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SAGA COMMUNICATIONS INC (SGA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net operating revenue was $28.8M (-1.3% YoY), diluted EPS was $0.20, operating income fell to $0.984M, and station operating income (non-GAAP) was $5.9M; same-station revenue declined 3.9% and same-station operating income decreased 63% to ~$1.0M .
  • Political advertising buoyed results; gross political revenue was ~$2.0M in Q4 2024 vs ~$0.407M in Q4 2023, and absent political, Q4 overall gross revenue would have declined ~6.5% YoY .
  • Management guided 2025 capex to $4.0–$4.5M, expects station OpEx to rise ~1.5%–2.5% YoY, corporate G&A ~$12M, tax rate 26%–29%; pacing is down mid–high single digits in Q1 but expected to turn positive beginning in Q2 .
  • Potential stock-reaction catalysts: evaluating non-core tower asset sales with intent to use proceeds for buybacks; ongoing board refresh to add a digital expert; accelerating traction in Blended Advertising and interactive (Q4 interactive +19.5% YoY to ~$3.0M) .

What Went Well and What Went Wrong

What Went Well

  • Interactive revenue rose 19.5% YoY to ~$3.0M in Q4 and 20.9% for FY 2024 to $11.6M; e-commerce grew to ~$0.569M in Q4 and by ~$0.904M to $2.4M for the year, and national revenue increased 13.1% in Q4 .
  • “Blended advertising orders yielded us 4.3x more than non-blended orders,” and customers buying blended spent 96% more on radio than non-blended buyers, underpinning Saga’s transformation thesis .
  • Balance sheet liquidity remained solid with $27.8M cash and short‑term investments at year-end, and the company continued dividends ($0.25 paid 12/13/24 and 3/7/25) .

What Went Wrong

  • Core revenues and margins compressed: Q4 net operating revenue fell 1.3% YoY to $28.8M; operating income dropped to $0.984M (operating margin ~3.4% vs ~9.6% prior year), driven by higher station operating expenses (+4.1% YoY) .
  • Expense pressure persisted (salary increases, interactive costs, bad debt) especially in H1; same‑station OpEx rose and same‑station operating income fell 63% to ~$1.0M in Q4 .
  • Limited exposure to battleground states capped political upside; management noted Q4 2024 political of ~$2.0M vs ~$3.8M in Q4 2020 and that “we just didn’t have stations in all the right states this year” .

Financial Results

MetricQ4 2023 (oldest)Q3 2024Q4 2024 (newest)
Net Operating Revenue ($M)$29.145 $28.118 $28.770
Operating Income ($M)$2.795 $1.645 $0.984
Diluted EPS ($)$0.40 $0.20 $0.20
Station Operating Income ($M, non-GAAP)$7.071 $5.985 $5.853
Operating Margin (%)9.6% (2.795/29.145) 5.9% (1.645/28.118) 3.4% (0.984/28.770)
Station Operating Income Margin (%)24.3% (7.071/29.145) 21.3% (5.985/28.118) 20.3% (5.853/28.770)

Segment cost breakdown (Depreciation & Amortization):

D&A ($M)Q4 2023 (oldest)Q3 2024Q4 2024 (newest)
Radio Stations$1.255 $1.325 $1.380
Corporate$0.063 $0.066 $0.056
Total$1.318 $1.391 $1.436

KPIs and mix:

KPIQ3 2024Q4 2024
Gross Political Revenue ($M)~$0.677 ~$2.000
Interactive Revenue ($M)~$2.51 (derived from growth disclosures) ~$3.00 (+19.5% YoY)
National Revenue Growth (%)+3.3% FY, +13.1% Q4 +13.1% Q4
E‑commerce Revenue ($M)~$0.514 (Q3) ~$0.569 (Q4)

Note: Interactive and e‑commerce amounts are from management commentary; Q3 interactive and e‑commerce levels are referenced via growth/absolute disclosures in the call .

Guidance Changes

MetricPeriodPrevious Guidance (Q3 2024)Current Guidance (Q4 2024)Change
Station Operating Expense (same-station)FY 2024 vs 2023 / FY 2025 vs 2024+3% to +5% (FY 2024) +1.5% to +2.5% (FY 2025) Lower growth trajectory
Corporate G&AFY 2024 / FY 2025~$12.2M (FY 2024) ~$12.0M (FY 2025) Lower
Tax RateOngoing27%–31% (deferred 6.9%) 26%–29% (deferred 5%–9%) Slightly lower midpoint
Capital ExpendituresFY 2024 / FY 2025$4.0–$4.5M (FY 2024) $4.0–$4.5M (FY 2025) Maintained
Revenue Outlook (Pacing)Q4 2024 / H1 2025Q4 pacing down low–mid single digits Q1 pacing down mid–high single digits; expect positive revenue growth beginning Q2 Mixed near-term, improving Q2
DividendsOngoingContinued quarterly dividends Declared $0.25 dividend (paid 3/7/25) and intent to continue regular quarterly cash dividends Maintained

Capital allocation update: evaluating non-core tower asset sales; Board committed to using a “not insignificant portion” of proceeds for stock buybacks (open market or block trades) .

