

)

Amortization of deferred financing costs

2


2


2


Preferred stock dividends

(13

)

(13

)

(13

)

Common stock dividends

(8

)

-


-


Purchase of property and equipment (1)

(35

)

(40

)

(37

)

Reimbursements of property and equipment purchases

1


10


9


Income taxes paid, net of refunds (2)

(3

)

(20

)

(11

)

Free Cash Flow

$

59


$

300


$

108


(1) Excludes approximately $18 million related to the Assembly Atlanta project in the fourth quarter of 2021.
(2) Excludes approximately $17 million of income tax payments related to the Meredith Divestiture and the Quincy Divestiture in the fourth quarter of 2021.

Reconciliation of Non-GAAP Terms on As Reported Basis, in millions:


Year Ended


December 31,


2021


2020


2019







Net income

$

90


$

410


$

179


Adjustments to reconcile from net income to






Free Cash Flow:






Depreciation

104


96


80


Amortization of intangible assets

117


105


115


Non-cash stock-based compensation

14


16


16


Non-cash 401(k) expense, excluding corporate portion

8


6


5


Loss (gain) on disposal of assets, net

42


(29

)

(54

)

Miscellaneous expense (income), net

8


5


(4

)

Interest expense

205


191


227


Loss on early extinguishment of debt

-


12


-


Income tax expense

78


134


76


Amortization of program broadcast rights

38


38


39


Payments for program broadcast rights

(38

)

(39

)

(43

)

Corporate and administrative expenses before






depreciation, amortization of intangible assets and






non-cash stock-based compensation

147


54


93


Broadcast Cash Flow

813


999


729


Corporate and administrative expenses before






depreciation, amortization of intangible assets and






non-cash stock-based compensation

(147

)

(54

)

(93

)

Broadcast Cash Flow Less Cash Corporate Expenses

666


945


636


Contributions to pension plans

(4

)

(3

)

(3

)

Interest expense

(205

)

(191

)

(227

)

Amortization of deferred financing costs

11


11


11


Preferred stock dividends

(52

)

(52

)

(52

)

Common stock dividends

(31

)

-


-


Purchase of property and equipment (1)

(98

)

(110

)

(110

)

Reimbursements of property and equipment purchases

11


29


41


Income taxes paid, net of refunds (2)

(60

)

(70

)

(23

)

Free Cash Flow

$

238


$

559


$

273


(1) Excludes approximately $109 million related to the Assembly Atlanta project in 2021.
(2) Excludes approximately $89 million of income tax payments related to the Meredith Divestiture and the Quincy Divestiture in 2021.

Reconciliation of Non-GAAP Terms on a Combined Historical Basis, in millions:



Three Months Ended


December 31,


2021


2020


2019



Net income

$

57


$

364


$

110


Adjustments to reconcile from net income to






Free Cash Flow:






Depreciation

32


34


28


Amortization of intangible assets

37


29


33


Non-cash stock based compensation

4


5


6


Non-cash 401(k) expense, excluding corporate portion

7


6


5


(Gain) loss on disposal of assets, net

(2

)

(5

)

2


Miscellaneous expense, net

1


1


-


Interest expense

78


78


78


Loss from early extinguishment of debt

-


12


-


Income tax expense

9


66


30


Amortization of program broadcast rights

14


15


14


Payments for program broadcast rights

(14

)

(14

)

(15

)

Corporate and administrative expenses before






depreciation, amortization of intangible assets and






non-cash stock-based compensation

81


15


17


Broadcast Transaction Related Expenses

3


-


7


Broadcast other adjustments

4


18


21


Broadcast Cash Flow

311


624


336


Corporate and administrative expenses before






depreciation, amortization of intangible assets and






non-cash stock-based compensation

(81

)

(15

)

(17

)

Broadcast Cash Flow Less Cash Corporate Expenses

230


609


319


Adjustments for unrestricted subsidiaries

3


-


-


Corporate Transaction Related Expenses

52


-


1


Operating Cash Flow as Defined in Senior Credit Facility

285


609


320


Interest expense

(78

)

(78

)

(78

)

Amortization of deferred financing costs

3


3


3


Preferred dividends

(13

)

(13

)

(13

)

Common stock dividends

(8

)

-


-


Purchase of property and equipment (1)

(37

)

(46

)

(51

)

Reimbursement of purchases of property and equipment

1


11


12


Income taxes paid, net of refunds (2)

(14

)

(63

)

(25

)

Free Cash Flow

$

139


$

423


$

168


(1) Excludes approximately $18 million related to the Assembly Atlanta project in the fourth quarter of 2021.
(2) Excludes approximately $17 million of income tax payments related to the Meredith Divestiture and the Quincy Divestiture in the fourth quarter of 2021.

