The E.W. Scripps Company (SSP) Bundle
Understanding The E.W. Scripps Company (SSP) Revenue Streams
Understanding E.W. Scripps Company’s Revenue Streams
Revenue Breakdown:
- Total Operating Revenues: $646,300,000 for Q3 2024, a 14.1% increase from $566,529,000 in Q3 2023.
- Total Operating Revenues (Year-to-Date): $1,781,393,000 for the first nine months of 2024, a 6.2% increase from $1,677,143,000 in the same period of 2023.
| Revenue Source | Q3 2024 ($000) | Q3 2023 ($000) | Change (%) | YTD 2024 ($000) | YTD 2023 ($000) | Change (%) |
|---|---|---|---|---|---|---|
| Core Advertising | 315,849 | 346,037 | -8.7% | 986,141 | 1,061,868 | -7.1% |
| Political | 131,403 | 9,130 | 1,344.2% | 176,850 | 16,501 | 975.7% |
| Distribution | 191,772 | 203,859 | -5.9% | 593,931 | 571,320 | 3.9% |
| Other | 7,276 | 7,503 | -3.0% | 24,471 | 27,454 | -10.2% |
Year-over-Year Revenue Growth Rate:
- Q3 2024 Revenue Growth: Increased by $79.8 million or 14% compared to Q3 2023.
- Year-to-Date 2024 Revenue Growth: Increased by $104 million or 6.2% compared to the same period in 2023.
Contribution of Different Business Segments:
- Local Media Segment: Total revenues of $445,553,000 for Q3 2024, up 26.2% from Q3 2023.
- Scripps Networks Segment: Total revenues of $201,672,000 for Q3 2024, down 6.4% from Q3 2023.
Significant Changes in Revenue Streams:
- Political Revenue: Increased significantly by $116 million in Q3 2024 and $152 million in the first nine months of 2024 compared to the prior year.
- Core Advertising Revenue: Decreased by $30.2 million in Q3 2024 and $75.7 million year-to-date compared to the previous year.
- Distribution Revenue: Decreased by $11.4 million in Q3 2024 but increased by $21.6 million year-to-date.
A Deep Dive into The E.W. Scripps Company (SSP) Profitability
A Deep Dive into E.W. Scripps Company's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $364,274 thousand, resulting in a gross profit margin of 20.5%.
Operating Profit Margin: The operating income for the same period was $220,874 thousand, leading to an operating profit margin of 12.4%.
Net Profit Margin: The net income attributable to shareholders was $50,831 thousand, which translates to a net profit margin of 2.9%.
Trends in Profitability Over Time
Comparing the profitability metrics from 2023 to 2024:
- Gross profit increased from $341,645 thousand in 2023 to $364,274 thousand in 2024.
- Operating income rose from $53,094 thousand in 2023 to $220,874 thousand in 2024.
- Net income improved from a loss of $692,022 thousand in 2023 to a profit of $50,831 thousand in 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the company’s profitability ratios compared to industry averages are:
| Metric | E.W. Scripps Company | Industry Average |
|---|---|---|
| Gross Profit Margin | 20.5% | 25% |
| Operating Profit Margin | 12.4% | 15% |
| Net Profit Margin | 2.9% | 8% |
Analysis of Operational Efficiency
The operational efficiency metrics indicate:
- Cost of Revenues: Total cost of revenues for the nine months was $973,126 thousand, which represents a 2.8% increase from $946,511 thousand in 2023.
- SG&A Expenses: Selling, general, and administrative expenses were $452,006 thousand, a 0.7% increase compared to $448,997 thousand in 2023.
- Restructuring Costs: Year-to-date restructuring costs totaled $18,653 thousand in 2024 compared to $29,208 thousand in 2023.
The company has shown improvements in operational efficiency, with the operating income margin significantly increasing due to higher political revenue and effective cost management strategies.
Debt vs. Equity: How The E.W. Scripps Company (SSP) Finances Its Growth
Debt vs. Equity: How The E.W. Scripps Company Finances Its Growth
The E.W. Scripps Company maintains a significant level of debt as part of its financing strategy. As of September 30, 2024, the company reported a total long-term debt of $2.784 billion, which includes the following components:
| Debt Type | Amount (in thousands) |
|---|---|
| Revolving Credit Facility | $175,000 |
| Senior Secured Notes (due 2029) | $523,356 |
| Senior Unsecured Notes (due 2027) | $425,667 |
| Senior Unsecured Notes (due 2031) | $392,071 |
| Term Loan (due 2026) | $723,116 |
| Term Loan (due 2028) | $545,000 |
| Total Outstanding Principal | $2,784,210 |
The company’s debt-to-equity ratio stands at approximately 2.28 as of the latest reporting period, indicating a higher reliance on debt compared to equity financing. This ratio is above the industry average, which typically hovers around 1.5, suggesting that the company is leveraging debt more aggressively than its peers.
