TEGNA Inc. Reports 2019 Third Quarter Results
Successfully closed acquisitions of stations from
Provides fourth quarter and full year 2019 outlook
TYSONS, Va.--(BUSINESS WIRE)--Nov. 7, 2019--
THIRD QUARTER HIGHLIGHTS:
-
Total company revenue was
$552 million , up two percent year-over-year, driven by acquisitions and continued growth in subscription revenue and advertising and marketing services, which more than offset the absence of$60 million of political revenue in the same period last year. - Adjusted total company revenue, excluding political, was up 14 percent year-over-year.
-
Third quarter subscription revenue of
$241 million was up 16 percent due to acquisitions and rate increases. -
Net income from continuing operations was
$48 million in the third quarter, down$44 million due to the cyclical absence of political revenue, and non-GAAP net income was$58 million . -
Free cash flow for the quarter was
$105 million , and the Company ended the quarter with total debt of$4.2 billion and net leverage of 4.9x, on track to delever to approximately 4.1x by the end of 2020. -
Total company Adjusted EBITDA was
$157 million , down 13 percent year-over-year as a result of the cyclical absence of high-margin political advertising revenue relative to last year’s third quarter. -
GAAP earnings per diluted share were
$0.22 in the third quarter and non-GAAP* earnings per diluted share were$0.27 .
STRATEGIC AND FINANCIAL UPDATES:
-
On
August 8 ,TEGNA announced that it completed its acquisition of Dispatch Broadcast Group’s leading television stations WTHR, anNBC affiliate and #1 rated station inIndianapolis, IN , and WBNS, aCBS affiliate and #1 rated station inColumbus, OH , and WBNS radio, the leader in sports radio inCentral Ohio .- The transaction represented a compelling purchase price of 7.9x expected average 2018-2019 EBITDA including run rate synergies; expected to be EPS accretive within one year of the close and immediately accretive to free cash flow per share.
-
On
September 9 ,TEGNA launched an integrated, in-house national sales organization and go-to-market strategy to serve national clients and expand those relationships. The new organization will provide greater revenue opportunities and a more efficient cost structure. -
Further strengthened the Company’s balance sheet and increased financial flexibility.
-
On
September 13 , completed$1.1 billion private placement offering of senior notes at a 5.0% interest rate, with net proceeds used in part to repay approximately$290 million of 5.125% notes dueJuly 2020 and borrowings under the revolving credit agreement. -
Extended and amended the
$1.5 billion revolving credit facility throughAugust 2024 with existing favorable terms and improved financial covenants.
-
On
-
On
September 19 ,TEGNA announced it completed its acquisition of 11 local television stations, including eight Big Four Affiliates, fromNexstar Media Group , bringing the Company’s Big Four portfolio to 55 affiliates.- The transaction represented a compelling purchase price of 6.7x expected average 2018-2019 EBITDA (or 7.7x, prior to tax savings) including run rate synergies and tax savings; expected to be EPS accretive within one year of the close and immediately accretive to free cash flow per share.
-
On
October 5 ,TEGNA reached a multi-year carriage agreement with Spectrum. -
On
October 28 , announced the renewal of a multi-year affiliation agreement withFox Corporation for all six of TEGNA’s Fox stations.
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1 Throughout earnings release, “acquisitions” includes (1) the Nexstar/Tribune Acquisitions, (2) the Dispatch Acquisitions, (3) the acquisition of broadcast stations WTOL in Toledo, OH and KWES in Midland Odessa, TX, and (4) multicast networks Justice Network and Quest. |
* See “Use of Non-GAAP Information” below for more detail |
CEO COMMENT
“We continue to execute on opportunities to generate value for our shareholders,” said
“Subscription revenues continue to be a source of growth and increased stability in our financial model. We were pleased to reach a recent agreement with Spectrum, beginning a repricing cycle that will result in 85 percent of our subscribers being repriced by year-end 2020. Advertising and marketing services continued on an improved trajectory, growing for the second quarter in a row. These consistent revenue streams, paired with our recent acquisitions and other strategic initiatives, allow for significant upside in our business as we expect to continue to drive value into 2020 and beyond.
“We updated and increased our full year 2019 guidance in September to reflect the completion of the Dispatch and Nexstar/Tribune acquisitions, including an expectation that subscription revenue will be up by a high-teens percentage and free cash flow will comprise 18-19 percent of our 2018/2019 estimated revenue. We will continue to be thoughtful and disciplined in evaluating potential avenues for growth, and executing our long-term strategy to create value for shareholders.”
