Diamond Financials

Supplemental Financial Information

Diamond Sports Intermediate Holdings LLC

Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations

Pursuant to the terms of certain credit agreements (the “Diamond Credit Agreements”) among Diamond Sports Intermediate Holdings LLC (“Holdings”), Diamond Sports Group LLC (“Borrower” or “Issuer”), certain agents, and the issuing banks and lenders party thereto (collectively, the “Lenders”), and the terms of the indentures related to secured and unsecured notes (the “Diamond Indentures”), entered into among the Issuer, Diamond Sports Finance Company, as co-issuer, Holdings, the other parties thereto as guarantors, and U.S. Bank National Association, as trustee, the Borrower has agreed to provide certain financial information regarding Holdings and its consolidated subsidiaries to the Lenders and holders of notes issued under the Diamond Indentures.

Sinclair Broadcast Group, Inc. (“Sinclair” or the “Company”), as the indirect parent of Holdings, has elected to make this supplemental financial information generally available to the public by posting on Sinclair’s website.

The matters discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) include forward-looking statements regarding, among other things, future events and actions. When used in the MD&A, the words “outlook,” “intends to,” “believes,” “anticipates,” “expects,” “achieves,” “estimates,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including and in addition to the assumptions set forth therein, but not limited to: the potential impacts of the war in Ukraine and the novel coronavirus (“COVID-19”) pandemic on the Borrower’s business operations, financial results and financial position and on the world economy, including the significant disruption to the operations of the professional sports leagues, the need to provide rebates to our distributors related to canceled professional sporting events, and loss of advertising revenue due to postponement or cancellation of professional sporting events and reduced consumer spending as a result of shelter in place and stay at home orders; the Borrower’s ability to generate cash to service its substantial indebtedness; successful execution of outsourcing agreements; the successful execution of retransmission consent agreements; the successful execution of distributor agreements; the successful execution of media rights agreements with professional sports teams; the impact of over-the-top and other emerging technologies and their potential impact on cord-cutting; the impact of distributors offering “skinny” programming bundles that may not include all programming of our regional sports networks; pricing and demand fluctuations in local and national advertising; the successful implementation and consumer adoption of the Borrower’s sports direct to consumer platform; volatility in programming costs; the market acceptance of new programming; our ability to identify and consummate acquisitions and investments, to manage increased leverage resulting from acquisitions and investments, and to achieve anticipated returns on those investments once consummated; and the impact of pending and future litigation claims against the Borrower. There can be no assurances that the assumptions and other factors referred to in the MD&A will occur. Sinclair undertakes no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

Click to Acknowledge and Access Supplemental Financial Information

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Certain Non-GAAP Financial Measurements

We use certain non-GAAP financial measures, specifically Adjusted EBITDA, Free Cash Flow, Leverage, and Senior Leverage in addition to GAAP financial measures as supplemental financial data to assist management and the public in their analysis and valuation of our company. These measures are not formulated in accordance with GAAP, are not meant to replace GAAP financial measures and may differ from other companies’ uses or formulations. Further discussions and reconciliations of our non-GAAP financial measures to comparable GAAP financial measures are provided via the hyperlink below. The Company does not provide reconciliations on a forward-looking basis.

Certain Non-GAAP Measures:

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA):

Management considers Adjusted EBITDA to be an indicator of our assets’ operating performance. Management also believes that Adjusted EBITDA is frequently used by industry analysts, investors and lenders as a measure of valuation. In addition, Adjusted EBITDA is the basis for calculating Adjusted EBITDA under our Bank Credit Agreement (BCA), which is used in computing our ability to borrow under the BCA.

Free Cash Flow (FCF):

Management considers Free Cash Flow to be an indicator of our assets’ operating performance. Management also believes that Free Cash Flow is a commonly used measure of valuation for companies in the broadcast industry. In addition, this measure is frequently used by industry analysts, investors and lenders as a measure of valuation for broadcast companies, although their definitions of Free Cash Flow may differ from our definition. We believe this measure serves as a valuable assessment tool for investors to identify potential trends in our performance.

Total Indebtedness Ratio (Leverage) and Senior Indebtedness Ratio (Senior Leverage):

Leverage and Senior Leverage are formulated in accordance with the BCA and are components of the maximum leverage and senior leverage ratios permitted by the BCA. Management considers Leverage and Senior Leverage to be important indicators of our ability to incur additional debt under our BCA, our ability to service our existing debt and the extent of our compliance with the leverage and senior leverage covenants in our BCA. We believe that industry analysts and investors commonly use our level of compliance with the financial covenants contained in our BCA as a measure of our ability to service existing debt and our liquidity, generally.

The following tables provide reconciliations between 1) Net Income and Free Cash Flow and Adjusted EBITDA, and 2) between debt on the balance sheet and Indebtedness and Senior Indebtedness. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, net cash flow from operating activities, net cash flow from investing activities and financing activities, net loss or net income, operating income, and debt, as well as other measures of financial performance reported in accordance with GAAP.

Go to Current Non-GAAP Reconciliations

Go to Investors / Diamond Financials for Diamond Supplement to Earnings Release Q1 2022

Go to Quarterly Pro Forma Information and EBITDA for Sinclair (August 3, 2022)

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