Recently, The E.W. Scripps Company has engaged in several debt issuances and refinancing activities. Notably, on July 31, 2023, the company amended its credit agreement to establish a $585 million Revolving Credit Facility, maturing on January 7, 2026. As of September 30, 2024, the company had $175 million drawn against this facility, with an interest rate of 7.71%.
The company's credit ratings reflect its financial health, with a current rating of B2 from Moody's and B+ from S&P, indicating a speculative grade rating but with some capacity to meet financial commitments.
The balance between debt financing and equity funding is crucial for The E.W. Scripps Company. The company has prioritized debt financing to fund its growth initiatives while managing its equity structure carefully. As of September 30, 2024, the company reported $1.219 billion in total equity, which represents a decrease from the previous year due to operational losses and restructuring costs incurred.
This strategic approach allows the company to maintain liquidity while pursuing growth opportunities in a competitive media landscape. It is essential for investors to monitor these debt levels and their implications for overall financial stability.
Assessing The E.W. Scripps Company (SSP) Liquidity
Assessing The E.W. Scripps Company's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.12, calculated as current assets of $541.6 million divided by current liabilities of $483.3 million.
Quick Ratio: The quick ratio stands at 0.90, derived from liquid assets of $290.5 million against current liabilities of $483.3 million.
Working Capital Trends
As of September 30, 2024, the working capital is calculated as current assets minus current liabilities, equating to $58.3 million. This reflects a significant improvement from ($20.5 million) as of December 31, 2023, indicating a positive trend in liquidity management.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $541.6 | $483.3 | $58.3 |
| December 31, 2023 | $505.1 | $525.6 | ($20.5) |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statements reveal:
- Net Cash Provided by Operating Activities: $212.4 million
- Net Cash Used in Investing Activities: ($41.7 million)
- Net Cash Used in Financing Activities: ($171.4 million)
- Overall Decrease in Cash and Cash Equivalents: ($0.7 million)
| Cash Flow Activity | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $212.4 | $49.1 |
| Net Cash Used in Investing Activities | ($41.7) | ($44.7) |
| Net Cash Used in Financing Activities | ($171.4) | ($6.6) |
| Decrease in Cash and Cash Equivalents | ($0.7) | ($2.2) |
Liquidity Concerns and Strengths
As of September 30, 2024, the company holds $34.6 million in cash and has $403 million of additional borrowing capacity under its revolving credit facility. The cash flow from operations is projected to sufficiently meet the company's operational needs for the next 12 months, reflecting robust liquidity management despite the challenges faced in the previous years.
Moreover, the company has made significant progress in reducing its debt, with a total outstanding principal of $2.78 billion as of September 30, 2024, down from $2.95 billion at the end of 2023. This reduction indicates a commitment to deleveraging and financial stability.
Is The E.W. Scripps Company (SSP) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of the company, we look at several key financial ratios and metrics that provide insights into whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 11.5, calculated based on a trailing twelve months (TTM) net income of $50.8 million and a market capitalization of approximately $583 million.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.2, derived from a book value of equity of $1.01 billion and a current stock price of $12.50.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 8.0, based on an enterprise value of $1.3 billion and EBITDA of $162 million.
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- 12 months ago: $10.00
- 6 months ago: $15.00
- Current price: $12.50
Dividend Yield and Payout Ratios
The company has not declared any dividends for 2024, focusing instead on strengthening its balance sheet. The previous dividend yield was 3.6% based on the $0.45 per share dividend paid in 2023.
Analyst Consensus on Stock Valuation
Analyst consensus currently reflects a rating of Hold, with a target price estimated at $13.00, indicating a potential upside of approximately 4% from the current price.
| Valuation Metric | Current Value |
|---|---|
| P/E Ratio | 11.5 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 8.0 |
| Current Stock Price | $12.50 |
| 12-Month Change in Stock Price | 25% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing The E.W. Scripps Company (SSP)
Key Risks Facing The E.W. Scripps Company
Industry Competition: The media landscape is highly competitive, with significant competition from both traditional and digital platforms. In the third quarter of 2024, core advertising revenue decreased by $30.2 million or 9.2% compared to the same period in 2023. This decline highlights the ongoing challenges in retaining advertising dollars amid fierce competition.