OVERVIEW OF THIRD QUARTER RESULTS
In analyzing third quarter 2019 results, investors should be reminded that TEGNA’s results are disproportionately impacted by cyclical political advertising drivers due to the Company’s footprint in states that tend to see substantial spending. In even numbered years, political spending is usually significantly higher than in odd numbered years due to advertising for local and national elections.
Total company revenues increased two percent in the quarter, driven by acquisitions and continued growth in subscription and advertising and marketing services revenue, which more than offset the cyclical absence of political advertising revenue.
Subscription revenue grew 16 percent year-over-year due to acquisitions and rate increases.
Advertising and marketing services revenue increased 12 percent in the quarter compared to last year, driven mostly by acquisitions, and we continue to see underlying advertising growth for the second quarter in a row. Softness in auto was more than offset by growth in the insurance, banking and media categories, among several others.
GAAP operating expenses were
GAAP operating income totaled
Special items for the quarter included acquisition-related fees of
Interest expense in the quarter increased to
FOURTH QUARTER AND FULL YEAR 2019 OUTLOOK
In the fourth quarter of 2019,
Fourth Quarter 2019 Key Guidance Metrics |
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As Reported1 |
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Total Company GAAP Revenue |
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+ mid single digits |
Non-GAAP Revenue (excluding political) |
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+ high 20s |
Total Non-GAAP Operating Expenses |
|
+ mid-to-high 20s |
Non-GAAP Operating Expenses (excluding programming) |
|
+ low-to-mid 20s |
1 Compares expected results including all acquisitions completed through the third quarter of 2019 to results as reported in the fourth quarter of 2018. |
As announced on
Full Year 2019 Key Guidance Metrics |
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Including All Acquisitions As Reported2 |
Subscription Revenue |
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+ high-teens percent |
Corporate Expenses |
|
approx. $43 million3 |
Depreciation |
|
$61 - 63 million |
Amortization |
|
TBD4 |
Interest Expense |
|
$203 - 205 million5 |
Total Capital Expenditures |
|
$82 - 84 million |
Non-Recurring Cap Ex (includes spectrum repack, corporate headquarters and KHOU relocations) |
$40 - $45 million |
|
Effective Tax Rate |
|
23 - 24%6 |
Leverage Ratio |
|
4.9x |
Free Cash Flow as a % of est. 2018/19 Revenue |
18 - 19% |
|
Free Cash Flow as a % of est. 2019/20 Revenue |
18 - 19% |
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|
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2 Includes legacy TEGNA business and multicast networks Justice and Quest, Dispatch stations and Nexstar/Tribune station acquisitions subsequent to their acquisition dates. |
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3 Updated from approximately $45 million provided in the September 19, 2019 8-K. |
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4 This will be updated upon completion of appraisals of the assets and liabilities related to the new acquisitions. |
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5 Includes interest related to our $1.1 billion ten-year 5.0% coupon bond offering completed in September. |
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6 Updated from the 23 - 25% range provided in the September 19, 2019 8-K. |
UPDATE ON KEY STRATEGIC, CONTENT AND PROGRAMMING INITIATIVES
-
Renewed Spectrum Retransmission Agreement - In October, reached a multi-year carriage agreement to provide
TEGNA stations’ programming to Spectrum customers after a successful negotiation process. -
Renewed Multi-Year Fox Affiliation Agreements - In October, announced the renewal of a multi-year affiliation agreement with
Fox Corporation for all six of TEGNA’s Fox stations. - VAULT Studios Launched BARDSTOWN Podcast - BARDSTOWN is the fourth production from TEGNA’s VAULT Studios this year. BARDSTOWN reached #2 on Apple’s podcast charts, and reached #1 in Apple’s True Crime category.
-
Daily Blast Live (DBL) Continued Market and Audience Growth - DBL continued to achieve strong year-over-year growth throughout its markets and target audiences, now spanning 61 markets, including 15 of the top 25, and adding 15 new non-
TEGNA markets thus far in 2019. -
Stations Recognized for Achievements in News -
TEGNA stations received awards for Outstanding Regional News Story (Spot orBreaking News and Investigative Report) at the 40th News & Documentary Emmy Awards. The Company was the only local station group to receive News & Documentary Emmys this year.
CAPITAL ALLOCATION AND M&A
TEGNA’s strong balance sheet and disciplined approach to capital allocation provides opportunities to create shareholder value in any environment by investing in growth through organic initiatives, pursuing accretive M&A, and returning capital to shareholders.
