Saga Communications, Inc. (NASDAQ:SGA) Q1 2023 Earnings Conference Call May 3, 2023 11:00 AM ET

Company Participants

Sam Bush - CFO

Conference Call Participants

Operator

Good day, ladies and gentlemen, and welcome to the Saga Communications Inc. 20223 First Quarter Earnings Release and Conference Call.

It is now my pleasure to turn the floor over to your host, Sam Bush. Sir, the floor is yours.

Sam Bush

Thank you, Matthew. First, I wanted to let you know that Chris was pulled away with a family emergency today and won't be joining the call. He did, however, leave me with his notes as to what he wanted to pass along. So, while I can't bring them to you with the color and the flare that he would have, I've incorporated them into my comments.

Now, for obviously the most fun, the basic disclaimer. 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 a discussion 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 tables.

For the quarter ended March 31, 2023, net revenue increased 1.3% to $25.3 million compared to $25 million last year. Station operating expense increased $1.1 million to $21.7 million for the three-month period. Station operating income decreased $770,000 to $4.8 million. Operating income was down $805,000. Political revenue during the quarter was inconsequential at $193,000 compared to $121,000 for the same period last year. National for the quarter was up approximately 7% year-over-year, and represents approximately 9% of our overall gross revenue. I'll talk more about one particular national win Saga had, a little later in my comments.

As indicated in the press release, two of the main reasons station operating expenses were up were employee compensation and healthcare costs at a market level. After a number of years of giving our employees little to no compensation increases, we made the important decision to give our remarkable staff pay increases in recognition of the tremendous work they did for Saga over the past years, including the COVID years of 2020 and 2021, as well as to recognize the issues that many of them were having given the current economic conditions and inflationary environment. For the quarter, these well-deserved pay increases and related payroll taxes accounted for approximately $446,000 of our overall station operating expense increases.