Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ed Christian. Please go ahead..

Thank you, Greg. I appreciate it. And welcome everybody. And we'll try to keep this as cogent and as short as possible.

With that said, here for the 88th time we figured Sam’s tenure, is the 89th call or 88th call?.

I am not sure, but it's in that neighborhood..

Go ahead..

Thank you, Ed. This call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the Risk Factors section of our most recent Form 10-K. This call will also contain discussions of certain non-GAAP financial measures.

Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data table.

As you look at the fourth quarter and full year for 2018, and this was the case for the first, second and third quarters as well, keep in mind that for the comparable periods in 2017 we've reported the financial performance of the television stations that we sold on September 1, 2017 as income from discontinued operations net of tax.

This is important to note when you compare the net income, free cash flow, and earnings per share information. We also acquired the radio stations in Charleston and Hilton Head, South Carolina as of the same date. It's also important to note that on December 22, 2017, the Tax Cuts and Jobs Act was enacted.

As a result of this act, we recorded $11.5 million reduction in our deferred tax liability. This is also important to note when you compare the income from continuing operations net of tax, net income and earnings per share.

One final note to keep in mind as you look at our comparative number as that in the fourth quarter of 2017, we recognized a non-cash impairment charge of $1.5 million [Technical Difficulty] impairment charge to record in 2018. For the quarter, our net revenue increased 4.7% on both on as-reported basis and a same-station basis.

Free cash flow was $5.9 million for the quarter. For the 12-month period, our net revenue increased 5.7% on an as-reported basis and 1.1% on a same-station basis. Free cash flow was $19.5 million for the year. Operating income netting out the 2017 impairment charge was up $1 million on an as-reported basis and $1.1 million on a same-station basis.

To better understand our calculation of free cash flow, net income and net income per share from continuing operations, we've included a couple of additional reconciliation tables as part of the supplemental financial data section of our press release.

As a result of the Tax Cuts and Jobs Act passed in 2017, we expect our ongoing tax rate to be 29% to 30% including a 14% to 15% deferred tax. Our expectations are subject to change, given the various states in which we operate, may adjust their rates in response to the federal tax.

CapEx for continuing operations was $1.5 million for the quarter, which was flat with the same period last year. For the year, we spent $5.9 million compared to $6.3 million last year. In 2019, we are continuing to upgrade several of our tower and studio sites. And at this point, we expect CapEx for the year to be between $5 million and $5.5 million.

[Technical Difficulty] debt outstanding. Cash on hand at the end of the quarter was $44.7 million. As of March 11th, we had $40.7 million in cash and $15 million in bank debt.

Keep in mind that we closed on the [Technical Difficulty] and paid for that acquisition out of cash, roughly $9.3 million in a purchase price, plus about a $0.5 million to acquire the accounts receivables. [Technical Difficulty] March 29, 2019, we will have paid over $64 million in dividends since December 3, 2012.

We intend to continue to pay regularly quarterly cash dividends in the future, as well as considering special cash and stock dividends as declared by our Board of Directors. During the quarter, we repurchased 2,505 shares for approximately $79,000. Last year, we repurchased 53,713 shares for the entire year for a total of about $2 million.

Gross political revenue was $1.6 million compared to $900,000 during the fourth quarter. For the year, gross political revenue was $2.9 million compared to $1.5 million last year. We expect same-station operating expenses to be up 1% to 2% for 2019. We expect interest expense for 2019 to be around $1 million.

At this point, we expect free cash flow for the year to be in the range of $17 million to $19 million. Finally, it should be noted that Saga's Board of Directors and Ed agreed to extend the maturity date of his contract to March 31, 2025. We previously filed an 8-K on March 1st with the details, if you are interested.

Ed, with that, I will turn it back over to you..

Hey, Sam, you are breaking up a little bit there. I hope it's not my line, and it's an aberration on this. But, if I do happen to have a problem, it's because Verizon sold their fiber to a different carrier and we've been having some problems with the fiber. Anyway, sorry about that.

Sam, as usual, a mini comprehensive review of the last year and the last quarter. I am sure people can't wait till the release of the annual report and associated documents, which will be compelling reading just as your speech was.

Seriously though, I'm buoyed by the fact that as the end of the year, as Sam mentioned that with the payments of the quarterly dividend, we will paid out $64 million in dividends for shareholders. I do have one interesting factoid about Q4, there perhaps is -- the reason for the lift was political.