TEGNA’s history of financial discipline led to strong market interest in the
TEGNA’s M&A strategy is rooted in its flexible capital allocation framework, ample headroom under the FCC cap, our reputation as a partner of choice for independent broadcasters, and a proven, repeatable strategy that continues to improve due to our growing and top of the market retransmission rates. The completed acquisitions of the Dispatch Broadcast Group’s leading television stations and Nexstar divestitures further demonstrate the continued successful execution of our strategy. As a result of our completed acquisitions, leverage has increased and free cash flow will subsequently be used to rapidly reduce debt, decreasing net leverage to approximately 4.1x by the end of 2020.
CONFERENCE CALL
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME |
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TEGNA Inc. |
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Unaudited, in thousands of dollars (except per share amounts) |
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Table No. 1 |
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Quarter ended September 30, |
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2019 |
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2018 |
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% Increase (Decrease) |
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Revenues |
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$ |
551,857 |
|
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$ |
538,976 |
|
|
2.4 |
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|
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|
|||||
Operating expenses: |
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|
|
|
|
|||||
Cost of revenues |
|
306,474 |
|
|
271,156 |
|
|
13.0 |
|
||
Business units - Selling, general and administrative expenses |
|
78,439 |
|
|
76,639 |
|
|
2.3 |
|
||
Corporate - General and administrative expenses |
|
29,792 |
|
|
17,593 |
|
|
69.3 |
|
||
Depreciation |
|
15,381 |
|
|
14,262 |
|
|
7.8 |
|
||
Amortization of intangible assets |
|
15,018 |
|
|
8,047 |
|
|
86.6 |
|
||
Spectrum repacking reimbursements and other |
|
(80 |
) |
|
(3,005 |
) |
|
(97.3 |
) |
||
Total |
|
445,024 |
|
|
384,692 |
|
|
15.7 |
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Operating income |
|
106,833 |
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|
154,284 |
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(30.8 |
) |
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Non-operating income (expense): |
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|
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|
|
|||||
Equity (loss) income in unconsolidated investments, net |
|
(491 |
) |
|
771 |
|
|
*** |
|
||
Interest expense |
|
(52,454 |
) |
|
(48,226 |
) |
|
8.8 |
|
||
Other non-operating items, net |
|
(463 |
) |
|
(214 |
) |
|
*** |
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Total |
|
(53,408 |
) |
|
(47,669 |
) |
|
12.0 |
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||
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Income before income taxes |
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53,425 |
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|
106,615 |
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(49.9 |
) |
||
Provision for income taxes |
|
5,079 |
|
|
13,789 |
|
|
(63.2 |
) |
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Net income from continuing operations |
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$ |
48,346 |
|
|
$ |
92,826 |
|
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(47.9 |
) |
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Earnings from continuing operations per share: |
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Basic |
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$ |
0.22 |
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$ |
0.43 |
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(48.8 |
) |
Diluted |
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$ |
0.22 |
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$ |
0.43 |
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(48.8 |
) |
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Weighted average number of common shares outstanding: |
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Basic |
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217,315 |
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|
216,015 |
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|
0.6 |
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Diluted |
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218,310 |
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216,348 |
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0.9 |
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*** Not meaningful |
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Table No. 1 (continued) |
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Nine months ended September 30, |
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2019 |
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2018 |
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% Increase (Decrease) |
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|
|
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Revenues |
|
$ |
1,605,542 |
|
|
$ |
1,565,146 |
|
|
2.6 |
|
|
|
|
|
|
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|
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Operating expenses: |
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|
|
|
|
|
|||||
Cost of revenues |
|
873,078 |
|
|
793,943 |
|
|
10.0 |
|
||
Business units - Selling, general and administrative expenses |
|
223,845 |
|
|
229,193 |
|
|
(2.3 |
) |
||
Corporate - General and administrative expenses |
|
60,363 |
|
|
41,522 |
|
|
45.4 |
|
||
Depreciation |
|
44,831 |
|
|
41,594 |
|
|
7.8 |
|
||
Amortization of intangible assets |
|
32,530 |
|
|
22,791 |
|
|
42.7 |
|
||
Spectrum repacking reimbursements and other |
|
(11,399 |
) |
|
(9,331 |
) |
|
22.2 |
|
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Total |
|
1,223,248 |
|
|
1,119,712 |
|
|
9.2 |
|
||
Operating income |
|
382,294 |
|
|
445,434 |
|
|
(14.2 |
) |
