Saga Communications (SGA) reports higher revenues and earnings but falls short of consensus EPS estimates

Saga Communications (SGA) reported  results on February 24, 2005 for
the fourth quarter and year end 2004.  Below are some highlights.

Results 4Q04 vs. 4Q03:

• EPS: $0.20 vs. $0.21; consensus was $0.22
• Revenue: $36.1M vs. $32.9M (+10%); consensus was $35.3M
• Operating income: $8.7M vs. $8.6M (+1%)
• Operating margin: 24.1% vs. 26.0% (-190 bps)
• Net income: $4.1M vs. $4.5M (-9%)
• Net margin: 11.5% vs. 13.8% (-230 bps)
• Debt: $121M vs. $121M (flat)
• Free cash flow: $4.3M vs. $6.0M (-29%)

Same Station Results 4Q04 vs. 4Q03:

Radio
Revenue: $30.6M vs. $29.5M (+4%)
Operating income: $10.1M vs. $9.7M (+4%)
Operating margin: 32.9% vs. 32.9% (flat)

Television
Revenue: $3.9M vs. $3.4M (+13%)
Operating income: $0.6M vs. $0.4M (+28%)
Operating margin: 14.2% vs. 12.5% (+170 bps)

Quick comments:

• No aquisitions during Q4; on January, 1 2005, SGA acquired WWWV-FM, WINA-AM and WQMZ-FM inCharlottesville, VA for $22 million, including $2M in stock; these should contribute $4M in revenue and $1.5M in operating income in 2005
• Capex during the quarter was $2.9M; $0.8M was acquisition related; 2005 capex is forecast to be $9M
• Share repurchase: spent $2.9M during quarter to purchase 171,000 shares; to date, have purchased 984,000 shares for $15.2M as part of a $20M share buyback program
• HD conversion: converting 5 stations in 2005; over next five years will convert 70%-80% of stations
• Political ads contributed $2.2M in revenues ($1.3M on radio, $460k on TV, and $430k on networks)