But an analysis of revenue and the political shows that our up in revenue was about half in political and half in non-political commercial advertising, which I think is a very good sign. We continue on a local basis making adjustments and changes to try to ensure that we can continue on to grow the Company.

Let's speak for a moment on the acquisition of the four stations that Sam mentioned in Ocala-Gainesville. The market is rated by Nielsen as being in the top 60s. But, there is really an interesting factor here. Years ago, the market was different. Gainesville was rated as a market by itself as was Ocala.

Actually, the market was Ocala-Leesburg at that time. The broadcasters in Gainesville and Ocala got together and decided that if they had -- then, it was Arbitron, which is a predecessor to Nielsen and the markets together, but dropped the Leesburg market from the summary that they would be market [indiscernible] like 65.

In truth, Gainesville and Ocala are different markets, are about 30 miles apart. There was a cross colonization as Gainesville was home to the University of Florida and Ocala is known for the horse country, it's known as -- it's name, it's actually the horse country.

The growth of the market also has grown tremendously Ocala market because of ingress of family support. But, however, we view Ocala as -- the old day, Gainesville-Ocala market is 750,000. But, if we go back to the old defined market of Leesburg and Ocala just by itself, there is well over 750,000 people just in Marion, Sumner and Lake Counties alone.

If you throw in the Ocala part of it, it's well over 1 million people in there.

The Marion and Sumner, which are not in the -- I am sorry, the Lake and Sumner, which are not in the market right now also include about 100,000 people in the villages which has a retirement community about an average income of $98,000 per household in the market, which is really very impressive. Market is growing like a weed.

Villages is also expanding in the Lake County, and it's projected it could double its population. Marion County referred to as horse capital, there is construction underway for a new equestrian center of 258 acres, which when completed in January ‘21 -- 2021 actually, will be the second largest in the world, which is very impressive on that.

And I happen to have a tour over last week. And I think there's like 18 horse barns on the property, all new which will hold 2,100 horses for events, a five-storey hotel, a five-star rating with it anticipated over 7,500 for concerts, it goes on and on. I think it's a game-changer for that entire market there.

We closed on the 1st of January, as Sam said. And under our new management team, we have already exceeded revenues for the first two months of the year. We have really put together a really great staff down there, and future is excellent on it. However, I do want to telegraph a little note that the winds were not as kind in some of our other markets.

Many of our markets over-performed in first quarter, which though isn't finished, we have a pretty good indication of what it will bring. We had three markets that had a larger than normal downturns in Q1 of this year.

One was an agricultural market because of the tariffs, which have not been kind to farmers, and agricultural advertising suffered quite a bit in the market. We are working on it now. We've put together another plan, combining to a rather ag stations and selling as a mini network which we think will help try to bring back some business on that.

One other market had a management change and we believe our problems there too in aberration. And a certain market is going through what we would call kind of a reeducation of basics -- of sales basics.

I say this in a kind manner as we do not make our staff sing songs or wave flags, whatever it is, but it is essentially back to basics and a more structured basics, and we believe that will be improved. I am disappointed in that. I should just go on record as saying that.

This will also be a somewhat expensive year as far as capital goes, as we're building a new towers, as Sam mentioned. The last time I think WNOR at Norfolk, the old tower, which we did not build, is suffering from salt erosion in the area at about 300 to 500 foot level. And we're always prudent that the tower will be replaced.

We have [indiscernible] tower, nearby in which broadcast wouldn’t change as the process occurs. We have to take down the old tower and install a new tower. For instance, we have to go down 35 feet into the bedrock to be able to pour the concrete for the holders of the tower, the steel for the tower.

The process will take us about several weeks once we start the construction on it. We are also remodeling our facilities in Springfield, Illinois and Charleston, South Carolina. And as Sam mentioned, we have plans for a newbuilding in Hilton Head and Ocala.

Other range of capital items will be purchased through -- will be I think eight or nine new transmitters or facilities. And it's an interesting -- to me, it's interesting that a number of years ago, it's anticipated you’ve got about 20 years to 25 years lifespan out of a transmitter; that's dropped down now at about 17, 18 years.

And if you kind of look at manufacturing, whereas before we had like seven or eight or more transmitter manufacturers for radio broadcasting, we really have two left. One is a Canadian company and one is a U.S. company which I think is interesting that we are down to just really two major.