Earnings Call Themes & Trends

TopicPrevious Mentions – Q2 2024Previous Mentions – Q3 2024Current Period – Q4 2024Trend
Blended Advertising strategyLaunch and training; online news/e‑commerce scaling; interactive up +33% in Q2; Best Of program scaling Early returns strong; blended increases radio-only spend; termination of low‑margin digital partner to improve profitability 4.3x revenue vs non-blended; 96% more radio spend by blended buyers; new $2M brand‑new clients signed in 7 days across 3 markets Accelerating
Macro demand / pacingQ3 pacing mid‑single-digit down; political slow vs 2020 Q4 pacing low–mid single-digit down; turbulence (auto/broadcast layoffs) Q1 down mid–high single-digit; expect positive in Q2 (April–June improving) Improving into Q2
Expense disciplineH1 salary increases, interactive costs; severance; bad debt Same‑station OpEx up 3%–5% FY; ongoing training investments Plan for 1%–2% pro forma OpEx reduction from efficiency initiatives; FY 2025 station OpEx growth 1.5%–2.5% Tightening
Political advertising2024 YTD political $0.598M through Q2 2024 YTD political $3.3M; Q4 ~$2.0M; less exposure to battleground states Q4 political ~$2.0M; without political, Q4 gross revenue down ~6.5% Supportive but constrained
Asset sales / buybacks10b5 plan exists but inactive; buybacks considered —Evaluating tower sales; proceeds for buybacks; update expected by Q1 2025 earnings Potential catalyst
Governance refresh——Strategic update: board refresh; recruiting digital marketing expert; engagement with largest holder and response to Gate City nominations Active

Management Commentary

  • CEO emphasized transformational change and “Blended Advertising” that integrates radio, search, and display to align with the consumer journey: “Radio gets the advertiser wanted, Search gets the advertiser found, and Display gets the advertiser chosen” .
  • CFO detailed Q4 mix and full-year drivers, highlighting political impact, interactive and e‑commerce growth, and expense initiatives: “We believe existing expenses can be reduced 1% to 2% on a pro forma basis…without impacting investments” .
  • Strategy momentum: “Blended advertising orders yielded us 4.3x more than non‑blended orders… customers who bought blended spent 96% more on radio” .
  • Near-term outlook: “Pacing for the first quarter is soft… We expect revenue to turn positive… beginning with the second quarter” .
  • Capital allocation: “We expect to receive shortly an offer to purchase some of our tower sites… The Board is committed to using a not insignificant portion of the proceeds… for stock buybacks” .

Q&A Highlights

  • Demand cadence: January/February down high single digits, March down mid-single; April down mid-single and improving, June pacing flat to slightly up, supporting expectation for positive revenue in Q2 .
  • Local advertiser sentiment: continued trust in Saga’s localism; blended strategy enhancing customer outcomes and sustaining radio’s role .
  • Guidance clarifications: FY 2025 station OpEx +1.5%–2.5%, corporate G&A ~$12M, tax rate 26%–29%, capex $4.0–$4.5M .
  • Capital plan: potential tower asset sale proceeds directed to buybacks (open market/block), timing update targeted for Q1 2025 report .

Estimates Context

  • Wall Street consensus (S&P Global) was unavailable at time of query due to access limits; as a result, we cannot provide formal “vs. estimates” comparisons in this recap [GetEstimates error].
  • Given limited disclosed sell‑side metrics in the documents and lack of SPGI data access at query time, any post‑hoc estimate comparisons should be refreshed once SPGI access is restored [GetEstimates error].

Key Takeaways for Investors

  • Core broadcast margins remain under pressure, but interactive and e‑commerce growth plus political support partially mitigated Q4 declines; absent political, Q4 gross revenue would have been down ~6.5% YoY, underscoring the need for digital momentum .
  • The Blended Advertising strategy shows tangible traction (4.3x blended vs non‑blended order revenue; 96% higher radio spend by blended buyers) and is a central lever to stabilize and grow revenue mix in 2025 .
  • Near‑term demand is soft, but monthly pacing data suggests improvement and management expects positive revenue growth starting in Q2—align trading setups around confirmation of Q2 inflection in April–June updates .
  • Expense discipline is tightening: FY 2025 station OpEx growth guided to +1.5%–2.5% with targeted 1%–2% pro forma reductions, and corporate G&A guided ~$12M—watch for operating leverage if revenue turns up .
  • Potential catalysts: non‑core tower asset sales and shareholder‑friendly capital returns via buybacks; ongoing board refresh to add digital expertise can support strategic execution and investor confidence .
  • Liquidity and dividends provide downside support (cash/short‑term investments $27.8M at 12/31/24; regular quarterly dividend continued at $0.25) .
  • Monitor political cycles, national demand, and macro sensitivity (auto, SMB advertising budgets) given historical variability in Saga’s revenue profile .