SAGA COMMUNICATIONS INC 10-Q

Item 1. Financial Statements SAGA COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ (In thousands) ​ Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 19,917 ​ $ 29,582 ​ Short-term investments ​ ​ 8,821 ​ ​ 10,595 ​ Accounts receivable, net ​ 15,456 ​ 17,173 ​ Prepaid expenses and other current assets ​ 3,255 ​ 2,451 ​ Barter transactions ​ 954 ​ 843 ​ Total current assets ​ 48,403 ​ 60,644 ​ Property and equipment ​ 151,804 ​ 148,265 ​ Less accumulated depreciation ​ 99,083 ​ 96,860 ​ Net property and equipment ​ 52,721 ​ 51,405 ​ Other assets: ​ ​ ​ ​ ​ ​ ​ Broadcast licenses ​ 90,693 ​ 90,240 ​ Goodwill ​ 20,044 ​ 19,236 ​ Other intangibles, right of use assets, deferred costs and investments, net ​ 11,349 ​ 10,688 ​ Total assets ​ $ 223,210 ​ $ 232,213 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and shareholders’ equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 3,347 ​ $ 2,802 ​ Accrued expenses: ​ ​ ​ ​ ​ ​ ​ Accrued payroll and payroll taxes ​ 5,598 ​ 5,318 ​ Dividend payable ​ 1,565 ​ 12,505 ​ Other accrued expenses ​ 6,826 ​ 6,480 ​ Barter transactions ​ 1,019 ​ 924 ​ Total current liabilities ​ 18,355 ​ 28,029 ​ Deferred income taxes ​ 26,372 ​ 26,122 ​ Long-term debt ​ 5,000 ​ — ​ Other liabilities ​ 7,491 ​ 7,513 ​ Total liabilities ​ 57,218 ​ 61,664 ​ Commitments and contingencies (Note 11 and 14) ​ — ​ — ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ Common stock ​ 80 ​ 80 ​ Additional paid-in capital ​ 73,833 ​ 72,593 ​ Retained earnings ​ 128,510 ​ 134,771 ​ Treasury stock ​ ( 36,431 ) ​ ( 36,895 ) ​ Total shareholders’ equity ​ 165,992 ​ 170,549 ​ Total liabilities and shareholders' equity ​ $ 223,210 ​ $ 232,213 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. 3 Table of Contents SAGA COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, ​ 2024 2023 2024 2023 ​ ​ (Unaudited) ​ ​ (In thousands, except per share data) Net operating revenue ​ $ 28,118 $ 29,149 $ 81,524 $ 83,628 Station operating expenses ​ 23,458 ​ 22,760 69,983 ​ 66,870 Corporate general and administrative ​ 2,966 ​ 2,852 9,144 ​ 7,940 Other operating expense, net ​ ​ 49 ​ ​ 45 ​ ​ 1,026 ​ ​ 125 Operating income ​ 1,645 ​ 3,492 1,371 ​ 8,693 Interest expense ​ 121 ​ 44 235 ​ 130 Interest income ​ ( 255 ) ​ ( 391 ) ( 809 ) ​ ( 1,027 ) Other income ​ ​ ( 78 ) ​ ​ — ​ ​ ( 1,211 ) ​ ​ ( 119 ) Income before income tax expense ​ 1,857 ​ 3,839 3,156 ​ 9,709 Income tax provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ 415 ​ 835 715 ​ 2,020 Deferred ​ ​ 175 ​ 275 250 ​ 690 ​ ​ 590 ​ 1,110 965 ​ 2,710 Net income ​ $ 1,267 ​ $ 2,729 $ 2,191 ​ $ 6,999 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.20 ​ $ 0.45 $ 0.35 ​ $ 1.15 Diluted ​ $ 0.20 ​ $ 0.45 $ 0.35 ​ $ 1.15 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares ​ 6,075 ​ 6,032 6,070 ​ 6,031 Weighted average common and common equivalent shares ​ 6,075 ​ 6,032 6,070 ​ 6,031 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends declared per share ​ $ 0.25 ​ $ 0.25 $ 1.35 ​ $ 0.75 ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ ​ 4 Table of Contents SAGA COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the three and nine months ended September 30, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A ​ Class B ​ Additional ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Common Stock ​ Paid-In ​ Retained ​ Treasury ​ Stockholders’ ​ Shares Amount Shares Amount Capital Earnings Stock Equity ​ ​ (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ 7,867 ​ $ 78 ​ — ​ $ — ​ $ 71,664 ​ $ 143,896 ​ $ ( 37,109 ) ​ $ 178,529 Net income, three months ended March 31, 2023 — ​ ​ — — ​ — ​ — ​ 920 ​ — ​ 920 Dividends declared per common share — ​ — — ​ — ​ — ​ ( 1,531 ) ​ — ​ ( 1,531 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 245 ​ ​ — ​ — ​ 245 401(k) plan contribution — ​ — — ​ — ​ ( 185 ) ​ — ​ 441 ​ 256 Balance at March 31, 2023 7,867 ​ $ 78 — ​ $ — ​ $ 71,724 ​ $ 143,285 ​ $ ( 36,668 ) ​ $ 178,419 Net income, three months ended June 30, 2023 — ​ — — ​ — ​ — ​ 3,350 ​ — ​ 3,350 Dividends declared per common share — ​ — — ​ — ​ — ​ ( 1,531 ) ​ — ​ ( 1,531 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 248 ​ — ​ — ​ 248 Balance at June 30, 2023 7,867 ​ $ 78 — ​ $ — ​ $ 71,972 ​ $ 145,104 ​ $ ( 36,668 ) ​ $ 180,486 Net income, three months ended September 30, 2023 ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 2,729 ​ ​ — ​ ​ 2,729 Dividends declared per common share ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 1,530 ) ​ ​ — ​ ​ ( 1,530 ) Compensation expense related to restricted stock awards ​ — ​ ​ — ​ — ​ ​ — ​ ​ 250 ​ ​ — ​ ​ — ​ ​ 250 Balance at September 30, 2023 ​ 7,867 ​ $ 78 ​ — ​ $ — ​ $ 72,222 ​ $ 146,303 ​ $ ( 36,668 ) ​ $ 181,935 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A ​ Class B ​ Additional ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Common Stock ​ Paid-In ​ Retained ​ Treasury ​ Stockholders’ ​ Shares Amount Shares Amount Capital Earnings Stock Equity ​ ​ (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ 8,007 ​ $ 80 ​ — ​ $ — ​ $ 72,593 ​ $ 134,771 ​ $ ( 36,895 ) ​ $ 170,549 Net loss, three months ended March 31, 2024 — ​ — — ​ — ​ — ​ ( 1,577 ) ​ — ​ ( 1,577 ) Dividends declared per common share — ​ — — ​ — ​ — ​ ( 5,321 ) ​ — ​ ( 5,321 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 453 ​ — ​ — ​ 453 401(k) plan contribution — ​ — — ​ — ​ ( 207 ) ​ — ​ 475 ​ 268 Balance at March 31, 2024 ​ 8,007 ​ $ 80 — ​ $ — ​ $ 72,839 ​ $ 127,873 ​ $ ( 36,420 ) ​ $ 164,372 Net income, three months ended June 30, 2024 — ​ — — ​ — ​ — ​ 2,501 ​ — ​ 2,501 Forfeiture of restricted stock ​ ( 1 ) ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Dividends declared per common share — ​ — — ​ — ​ — ​ ​ ( 1,566 ) ​ — ​ ( 1,566 ) Compensation expense related to restricted stock awards — ​ — — ​ — ​ 520 ​ — ​ — ​ 520 Balance at June 30, 2024 8,006 ​ $ 80 — ​ $ — ​ $ 73,359 ​ $ 128,808 ​ $ ( 36,420 ) ​ $ 165,827 Net income, three months ended September 30, 2024 ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 1,267 ​ ​ — ​ ​ 1,267 Dividends declared per common share ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 1,565 ) ​ ​ — ​ ​ ( 1,565 ) Compensation expense related to restricted stock awards ​ — ​ ​ — ​ — ​ ​ — ​ ​ 474 ​ ​ — ​ ​ — ​ ​ 474 Purchase of shares held in treasury ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 11 ) ​ ​ ( 11 ) Balance at September 30, 2024 ​ 8,006 ​ $ 80 ​ — ​ $ — ​ $ 73,833 ​ $ 128,510 ​ $ ( 36,431 ) ​ $ 165,992 See accompanying notes to unaudited condensed consolidated financial statements. ​ 5 Table of Contents SAGA COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ 2024 2023 ​ ​ (Unaudited) ​ ​ (In thousands) ​ Statement of Cash Flows ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 2,191 ​ $ 6,999 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 3,847 ​ ​ 3,737 ​ Deferred income tax expense ​ ​ 250 ​ ​ 690 ​ Amortization of deferred costs ​ ​ 27 ​ ​ 27 ​ Compensation expense related to restricted stock awards ​ ​ 1,447 ​ ​ 743 ​ Loss on sale of assets, net ​ ​ 1,026 ​ ​ 125 ​ (Gain) on insurance claims ​ ​ ( 78 ) ​ ​ — ​ Other (gain), net ​ ​ ( 1,133 ) ​ ​ ( 119 ) ​ Barter (revenue) expense, net ​ ​ ( 20 ) ​ ​ 44 ​ Deferred and other compensation ​ ​ ( 165 ) ​ ​ ( 239 ) ​ Changes in assets and liabilities, net of business acquisition: ​ ​ ​ ​ ​ ​ ​ Decrease (increase) in receivables and prepaid expenses ​ ​ 1,848 ​ ​ ( 51 ) ​ Increase in accounts payable, accrued expenses, and other liabilities ​ ​ 901 ​ ​ 1,965 ​ Total adjustments ​ ​ 7,950 ​ ​ 6,922 ​ Net cash provided by operating activities ​ ​ 10,141 ​ ​ 13,921 ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ Purchase of short-term investments ​ ​ ( 12,993 ) ​ ​ ( 14,441 ) ​ Redemption of short-term investments ​ ​ 15,104 ​ ​ 14,437 ​ Acquisition of property and equipment (Capital Expenditures) ​ ( 3,199 ) ​ ( 3,397 ) ​ Acquisition of broadcast properties ​ ( 5,711 ) ​ — ​ Proceeds from sale and disposal of assets ​ ​ 176 ​ ​ 621 ​ Proceeds from redemption of investments and other ​ 1,221 ​ ​ — ​ Other investing activities ​ ( 2 ) ​ 117 ​ Net cash used in investing activities ​ ( 5,404 ) ​ ( 2,663 ) ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ Proceeds from long-term debt ​ ​ 5,000 ​ ​ — ​ Cash dividends paid ​ ( 19,391 ) ​ ( 16,816 ) ​ Purchase of treasury shares ​ ( 11 ) ​ — ​ Net cash used in financing activities ​ ( 14,402 ) ​ ( 16,816 ) ​ Net decrease in cash and cash equivalents ​ ( 9,665 ) ​ ( 5,558 ) ​ Cash and cash equivalents, beginning of period ​ 29,582 ​ 36,802 ​ Cash and cash equivalents, end of period ​ $ 19,917 ​ $ 31,244 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ ​ 6 Table of Contents ​ SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for annual financial statements. In our opinion, the accompanying financial statements include all adjustments of a normal, recurring nature considered necessary for a fair presentation of our financial position as of September 30, 2024 and the results of operations for the three and nine months ended September 30, 2024 and 2023. Results of operations for three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. We own or operate broadcast properties in 28 markets, including 82 FM and 32 AM radio stations and 79 metro signals. For further information, refer to the consolidated financial statements and footnotes thereto included in the Saga Communications, Inc. annual report on Form 10-K for the year ended December 31, 2023. We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2024, for items that should potentially be recognized in these financial statements or discussed within the notes to these financial statements. Earnings Per Share Information Earnings per share is calculated using the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security. The Company has participating securities related to restricted stock units, granted under the Company’s Second Amended and Restated 2005 Incentive Compensation Plan and the Company’s 2023 Incentive Compensation Plan, that earn dividends on an equal basis with common shares. In applying the two-class method, earnings are allocated to both common shares and participating securities. 7 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ The following table sets forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, ​ 2024 2023 2024 2023 ​ ​ (In thousands, except per share data) Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 1,267 ​ $ 2,729 ​ $ 2,191 ​ $ 6,999 ​ Less: Income allocated to unvested participating securities ​ 39 ​ 41 ​ 69 ​ 105 ​ Net income available to common shareholders ​ $ 1,228 ​ $ 2,688 ​ $ 2,122 ​ $ 6,894 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator for basic earnings per share — weighted average shares ​ 6,075 ​ 6,032 ​ 6,070 ​ 6,031 ​ Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock equivalents ​ — ​ — ​ — ​ — ​ Denominator for diluted earnings per share — adjusted weighted-average shares and assumed conversions ​ 6,075 ​ 6,032 ​ 6,070 ​ 6,031 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.20 ​ $ 0.45 ​ $ 0.35 ​ $ 1.15 ​ Diluted ​ $ 0.20 ​ $ 0.45 ​ $ 0.35 ​ $ 1.15 ​ ​ There were no stock options outstanding that had an antidilutive effect on our earnings per share calculation for the three and nine months ended September 30, 2024 and 2023, respectively. The actual effect of these shares, if any, on the diluted earnings per share calculation will vary significantly depending on the fluctuation in the stock price. Financial Instruments We account for marketable securities in accordance with ASC 320, “ Investments – Debt Securities, ” which require that certain debt securities be classified into one of three categories: held-to-maturity, available-for-sale, or trading securities, and depending upon the classification, value the security at amortized cost or fair market value. At September 30, 2024 and December 31, 2023, we have recorded $ 8.8 million and $ 10.6 million, respectively, of held-to-maturity U.S. Treasury Bills and Treasury Notes at amortized cost basis that have a fair market value of $ 8.8 million and $ 10.6 million, respectively. Our held-to-maturity U.S. Treasury Bills and Treasury Notes all have original maturity dates ranging from October 2024 to March 2025. Our financial instruments are comprised of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and long-term debt. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. The carrying value of long-term debt approximates fair value as it carries interest rates that either fluctuate with the secured overnight finance rate (“SOFR”), prime rate or have been reset at the prevailing market rate at September 30, 2024. ​ 8 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Allowance for Credit losses A provision for credit losses is recorded based on our judgment of collectability of receivables. Amounts are written off when determined to be fully uncollectible. Delinquent accounts are based on contractual terms. We maintain a specific allowance for estimated losses resulting from the inability of certain customers to make required payments. We also consider factors external to the specific customer, including current conditions and forecasts of economic conditions, including the potential impact of uncertain economic conditions. In the event we recover amounts previously written off, we will reduce the specific allowance for credit loss. Our allowance for credit losses was $ 1,176,000 and $ 618,000 at September 30, 2024 and December 31, 2023, respectively. The activity in the allowance for credit losses during the nine months ended September 30, 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Write Off of ​ ​ ​ Balance ​ Charged to ​ Allowance ​ Uncollectible ​ Balance at ​ ​ at Beginning ​ Costs and ​ From ​ Accounts, Net of ​ End of Nine Months Ended of Period Expenses Acquisitions Recoveries Period ​ ​ (in thousands) September 30, 2024 ​ $ 618 ​ $ 832 ​ $ 26 ​ $ ( 300 ) ​ $ 1,176 ​ Income Taxes Our effective tax rate is higher than the federal statutory rate as a result of the inclusion of state taxes in the income tax amount and permanent differences related to executive compensation. We have historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Segments We serve twenty-eight radio markets (reporting units) that aggregate into one operating segment (Radio), which also qualifies as a reportable segment. We operate under one reportable business segment for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance. The Chief Operating Decision Maker (“CODM”) evaluates the results of the radio operating segment and makes operating and capital investment decisions based at the Company level. Furthermore, technological enhancements and system integration decisions are reached at the Company level and applied to all markets rather than to specific or individual markets to ensure that each market has the same tools and opportunities as every other market. Managers at the market level do not report to the CODM and instead report to other senior management, who are responsible for the operational oversight of radio markets and for communication of results to the CODM. We continually review our operating segment classification to align with operational changes in our business and may make changes as necessary. Time Brokerage Agreements/Local Marketing Agreements We have entered into Time Brokerage Agreements (“TBAs”) or Local Marketing Agreements (“LMAs”) in certain markets. In a typical TBA/LMA, the FCC licensee of a station makes available, for a fee, blocks of air time on its station to another party that supplies programming to be broadcast during that air time and sells their own commercial advertising announcements during the time periods specified. Revenue and expenses related to TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Statements of Income. Assets and liabilities related to the TBAs/LMAs are included in the accompanying unaudited Condensed Consolidated Balance Sheets. ​ 9 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ ​ 2. Recent Accounting Pronouncements New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 is effective for us for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025. We are currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures. ​ In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which requires expanded disclosure of our income rate reconciliation and income taxes paid. ASU 2023-09 is effective for us for annual periods beginning after January 1, 2025. We are currently evaluating the impact ASU 2023-09 will have on our financial statement disclosures. ​ In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (DISE) (“ASU 2024-03”), which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses on an annual and interim basis. ASU 2024-03 is effective for us for annual periods beginning after January 1, 2027 and interim periods beginning after January 1, 2028. We are currently evaluating the impact ASU 2024-03 will have on our financial statement disclosures. ​ ​ 3. Revenue Nature of goods and services The following is a description of principal activities from which we generate our revenue: Broadcast Advertising Revenue Our primary source of revenue is from the sale of advertising for broadcast on our stations. We recognize revenue from the sale of advertising as performance obligations are satisfied upon airing of the advertising; therefore, revenue is recognized at a point in time when each advertising spot is transmitted. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory placed by an agency and are reported as a reduction of advertising revenue. Digital Advertising Revenue We recognize revenue from our digital initiatives across multiple platforms such as targeted digital advertising, online promotions, advertising on our websites and digital audio streams, mobile messaging, email marketing and other e-commerce. Revenue is recorded when each specific performance obligation in the digital advertising campaign takes place, typically within a one-month period. Other Revenue Other revenue includes revenue from concerts, promotional events, tower rent and other miscellaneous items. Revenue is generally recognized when the event is completed, as the promotional events are completed or as each performance obligation is satisfied. 