With “record” Q3 results and a street beat for its Q3 earnings and revenue results, Gray Television has decided to expand its share repurchase authorization in a sizable way.
While share repurchases would be seen from time to time through 2023, the confidence in the company from the C-Suite sparked the publicly traded GTN, with an 8% rise seen in the first hour of trading on Thursday and a 5% rise at the closing bell.
Concurrent with the release of its third quarter results, Gray’s Board of Directors approved an expansion of Gray’s share repurchase authorization for up to an additional
$150 million of outstanding common stock (GTN) and/or Class A common stock (GTN.A), through December 31, 2023.
The additional authorization widens the total capacity under Gray’s share repurchase program to $220 million, when combined with the approximately $70 million remaining
under its previous authorization.
As of October 31, Gray had 89,112,965 shares of common stock outstanding and 7,048,006 shares of Class A common stock outstanding.
Any repurchased shares will be held as treasury shares and may be used for general corporate purposes including, but not limited to, satisfying obligations under Gray’s employee benefit plans and long-term incentive plan.
The news buoyed GTN, with a 6.7% gain to $14.16 just prior to the company’s Q3 earnings call.
It’s a safe bet Gray’s fiscal results for the three months ending Sept. 30 pleased investors, too.
Gray Television saw net income grow to $109 million ($1.14 per diluted share), from $46 million ($0.46), easily beating the Zacks Consensus Estimate of $1.03 per share. Total Q3 revenue increased to $604 million from $517 million.
The improvement came despite a $10 million increase in broadcast expenses, to $326 million.
Free Cash Flow jumped to $139 million, from $92 million, as Adjusted EBITDA jumped to $261 million from $181 million.
Hilton H Howell, Chairman/co-CEO of Gray Television, opened the company’s Q3 earnings call by noting that it may be hard for all of us to remember how much optimism all had at the start of 2020. Now, months into “this crazy pandemic,” Gray is continuing to recover from the darkest weeks of the COVID-19 pandemic.
He spoke strongly of how Gray’s content “warrant compensation terms” — a nod to retransmission revenue of $217 million, rising from $196 million.
Overall, Q3 revenue was much better than what the C-Suite would have expected over the summer, Howell added.
The big story, “of course,” is political — it surpassed Gray’s most wildly expectations, Howell shared. The total for Q3? Some $128 million in political dollars were seen in the quarter.
For the full year, Gray believes its political revenue will total $380 million. And, with a runoff election set for the Georgia Senate race, the political revenue for 2020 could very well top $400 million, Howell noted.
Political ad displacement likely contributed to the dip in local advertising, including internet/digital and mobile, to $188 million from $218 million.
On the call, Howell noted that, despite all of these great accomplishments, it remains disappointed with its “mismatched” stock price — hence the stock buy back plan.
While Howell does make a strong case that GTN is undervalued, the issue is hardly equal to Nexstar Media Group, which recently topped $100 per share. Rather, GTN’s five-year high is $23.43, seen in April 2019, while its five-year low is $8.90, seen in August 2016.
Thus, Gray’s present stock value is just under a five-year median, with a close on Thursday at $13.96.
A meaningful jump from Oct. 28 shows investors are listening.