Regulatory Changes: Regulatory changes can impact operational costs and revenue models. The company is subject to FCC regulations which may affect its broadcasting capabilities and advertising revenues. Compliance with these regulations requires ongoing investment in legal and operational adjustments.
Market Conditions: Economic conditions significantly affect advertising budgets. The volatility in political advertising, which increased by $122 million in the third quarter of 2024, is indicative of how market conditions can fluctuate based on election cycles. Conversely, a $30.2 million drop in core advertising revenue underscores the risks associated with economic downturns.
Operational Risks
The company has faced operational challenges, including restructuring costs that totaled $12.7 million in the third quarter of 2024. These costs are associated with strategic reorganizations aimed at improving efficiency but also indicate potential instability in operations during transitions.
Goodwill Impairment: A significant risk involves goodwill impairment, which was recorded at $686 million in 2023. This impairment reflects a substantial loss in asset value that can adversely affect the balance sheet and lead to decreased investor confidence.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Core Advertising Revenue | Decline in core advertising revenue | -$30.2 million (9.2%) in Q3 2024 |
| Political Advertising Revenue | Increase in political advertising revenue | +$122 million in Q3 2024 |
| Restructuring Costs | Costs associated with operational restructuring | $12.7 million in Q3 2024 |
| Goodwill Impairment | Non-cash charge for goodwill impairment | $686 million in 2023 |
Financial Risks
Debt Levels: As of September 30, 2024, the total outstanding principal of long-term debt was reported at $2.78 billion. This includes $175 million under the revolving credit facility. High debt levels can limit financial flexibility and increase vulnerability to interest rate fluctuations.
Interest Expense: Interest expenses for the company were $161.5 million for the nine months ended September 30, 2024. Rising interest rates could further strain profitability and cash flow.
Liquidity Risks: As of September 30, 2024, the company had $34.6 million in cash and $403 million in available borrowing capacity. While this provides some liquidity, any unexpected downturns in revenue could quickly erode these reserves.
Mitigation Strategies
The company is taking steps to mitigate risks through strategic restructuring and operational efficiency improvements. In 2024, the company focused on enhancing its political advertising capabilities to leverage election cycles effectively, resulting in increased political revenue. Additionally, the company continues to monitor regulatory developments closely to adapt its operations accordingly.
Future Growth Prospects for The E.W. Scripps Company (SSP)
Growth Opportunities
Future growth prospects for the company are supported by several key drivers:
Analysis of Key Growth Drivers
- Product Innovations: The company has entered into sports rights contracts for the airing of games for the Women's National Basketball Association (WNBA), the National Women's Soccer League (NWSL), and the Vegas Golden Knights and Utah Hockey Club in the NHL. These contracts have increased programming expenses by $3.9 million in Q3 2024 and $22.8 million in the first nine months of 2024 compared to prior periods.
- Market Expansions: Local Media revenues increased $92.5 million or 26% in Q3 2024 and $146 million or 14% in the first nine months of 2024, largely driven by political revenue growth.
- Acquisitions: The company completed the sale of Broadcast Music, Inc. (BMI) for $18.1 million in pre-tax cash proceeds, which enhances liquidity for future acquisitions.
Future Revenue Growth Projections and Earnings Estimates
Operating revenues are projected to reach $1.78 billion in 2024, representing a 6.2% increase compared to $1.68 billion in 2023. The expected growth is bolstered by a significant rise in political advertising revenues of $160 million year-to-date 2024.
Strategic Initiatives or Partnerships
The company plans to enhance its content offerings through strategic partnerships and the acquisition of premium sports broadcasting rights, which are expected to drive additional viewership and advertising revenues.
Competitive Advantages
- Market Position: The company holds a strong position in local media, with a year-to-date segment profit increase of 55.8%.
- Cost Management: Employee compensation and benefits have been effectively managed, showing a decrease of 0.5% in the first nine months of 2024 compared to the prior period.
- Debt Management: As of September 30, 2024, the company had $34.6 million in cash on hand and $403 million available under its revolving credit facility, indicating strong liquidity to support growth initiatives.
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Operating Revenues | $646.3 million | $566.5 million | +14.1% |
| Net Income | $47.8 million | ($3.7 million) | N/A |
| Political Revenue | $131.4 million | $9.1 million | +1,345.4% |
| Distribution Revenue | $191.8 million | $203.9 million | -5.7% |
Overall, the company's focus on strategic partnerships, market expansions, and effective cost management positions it for robust growth moving forward.
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Updated on 16 Nov 2024
Resources:
- The E.W. Scripps Company (SSP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The E.W. Scripps Company (SSP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The E.W. Scripps Company (SSP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.