Reconciliation of Non-GAAP Terms on a Combined Historical Basis, in millions:


Year Ended


December 31,


2021


2020


2019



Net income

$

265


$

635


$

310


Adjustments to reconcile from net income to






Free Cash Flow:






Depreciation

128


128


111


Amortization of intangible assets

123


114


127


Non-cash stock-based compensation

16


18


17


Non-cash 401(k) expense, excluding corporate portion

8


6


5


Gain on disposal of assets, net

(10

)

(32

)

(41

)

Miscellaneous expense (income), net

8


27


(5

)

Interest expense

311


311


311


Loss from early extinguishment of debt

-


12


-


Income tax expense

46


117


65


Amortization of program broadcast rights

55


58


60


Payments for program broadcast rights

(56

)

(59

)

(64

)

Corporate and administrative expenses excluding






depreciation, amortization of intangible assets and






non-cash stock-based compensation

147


54


93


Broadcast Transaction Related Expenses

3


-


45


Broadcast other adjustments

61


70


87


Broadcast Cash Flow

1,105


1,459


1,121


Corporate and administrative expenses excluding






depreciation, amortization of intangible assets and






non-cash stock-based compensation

(147

)

(54

)

(93

)

Broadcast Cash Flow Less Cash Corporate Expenses

958


1,405


1,028


Contributions to pension plans

(4

)

(3

)

(3

)

Adjustments for unrestricted subsidiaries

4


-


-


Corporate Transaction Related Expenses

71


1


35


Operating Cash Flow as Defined in Senior Credit Facility

1,029


1,403


1,060


Interest expense

(311

)

(311

)

(311

)

Amortization of deferred financing costs

12


12


12


Preferred dividends

(52

)

(52

)

(52

)

Common stock dividends

(31

)

-


-


Purchase of property and equipment (1)

(107

)

(127

)

(154

)

Reimbursement of purchases of property and equipment

13


36


55


Income taxes paid, net of refunds (2)

(110

)

(152

)

(77

)

Free Cash Flow

$

443


$

809


$

533


(1) Excludes approximately $109 million related to the Assembly Atlanta project in 2021.
(2) Excludes approximately $89 million of income tax payments related to the Meredith Divestiture and the Quincy Divestiture in 2021.

Reconciliation of Net Income on As Reported Basis to Adjusted EBITDA and the Effect of Transaction Related Expenses and Certain Non-cash Expenses, in millions except for per share information:


Three Months Ended


Year Ended


December 31,


December 31,


2021


2020


2021


2020









Net income

$

29


$

224


$

90


$

410


Adjustments to reconcile from net income to








Adjusted EBITDA:








Depreciation

28


27


104


96


Amortization of intangible assets

36


27


117


105


Non-cash stock-based compensation

4


4


14


16


(Gain) loss on disposal of assets, net

(4

)

(6

)

42


(29

)

Miscellaneous expense, net

1


-


8


5


Interest expense

62


48


205


191


Loss on early extinguishment of debt

-


12


-


12


Income tax expense

13


67


78


134


Total

169


403


658


940


Add: Transaction Related Expenses

55


1


81


1


Adjusted EBITDA

$

224


$

404


$

739


$

941










Net income attributable to common stockholders

$

16


$

211


$

38


$

358


Add: Transaction Related Expenses and non-cash








stock-based compensation

59


5


95


17


Less: Income tax expense related to Transaction Related








Expenses and non-cash stock-based compensation

(15

)

(1

)

(24

)

(4

)

Net income attributable to common stockholders - excluding Transaction Related Expenses and non-cash stock-based compensation

$

60


$

215


$

109


$

371










Net income attributable to common stockholders per common share, diluted - excluding Transaction Related Expenses and non-cash stock-based compensation

$

0.63


$

2.26


$

1.15


$

3.82










Diluted weighted-average shares outstanding

95


95


95


97



Reconciliation of Total Leverage Ratio, Net of All Cash, in millions except for ratio:



Eight Quarters Ended



December 31, 2021




Net income


$

500

Adjustments to reconcile from net income to operating cash flow as



defined in our Senior Credit Agreement:



Depreciation


200

Amortization of intangible assets


222

Non-cash stock-based compensation


30

Non-cash 401(k) expense, excluding corporate portion


15

Loss on disposal of assets, net


13

Interest expense


396

Loss on early extinguishment of debt


12

Income tax expense


212

Amortization of program broadcast rights


75

Payments for program broadcast rights


(77)

Pension gain


(3)

Contributions to pension plan


(7)

Adjustments for unrestricted subsidiaries


3

Adjustments for stations acquired or divested, financings and expected



synergies during the eight quarter period


759

Transaction Related Expenses


82

Operating Cash Flow, as defined in our Senior Credit Agreement