10 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Disaggregation of Revenue Revenues from contracts with customers comprised the following for three and nine months ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, September 30, ​ 2024 2023 2024 2023 ​ ​ (in thousands) (in thousands) Types of Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Broadcast Advertising Revenue, net ​ $ 22,516 ​ $ 23,946 ​ $ 66,165 ​ $ 69,798 ​ Digital Advertising Revenue ​ 2,858 ​ 2,757 ​ 8,587 ​ 7,140 ​ Other Revenue ​ 2,744 ​ 2,446 ​ 6,772 ​ 6,690 ​ Net Revenue ​ $ 28,118 ​ $ 29,149 ​ $ 81,524 ​ $ 83,628 ​ ​ Contract Liabilities Payments from our advertisers are generally due within 30 days although certain advertisers are required to pay in advance. When an advertiser pays for the services in advance of the performance obligations these prepayments are recorded as contract liabilities. Typical contract liabilities relate to prepayments for advertising spots not yet run; prepayments from sponsors for events that have not yet been held; and gift cards sold on our websites used to finance a broadcast advertising campaign. Generally all contract liabilities are expected to be recognized within one year and are included in accounts payable in the Company’s Condensed Consolidated Financial Statements and are immaterial. Transaction Price Allocated to the Remaining Performance Obligations As the majority of our sales contracts are one year or less, we have utilized the optional exemption under ASC 606-10-50-14 and will not disclose information about the remaining performance obligations for sales contracts which have original expected durations of one year or less. ​ 4. Broadcast Licenses, Goodwill and Other Intangible Assets We evaluate our FCC licenses for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We operate our broadcast licenses in each market as a single asset and determine the fair value by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcast licenses. The fair value calculation contains assumptions incorporating variables that are based on past experiences and judgments about future operating performance using industry normalized information for an average station within a market. These variables include, but are not limited to: (1) the forecasted growth rate of each radio market, including population, household income, retail sales and other expenditures that would influence advertising expenditures; (2) the estimated available advertising revenue within the market and the related market share and profit margin of an average station within a market; (3) estimated capital start-up costs and losses incurred during the early years; (4) risk-adjusted discount rate; (5) the likely media competition within the market area; and (6) terminal values. If the carrying amount of FCC licenses is greater than their estimated fair value in a given market, the carrying amount of FCC licenses in that market is reduced to its estimated fair value. ​ We also evaluate goodwill for impairment annually, or more frequently if certain circumstances are present. If the carrying amount of goodwill in a reporting unit is greater than the implied value of goodwill determined by completing a hypothetical purchase price allocation using estimated fair value of the reporting unit, the carrying amount of goodwill in that reporting unit is reduced to its implied value. ​ We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value. Amortizable intangible assets are included in other intangibles, deferred costs and investments in the consolidated balance sheets. 11 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ ​ The Company considered the current and expected future economic and market conditions, and other potential indicators of impairment and determined a triggering event had not occurred which would necessitate any interim impairment tests during the nine months ended September 30, 2024. We will continue to monitor changes in economic and market conditions, and if any event or circumstances indicate a triggering event has occurred, we will perform an interim impairment test of our intangible assets at the appropriate time. ​ If actual market conditions are less favorable than those estimated by us or if events occur or circumstances change that would reduce the fair value of our broadcast licenses below the carrying value, we may be required to recognize impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements. ​ Intangible assets that have finite lives are amortized over their useful lives using the straight-line method. Favorable lease agreements are amortized over the lives of the leases ranging from five to twenty-six years . Other intangibles are amortized over one to fifteen years . Customer relationships are amortized over three years . ​ 5. Common Stock and Treasury Stock Our founder and former Chairman, President and CEO, Edward K. Christian, passed away on August 19, 2022. As of the date of his passing, Mr. Christian, who was also our principal shareholder, held approximately 65 % of the combined voting power of the Company’s Common Stock based on Class B Common Stock (together with the Class A Common Stock, collectively, the “Common Stock”) generally being entitled to ten votes per share. As a result, Mr. Christian was generally able to control the vote on most matters submitted to the vote of stockholders and, therefore, was able to direct our management and policies, except with respect to (i) the election of two Class A directors, (ii) those matters where the shares of our Class B Common Stock are only entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of incorporation, bylaws or applicable law. Mr. Christian’s passing resulted in the conversion of his Class B shares into Class A shares that were transferred to an estate planning trust that now owns approximately 16 % of the common stock outstanding. As a result, we no longer have any shares of Class B Common Stock issued or outstanding. Dividends. Shareholders are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available for such purpose. However, no dividend may be declared or paid in cash or property on any share of any class of Common Stock unless simultaneously the same dividend is declared or paid on each share of the other class of common stock. In the case of any stock dividend, holders of Class A Common Stock are entitled to receive the same percentage dividend (payable in shares of Class A Common Stock) as the holders of Class B Common Stock receive (payable in shares of Class B Common Stock). Voting Rights. Holders of shares of Common Stock vote as a single class on all matters submitted to a vote of the shareholders, with each share of Class A Common Stock entitled to one vote. Prior to Mr. Christian’s passing, each share of Class B Common Stock was entitled to ten votes, except (i) in the election for directors, (ii) with respect to any “going private” transaction between the Company and the principal stockholder, and (iii) as otherwise provided by law. Prior to Mr. Christian’s passing, in the election of directors, the holders of Class A Common Stock, voting as a separate class, were entitled to elect twenty-five percent, or two, of our directors. The holders of the Common Stock, voting as a single class with each share of Class A Common Stock entitled to one vote and each share of Class B Common Stock entitled to ten votes, were entitled to elect the remaining directors. The Board of Directors consisted of eight members at December 31, 2023. Currently, our Board of Directors consists of seven members. Holders of Common Stock are not entitled to cumulative voting in the election of directors. The holders of the Common Stock vote as a single class with respect to any proposed “going private” transaction with the principal stockholder or an affiliate of the principal stockholder, with each share of each class of Common Stock entitled to one vote per share. 12 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Under Florida law, the affirmative vote of the holders of a majority of the outstanding shares of any class of common stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of common stock. Liquidation Rights. Upon our liquidation, dissolution, or winding-up, the holders of Class A Common Stock (which constitute all of our outstanding Common Stock holders) are entitled to share ratably in accordance with the number of shares held in all assets available for distribution after payment in full of creditors. The following summarizes information relating to the number of shares of our common stock issued in connection with stock transactions through September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Common Stock Issued ​ Class A Class B ​ ​ (Shares in thousands) Balance, January 1, 2023 ​ 7,867 ​ — Issuance of restricted stock 140 — Balance, December 31, 2023 8,007 — Forfeiture of restricted stock ​ ( 1 ) ​ — Balance, September 30, 2024 8,006 — ​ We have a Stock Buy-Back Program to allow us to purchase up to $ 75.8 million of our Class A Common Stock. As of September 30, 2024, we have remaining authorization of $ 18.0 million for future repurchases of our Class A Common Stock. On September 14, 2017, the Board of Directors authorized the repurchase of our Class A Common Stock under our trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1. The Rule 10b5-1 repurchase plan allows us to repurchase our shares during periods when we would normally not be active in the market due to our internal trading blackout periods. Under the plan, we may repurchase our Class A Common Stock in any combination of open market, block transactions and privately negotiated transactions subject to market conditions, legal requirements including applicable SEC regulations (which include certain price, market, volume and timing constraints), specific repurchase instructions and other corporate considerations. Purchases under the plan are funded by cash on our balance sheet. The plan does not obligate us to acquire any particular amount of Class A Common Stock. Our original purchase authorization was effective until September 1, 2018 and has been extended several times, with the most recent authorization instructions extension being through May 28, 2020. We halted the directions for any additional buybacks under our plan in 2020. We continue to monitor economic conditions to determine if and when it makes sense to make additional buybacks under our plan. During the three and nine months ended September 30, 2024, 715 shares were retained for the payment of withholding taxes for $ 11,000 related to the vesting of restricted stock. During the three and nine months ended September 30, 2023, no shares were repurchased under the Stock Buy-Back Program. ​ 6. Leases We lease certain land, buildings and equipment for use in our operations. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least one year. Some leases include one or more options to renew . The exercise of lease renewal options is generally at our discretion. The depreciable lives of ROU assets are limited to the expected lease term. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As of September 30, 2024, we do not have any non-cancellable operating lease commitments that have not yet commenced. ROU assets are classified within other intangibles, deferred costs and investments, net on the condensed consolidated balance sheet while current lease liabilities are classified within other accrued expenses and long-term lease liabilities are classified within other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ROU assets were $ 6.2 million and $ 7.0 million at September 30, 2024 and December 31, 2023 respectively. Lease liabilities were $ 6.5 million and $ 7.3 million at September 30, 2024 and December 31, 2023, respectively. During the nine months ended September 30, 2024, we recorded additional ROU assets under operating 13 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ leases of $ 1,080,000 . Payments on lease liabilities during the three and nine months ended September 30, 2024 and 2023 totaled $ 483,000 , $ 1,446,000 , $ 415,000 , and $ 941,000 , respectively. Lease expense includes cost for leases with terms in excess of one year. For the three and nine months ended September 30, 2024 and 2023, our total lease expense was $ 483,000 , $ 1,432,000 , $ 457,000 and $ 917,000 , respectively. Short-term lease costs are de minimis in nature. We have no financing leases and minimum annual rental commitments under non-cancellable operating leases consisted of the following at September 30, 2024 (in thousands): ​ ​ ​ ​ ​ Years Ending December 31, ​ ​ 2024 (a) $ 428 2025 ​ 1,750 2026 ​ 1,531 2027 ​ 1,342 2028 ​ 933 Thereafter ​ 1,846 Total lease payments (b) ​ 7,830 Less: Interest (c) ​ 1,303 Present value of lease liabilities (d) ​ $ 6,527 ​ (a) Remaining payments are for the three-months ending December 31, 2024. (b) Lease payments include options to extend lease terms that are reasonably certain of being exercised. There were no legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2024. (c) Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date. (d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 6.3 years and 5.6 % , respectively, at September 30, 2024. ​ ​ ​ ​ ​ ​ 7. Acquisitions and Dispositions We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill. The Company accounts for acquisitions under the provisions of FASB ASC Topic 805, Business Combinations . Management utilizes an independent appraisal in assigning fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow (or income) approach and a market approach when appropriate. The key assumptions used in the value of FCC licenses are revenue growth rates, market revenue shares at maturity, operating income margins at maturity and discount rate. Goodwill fair value is the amount of the purchase price exceeding the values allocated to the tangible and identifiable intangible assets and includes the value of the assembled workforce. . ​ ​ 14 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ ​ 2024 Acquisitions and Dispositions ​ On February 13, 2024, we entered into an agreement to purchase the assets of WKOA (FM), WKHY (FM), WASK (FM), WXXB (FM), WASK (AM) and W269DJ from Neuhoff Communications, Inc. serving the Greater Lafayette, Indiana radio market for $ 5.3 million, subject to certain purchase price adjustments. The Company closed on this transaction on May 31, 2024, using funds from operations and borrowings under our credit agreement, of $ 5,832,000 , which included the purchase price of $ 5,300,000 , the purchase of $ 499,000 in accounts receivable and transactional costs of approximately $ 121,000 offset by $ 88,000 in certain closing adjustments. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in Lafayette, Indiana as well as synergies and growth opportunities expected through the combination with the Company’s existing stations. The $ 0.9 million allocated to goodwill is deductible for tax purposes. ​ On May 31, 2024, we closed on an agreement to sell WNDN-FM located in our Ocala-Gainesville, Florida market to Suncoast Radio, Inc. for $ 150,000 . We recorded a $ 20,000 loss on the sale in our other operating (income) expense , net line on our Condensed Consolidated Statement of Operations. On March 29, 2024, we closed on an agreement to sell WYSE-AM, W275CP translator and W248CM translator located in our Asheville, North Carolina market to EZ Radio LLC for $ 10,000 . We recorded a $ 147,000 loss on the sale in our other operating (income) expense , net line item on our Condensed Consolidated Statement of Operations. On March 22, 2024, we submitted a request to the FCC to cancel our FCC license for KBAI-AM located in our Bellingham, Washington market. We recorded an $ 800,000 loss on the disposal in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations. 2023 Dispositions On February 28, 2023, we closed on an agreement to sell WPVQ-AM located in our Greenfield, Massachusetts market to Hampden Communications Corp for $ 2,000 . We recorded a $ 43,000 loss on the sale in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations. On March 20, 2023, we submitted a request to the FCC to cancel our FCC license for WHMQ-AM located in our Greenfield, Massachusetts market. We recorded a $ 22,000 loss on the disposal in our other operating (income) expense, net line item on our Condensed Consolidated Statement of Operations. ​ 15 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Condensed Consolidated Balance Sheet of 2024 and 2023 Acquisitions: The following unaudited condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2024 and 2023 acquisitions. The allocation of the purchase price for the 2024 acquisition is preliminary at September 30, 2024 as management is awaiting information to finalize the fair values of assets acquired and liabilities assumed. Saga Communications, Inc. Condensed Consolidated Balance Sheet of 2024 and 2023 Acquisitions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisitions in ​ 2024 2023 ​ ​ (In thousands) Assets Acquired: ​ ​ ​ ​ ​ ​ Current assets ​ $ 533 $ — Property and equipment ​ ​ 2,035 ​ — Other assets: ​ ​ ​ ​ ​ ​ Broadcast licenses ​ 1,346 ​ — Goodwill ​ 891 ​ — Other intangibles, deferred costs and investments ​ 1,034 ​ — Total other assets ​ 3,271 ​ — Total assets acquired ​ 5,839 ​ — Liabilities Assumed: ​ ​ ​ ​ ​ ​ Current liabilities ​ 128 ​ — Total liabilities assumed ​ 128 ​ — Net assets acquired ​ $ 5,711 ​ $ — ​ ​ ​ ​ 16 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Pro Forma Results of Operations for Acquisitions (Unaudited) ​ The following unaudited pro forma results of our operations for three and nine months ended September 30, 2024 and 2023 assume the 2024 acquisitions occurred as of January 1, 2023. The pro forma results give effect to certain adjustments, including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations that would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2024 2023 ​ 2024 2023 ​ ​ (In thousands, except per share data) Pro forma Consolidated Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net operating revenue ​ $ 28,118 ​ $ 29,986 ​ ​ $ 82,692 ​ $ 85,973 Station operating expense ​ 23,458 ​ 23,474 ​ ​ 71,127 ​ 68,956 Corporate general and administrative ​ 2,966 ​ 2,852 ​ ​ 9,144 ​ 7,940 Other operating expense, net ​ 49 ​ 45 ​ ​ 1,026 ​ 125 Operating income ​ 1,645 ​ 3,615 ​ ​ 1,395 ​ 8,952 Interest expense ​ 121 ​ 122 ​ ​ 366 ​ 366 Interest income ​ ( 255 ) ​ ( 391 ) ​ ​ ( 809 ) ​ ( 1,027 ) Other income, net ​ ( 78 ) ​ — ​ ​ ( 1,211 ) ​ ( 119 ) Income before income tax expense ​ 1,857 ​ 3,884 ​ ​ 3,049 ​ 9,732 Income tax provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ 415 ​ ​ 845 ​ ​ ​ 690 ​ ​ 2,025 Deferred ​ 175 ​ 277 ​ ​ 246 ​ 691 ​ ​ ​ 590 ​ ​ 1,122 ​ ​ ​ 936 ​ ​ 2,716 Net income ​ $ 1,267 ​ $ 2,762 ​ ​ $ 2,113 ​ $ 7,016 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.20 ​ $ 0.45 ​ ​ $ 0.34 ​ $ 1.15 Diluted ​ $ 0.20 ​ $ 0.45 ​ ​ $ 0.34 ​ $ 1.15 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8. Income taxes An income tax expense of $ 590,000 was recorded for the three months ended September 30, 2024 compared to $ 1,110,000 for the three months ended September 30, 2023. The effective tax rate was approximately 31.8 % for the three months ended September 30, 2024 compared to 28.9 % for the three months ended September 30, 2023. An income tax expense of $ 965,000 was recorded for the nine months ended September 30, 2024 compared to $ 2,710,000 for the nine months ended September 30, 2023. The effective tax rate was approximately 30.6 % for the nine months ended September 30, 2024 compared to 27.9 % for the nine months ended September 30, 2023. Income tax provisions for interim (quarterly) periods are based on estimated annual income tax rates and are adjusted for the effects of significant, infrequent or unusual items (i.e. discrete items) occurring during the interim period. ​ ​ ​ 17 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ 9. Stock-Based Compensation 2005 Incentive Compensation Plan On May 13, 2019 our shareholders approved an amendment to the Second Amended and Restated Saga Communications, Inc. 2005 Incentive Compensation Plan (as amended, the “Second Restated 2005 Plan”). This plan was first approved in 2005, and subsequently re-approved in 2010 and 2013. The amendment to the Second Restated 2005 Plan (i) extended the date for making awards to September 6, 2023 and (ii) increased the number of authorized shares under the plan by 90,000 shares of Class B Common Stock. The Second Restated 2005 Plan allowed for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards to eligible employees and non-employee directors. The number of shares of Common Stock that was allowed to be issued under the Second Restated 2005 Plan was not to exceed 370,000 shares of Class B Common Stock, or 990,000 shares of Class A Common Stock of which up to 620,000 shares of Class A Common Stock were to be issued pursuant to incentive stock options and 370,000 shares of Class A Common Stock were to be issued upon conversion of Class B Common Stock. Awards denominated in Class A Common Stock were to be granted to any employee or director under the Second Restated 2005 Plan. Upon the passing of Mr. Christian, we no longer have any holders of Class B Common Stock, as those awards denominated in Class B Common Stock were only able to be granted to Mr. Christian. Stock options granted under the Second Restated 2005 Plan were to be for terms not exceeding ten (10) years from the date of grant and could not be exercised at a price which was less than 100% of the fair market value of shares at the date of grant . 2023 Incentive Compensation Plan On May 8, 2023 our shareholders approved the 2023 Incentive Compensation Plan (the “2023 Plan”). The 2023 Plan replaces the Second Restated 2005 Plan. The Board of Directors does not intend to make any further awards under the Second Restated 2005 Plan. However, each outstanding award under the Second Restated 2005 Plan will remain outstanding under the Second Restated 2005 Plan and will continue to be governed under its terms and any applicable award agreement. The 2023 Plan allows for the granting of restricted stock, restricted stock units, incentive stock options, nonqualified stock options, and performance awards, including cash to eligible employees and non-employee directors of the Company and its subsidiaries. The number of shares of Common Stock that may be issued under the 2023 Plan may not exceed 600,000 shares of Class A Common Stock. Stock-Based Compensation All stock options granted were fully vested and expensed at December 31, 2012; therefore, there was no compensation expense related to stock options for the three and nine months ended September 30, 2024 and 2023, respectively. There were no stock options granted during 2024 or 2023 and there were no stock options outstanding as of September 30, 2024. All outstanding stock options were exercised in 2017. ​ 18 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ ​ The following summarizes the restricted stock transactions for the nine months ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ ​ Grant Date ​ ​ ​ ​ Fair ​ Shares Value Outstanding at January 1, 2024 ​ 193,529 ​ $ 22.36 Vested ​ 6,514 ​ ​ 22.84 Forfeited ​ 1,040 ​ ​ 23.07 Non-vested and outstanding at September 30, 2024 185,975 $ 22.34 ​ For the three and nine months ended September 30, 2024 and 2023, we had $ 474,000 , $ 1,447,000 , $ 250,000 and $ 743,000 , respectively, of total compensation expense related to restricted stock-based compensation arrangements. This expense is included in corporate general and administrative expenses in our results of operations. The associated tax benefit recognized for the three and nine months ended September 30, 2024 and 2023 was $ 125,000 , $ 381,000 , $ 66,000 and $ 195,000 , respectively. ​ ​ 10. Long-Term Debt Long-term debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2024 2023 ​ ​ (In thousands) Revolving credit facility ​ $ 5,000 ​ $ — Amounts payable within one year ​ — ​ — ​ ​ $ 5,000 ​ $ — ​ On December 19, 2022, we entered into the Third Amendment to our Credit Facility, (the “Third Amendment”), which extended the maturity date to December 19, 2027, reduced the lenders to JPMorgan Chase Bank, N.A., and the Huntington National Bank (the “Lenders”), established an interest rate equal to the secured overnight financing rate (“SOFR”) as administered by the SOFR Administrator (currently established as the Federal Reserve Bank of New York) as the interest base, and increased the basis points. We have pledged substantially all of our assets (excluding our FCC licenses and certain other assets) in support of the Credit Facility and each of our subsidiaries has guaranteed the Credit Facility and has pledged substantially all of their assets (excluding their FCC licenses and certain other assets) in support of the Credit Facility. Approximately $ 266,000 of debt issuance costs related to the Credit Facility were capitalized and are being amortized over the life of the Credit Facility. These debt issuance costs are included in other assets, net in the consolidated balance sheets. As a result of the Second Amendment to our Credit Facility, the Company incurred an additional $ 120,000 of transaction fees related to the Credit Facility that were capitalized. As a result of the Third Amendment, the Company incurred an additional $ 161,000 of transaction fees related to the Credit Facility that were capitalized. The cumulative transaction fees are being amortized over the remaining life of the Credit Facility. ​ 19 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ Interest rates under the Credit Facility are payable, at our option, at alternatives equal to SOFR ( 5.16 % at September 30, 2024), plus 1 % to 2 % or the base rate plus 0 % to 1 % . The spread over SOFR and the base rate vary from time to time, depending upon our financial leverage. Letters of credit issued under the Credit Facility will be subject to a participation fee (which is equal to the interest rate applicable to Eurocurrency Loans, as defined in the Credit Agreement) payable to each of the Lenders and a fronting fee equal to 0.25 % per annum payable to the issuing bank. Under the Third Amendment, we now pay quarterly commitment fees of 0.25 % per annum on the unused portion of the Credit Facility. We previously paid quarterly commitment fees of 0.2 % to 0.3 % per annum on the unused portion of the Revolving Credit Facility. The Credit Facility contains a number of financial covenants (all of which we were in compliance with at September 30, 2024) which, among other things, require us to maintain specified financial ratios and impose certain limitations on us with respect to investments, additional indebtedness, dividends, distributions, guarantees, liens and encumbrances. We had approximately $ 45 million and $ 50 million of unused borrowing capacity under the Revolving Credit Facility at September 30, 2024 and December 31, 2023, respectively. ​ ​ 11. Litigation From time to time, the Company may be involved in various legal proceedings that are incidental to the Company’s business. In management’s opinion, the Company is not a party to any current legal proceedings that are material to its financial condition, either individually or in the aggregate. ​ 12. Dividends During 2024, the Company’s Board of Directors has declared three quarterly cash dividends and a variable dividend on its Class A Common Stock. These dividends totaling $ 1.35 per share and approximately $ 8.5 million were paid or accrued as of September 30, 2024. During 2023, the Company’s Board of Directors declared four quarterly cash dividends and one special dividend on its Class A Common Stock. These dividends totaling $ 3.00 per share and approximately $ 18.6 million were accrued or paid during 2023. The Company currently intends to declare regular quarterly cash dividends as well as variable dividends in accordance with the terms of its variable dividend policy. As previously reported, our Board adopted a variable dividend policy for the allocation of available cash aligned with the goals of maintaining a strong balance sheet, increasing cash returns to shareholders, and continuing to grow the Company through strategic acquisitions. The Company may also declare special dividends and implement stock buybacks in future periods. The declaration and payment of any future dividend, whether fixed, special, or based on the variable policy, or the implementation of any stock buyback program will remain at the full discretion of the Board and will depend on the Company’s financial results, cash requirements, future expectations, and other pertinent factors. ​ ​ ​ 20 Table of Contents SAGA COMMUNICATIONS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued) ​ 13. Other Income and Loss During the nine months ended September 30, 2024, we had weather-related damages to properties in Ohio and Florida. The Company’s insurance policy provides coverage for repairs and replacements. As a part of the insurance settlement during the third quarter of 2024, the Company received cash proceeds of $ 78,000 , resulting in a gain of $ 78,000 , which is recorded in other (income) expense, net, in the Company’s Consolidated Statements of Income. During the second quarter of 2024, the Company received $ 1,133,000 related to the sale of an investment in Broadcast Music, Inc. (“BMI”) and recorded a gain of $ 1,133,000 . The gain on sale of investment is recorded in other (income) expense, net in the Company’s Condensed Consolidated Statement of Operations. In 2012, Congress mandated that the FCC conduct an incentive auction of broadcast television spectrum as set forth in the Middle Class Tax Relief and Job Creation Act of 2012 ("Spectrum Act"). The Spectrum Act authorized the FCC to conduct incentive auctions in which licensees could voluntarily relinquish their spectrum usage rights in order to permit the assignment by auction of new initial licenses subject to flexible use service rules, in exchange for a portion of the resulting auction proceeds. The Spectrum Act appropriated $1.75 billion to the TV Broadcaster Relocation Fund ("Reimbursement Fund") for costs reasonably incurred by Full Power and Class A broadcast television licensees reassigned to new channels (the "repack"), as well as Multichannel Video Programming Distributors ("MVPDs") that incurred costs related to continuing to carry the signals of reassigned broadcast stations. The 2018 Reimbursement Expansion Act appropriated $1 billion in additional funds for the Reimbursement Fund and expanded eligible entities for reimbursement to include FM stations affected by the repack. During the first quarter of 2023, we received approximately $ 115,000 in reimbursement for our FM stations. This reimbursement was recorded in other (income), expense, net, in the Company’s Condensed Consolidated Statement of Operations. We do not anticipate receiving any additional reimbursements. ​ 14. Commitments and Contingencies As previously disclosed, Mr. Christian passed away on August 19, 2022. As a result of his passing the Company was required to make several payments to his estate as outlined in his employment agreement, as described in our annual report on Form 10-K for the year ended December 31, 2022. In accordance with ASC 712-10-25, Nonretirement Postemployment Benefits , we accrued all necessary expenses as of September 30, 2022. However, under the agreement, the Company will be responsible to pay the estate’s income tax obligation relating to the payout of the life insurance policy. The estimate of the possible loss related to that tax obligation cannot be made at this time due to uncertainties related to the timing of the transfer. ​ ​ 21 Table of Contents