There are somewhat smaller manufacturers, but just really two major suppliers in that area. I would also like to mention that we are still in the acquisition business and should be apparent to all that we believe in talent-driven radio and patience in finding just right acquisition.

A couple of brokers have actually called me goldilocks, which I don't know is a good thing or a bad thing. I think, it's good because we don't buy barrels of different types of porridge at the same time. We acquire one bowl at a time and a bowl that is just right, and it's worked for us for 32 years. There is no reason for us to change the metric.

We do not buy batches and batches of stations at one time. Frankly, we just overwhelm our infrastructure, and that could cause severe ramifications for our old shareholders and for us. We do have a credit line that’s $100 million, and we keep cash reserves available. Sometimes, it takes us longer than other times to find a proper station.

In the case of Ocala, our first conversation about the properties occurred with a call about 10 years ago with a polite response from them of thank you but we are not interested. I guess, our persistence does pay off. We have four properties that we are kind of looking at, at this time right now. It will take time.

None of them are tomorrow, but they could be tomorrow. That's the type of relationship that we build where events cause somebody to respond to us because they know we can perform quickly. As you've all noted, 2018 and even the first part of 2019, we've had witnessed unusual, actually I call it strange weather patterns.

Many businesses would say the same about their industries and broadcasting shares the same view. Last year was an unusual thing, it wasn't so much for us, but I'd tell you that we don't like some of the weather patterns that we've seen.

We are hoping for calm waters but we carry a lot of extra pumice on our boats, which wants us to make immediate repairs, should we have to. We are in good shape financially. We are in good shape with the stations we have. We've operated them prudently and well. We make the changes when necessary.

And as I said earlier, we really do believe in a talent-driven industry. I think, one of the things that's happened a little bit is there has been too much pruning by some of the other groups of talent. And we as an industry have to keep the talent quotient afloat as it is, really what the driver is for our business. Sam, that's about it.

Do we have any questions that we should look at?.

We had a couple of questions. One, I think we've already answered with the comment I made about extending your contract to 2025 because it was about what are your tentative plans to retire. And we all know that's not in the cards anytime soon.

The other one is the typical conversation piece that we have all the time internally and externally is about where our stock price is trading. And effectively, you've talked a little bit about cash management.

But basically, [Technical Difficulty] stock price but talking about what we are doing with the cash we have and relative to share buyback [Technical Difficulty] dividends and acquisitions and [Technical Difficulty].

You are breaking up.

Are you on your cellphone?.

No, I'm not..

Wow. Okay..

That's interesting..

Did, I break up at all?.

No. [Technical Difficulty].

Okay. Maybe it’s just the line. We do have the reserves available for us. We believe in having adequate reserves in case we decide that we can move quickly on something. We're pleased to be able to show that to anybody who is looking I’d say perspective, [indiscernible] seller. But, I guess that would be appropriate to us.

And we do have the line of credit. So, we're very much available in that. I think, I know where this call came from, it's one of two people. But, it's something that the Board looks at. We still had -- what, 1 million in interest that we had to pay on the -- our bank loan, which we did pay some down [Technical Difficulty].

I think, we just lost Ed. I think his phone just disconnected..

Yes. His line has disconnected..

Okay. I think I can -- he'll call back in here in a second. I know he's been having some lines -- problems for the last month or so. But, where he was basically going was we obviously look at all the alternatives, what we can do with cash.

We do want to be sure that we're prepared if there is a forthcoming downturn in the economy, which obviously will impact radio as well. We want to be prepared to have cash on hand for acquisitions and we do have the stock buyback in place..

Well, here I am. I guess, we figured it out that it was my end with my local carrier, which -- by the way, just to put it all in perspective, I think that they paid way too much and have too many bonds out there, which is affecting performance, and you said politely.

We won't name who it is, you can probably figure it out if you follow telephone stocks. That's pretty much when I have, Sam.

I was saying that it's a one of two people that probably ask that questions and we review this every single time we have a shareholder meeting and we review it every time that we sit down with the Board of Directors as to what is the basic use of our cash, and it's to grow the Company, which is something we go strongly on bit by bit by bit.

And we've been fortunate in that having that availability. I think, that's all I have..

I think we can wrap it up with that, Greg, and turn it back over to you just to wrap it up..

All right. Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect..