SGA

Core Strategic Transformation and Digital Investment

• The company is executing a multi-year digital transformation to build a blended digital-radio platform, described as "remodeling the house while still living in it", to address ongoing declines in traditional radio ad spend.
• Key hiring investments in Q2: 9 new market sales managers (adding $146 thousand to Q2 operating expenses) and additional digital campaign managers and digital fulfillment team members (adding $211 thousand to Q2 operating expenses, $290 thousand for the first half). This structure frees media advisors to focus on client outreach and new business development, while dedicated teams handle campaign execution and performance monitoring to improve client retention.
• Operational updates for digital: brought all search campaign tools fully in-house with 3 full-time dedicated search specialists, migrated remaining digital fulfillment to Marketron NXT (Saga's existing radio traffic and billing platform) for improved consistency and speed to market, and launched internally developed AI tools (AI lead generation, search calculators, and automated proposal writing that cuts proposal creation time in half) to boost team efficiency.

New Partnerships and Organizational Changes

• Formed a new data partnership with Burrell and Associates to gain deeper visibility into local market advertiser spend, identify untapped revenue opportunities, improve Saga's share of wallet in high-growth categories, and guide a targeted surgical sales strategy.
• Promoted Paul O'Malley, former Charleston Cluster President/GM, to Senior Vice President of Revenue Development, overseeing all traditional, non-traditional, and digital revenue growth.
• Announced a landmark 7-year joint sales partnership with the University of Florida College of Journalism and Communication expanding Saga's broadcast footprint in the Ocala-Gainesville, Florida market, including the Gator Sports Network. The partnership creates collaborative opportunities for internships, mentorships, and industry development to train the next generation of media professionals.

Financial and Non-Core Asset Updates

• Completed an amendment to the October 2025 telecommunications tower sale transaction during the quarter, aligning documentation with the intended economic structure to allow tax deferral of the $5.4 million non-cash gain over the 25-year lease term. The transaction results in non-cash rent expense and non-cash interest income with no actual cash rent outflow, and the company retains full use of the towers for ongoing operations.
• Repaid the full $5 million outstanding balance on its revolving credit agreement and terminated the existing credit agreement to gain greater flexibility for deploying cash toward dividends, share repurchases, digital investments, capital expenditures, and other strategic opportunities. A new credit agreement will be put in place when strategically appropriate.
• Monetized six non-core properties (including the former Sarasota corporate house and an unused Portland, Maine tower site) for over $4 million in proceeds since Q4 2025, to offset investment costs for digital transformation. The company held $22.9 million in cash and short-term investments as of August 10, 2026, and has paid over $145 million in total dividends to shareholders since 2012, with a recent $0.25 per share quarterly dividend totaling $1.6 million paid in June 2026.

Local Radio and Community Engagement

• Saga's local radio stations received multiple industry awards, including an NAB Service to America Award for WYMG-FM (Springfield, IL), four 2027 Marconi Award nominations across multiple market categories, and local market recognition for stations and on-air personalities. Saga markets raised nearly $4 million for local community initiatives in the first half of 2026, strengthening local audience and advertiser connections.

• Full-year 2026 station operating expense is expected to increase 1.5% to 2.5%, including costs for digital transformation infrastructure buildout and the non-cash tower rent expense from the tower sale transaction.
• Full-year 2026 corporate general and administrative expense is projected to be $11.8 to $12 million, down from $12.3 million in 2025.
• Full-year 2026 capital expenditures are expected to total $3 to $3.5 million, consistent with prior year levels.
• Third quarter 2026 total revenue is currently pacing for a mid-single digit year-over-year decline, while digital revenue is pacing for mid-to-high single digit year-over-year growth.
• An additional $1.1 million in gross political revenue has already been sold for the remainder of 2026, compared to full-year 2025 total gross political revenue of $650 thousand.

For Q2 2026 ended June 30, 2026: Total net revenue was $26.4 million, a 6.5% ($1.8 million) decrease year-over-year (YoY). Traditional advertising segments all saw double-digit YoY declines: local revenue down 11.2%, national revenue down 25%, and non-traditional revenue down 16.4%. For the six-month period ending June 30, 2026, total net revenue was $49.3 million, a 6% ($3.2 million) decrease YoY, with local revenue down 11% YoY, national revenue down 19.5% YoY, and non-traditional revenue down 12.9% YoY. Blended digital (including search, display, SEO, social, managed email, OTT/CTV) grew 60.8% YoY in Q2 2026 and 76.4% YoY for the first half of 2026. E-commerce revenue grew 10.7% YoY in Q2 and 15.2% YoY for the first half. All other non-blashed digital revenue declined 9.6% YoY in Q2 and 8.4% YoY for the first half. Digital accounted for 19% of total gross revenue in the first half of 2026, up from 14% in the first half of 2025. Gross political revenue was $450 thousand in Q2 2026, up from $50 thousand in Q2 2025, and $725 thousand for the first half of 2026, up from $321 thousand in the first half of 2025. Station operating income was $3 million in Q2, and total operating income was $623 thousand. Corporate general and administrative expense decreased 13% ($398 thousand) in Q2 and 9.4% ($589 thousand) for the first half YoY. Capital expenditures were $1.3 million in Q2, flat YoY, and $2 million for the first half, also flat YoY.

• The company is facing broad industry headwinds, with all traditional advertising verticals experiencing double-digit year-over-year revenue declines driven by monetization challenges, even as audience consumption of radio remains stable.
• The ongoing digital transformation requires incremental upfront operating and capital investment, which has pressured near-term profitability even as the company expects these investments to drive long-term growth.
• All forward-looking statements related to digital growth and future profitability are subject to inherent risks and uncertainties, which are disclosed in the company's recent 10-K and 10-Q filings.
• The digital advertising market is highly competitive, continuously evolving, and requires ongoing adjustments to product offerings to meet changing client needs.

Q: What is the current revenue pacing for the third quarter of 2026 and early fourth quarter? / A: Management confirmed that third quarter 2026 revenue is pacing for a mid-single digit year-over-year decline, while digital revenue is pacing for mid-to-high single digit year-over-year growth. This disclosure was already shared in the financial update section of the prepared remarks, with no additional changes to guidance provided. /n/nQ: What is the current status of booked political advertising revenue for the 2026 election cycle? / A: Management reported that gross political revenue hit $450 thousand in Q2 2026 (up from $50 thousand YoY) and $725 thousand for the first half (up from $321 thousand YoY). An additional $1.1 million in gross political revenue has already been sold for the remainder of 2026, which is significantly higher than the full-year 2025 total gross political revenue of $650 thousand, ahead of the general election. /n/nQ: Does Saga currently have all the required digital product and service feature sets to succeed, or are additional large investments needed? / A: Management stated that most major investments in the digital platform have already been completed, with existing strong offerings in core blended digital products including search, display, and radio integration. The company will make incremental adjustments and add new offerings over time as the digital landscape evolves, aligned with changing client and market demands for products such as social media and video. No large additional capital commitments are required at this stage, with the focus now shifting to execution and monetization of the built platform.