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|
|
|
|
|
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|
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Non-operating income (expense): |
|
|
|
|
|
|
|||||
Equity income in unconsolidated investments, net |
|
10,922 |
|
|
15,080 |
|
|
(27.6 |
) |
||
Interest expense |
|
(145,166 |
) |
|
(145,055 |
) |
|
0.1 |
|
||
Other non-operating items, net |
|
6,962 |
|
|
(13,005 |
) |
|
*** |
|
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Total |
|
(127,282 |
) |
|
(142,980 |
) |
|
(11.0 |
) |
||
|
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|
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|
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Income before income taxes |
|
255,012 |
|
|
302,454 |
|
|
(15.7 |
) |
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Provision for income taxes |
|
52,732 |
|
|
61,929 |
|
|
(14.9 |
) |
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Net Income from continuing operations |
|
$ |
202,280 |
|
|
$ |
240,525 |
|
|
(15.9 |
) |
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|
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|
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Earnings from continuing operations per share: |
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|
|
|
|
|
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Basic |
|
$ |
0.93 |
|
|
$ |
1.11 |
|
|
(16.2 |
) |
Diluted |
|
$ |
0.93 |
|
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$ |
1.11 |
|
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(16.2 |
) |
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Weighted average number of common shares outstanding: |
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|
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|
|||||
Basic |
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217,040 |
|
|
216,210 |
|
|
0.4 |
|
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Diluted |
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217,808 |
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|
216,617 |
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0.5 |
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*** Not meaningful |
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USE OF NON-GAAP INFORMATION
The company uses non-GAAP financial performance measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the related GAAP measures, nor should they be considered superior to the related GAAP measures, and should be read together with financial information presented on a GAAP basis. Also, our non-GAAP measures may not be comparable to similarly titled measures of other companies.
Management and the company’s Board of Directors use the non-GAAP financial measures for purposes of evaluating company performance. Furthermore, the
The company discusses in this release non-GAAP financial performance measures that exclude from its reported GAAP results the impact of “special items” consisting of spectrum repacking reimbursements and other, gains on sale of equity method investments, acquisition-related costs, severance costs and certain non-operating expenses (
The company believes that such expenses and gains are not indicative of normal, ongoing operations. While these items may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods as these items can vary significantly from period to period depending on specific underlying transactions or events that may occur. Therefore, while we may incur or recognize these types of expenses and gains in the future, the company believes that removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of our ongoing operating performance.
The company also discusses Adjusted EBITDA (with and without corporate expenses), a non-GAAP financial performance measure that it believes offers a useful view of the overall operation of its businesses. The company defines Adjusted EBITDA as net income before (1) interest expense, (2) income taxes, (3) equity income (loss) in unconsolidated investments, net, (4) other non-operating items, net, (5) severance expense, (6) acquisition-related costs, (7) spectrum repacking reimbursements and other, (8) depreciation and (9) amortization. The company believes these adjustments facilitate company-to-company operating performance comparisons by removing potential differences caused by variations unrelated to operating performance, such as capital structures (interest expense), income taxes, and the age and book appreciation of property/equipment (and related depreciation expense). The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income. Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternate to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. In particular, Adjusted EBITDA is not intended to be a measure of cash flow available for management’s discretionary expenditures, as this measure does not consider certain cash requirements, such as working capital needs, capital expenditures, contractual commitments, interest payments, tax payments and other debt service requirements.
The company also considers adjusted revenues to be an important non-GAAP financial measure. Adjusted revenue is calculated by taking total company revenues on a GAAP basis and adjusting it to exclude (1) estimated incremental Olympic and Super Bowl revenue and (2) political revenues. These adjustments are made to our reported revenue on a GAAP basis in order to evaluate and assess our core operations on a comparable basis, and it represents the ongoing operations of our media business.
This earnings release also discusses free cash flow, a non-GAAP performance measure. Beginning in the first quarter of 2019 we began using a new methodology to compute free cash flow. The change in methodology was determined to be preferable as it better reflects how the Board of Directors reviews the performance of the business and it more closely aligns to how other companies in the broadcast industry calculate this non-GAAP performance metric. The most directly comparable GAAP financial measure to free cash flow is Net income from continuing operations. Free cash flow is now calculated as non-GAAP Adjusted EBITDA (as defined above), further adjusted by adding back (1) stock-based compensation, (2) non-cash 401(k) company match, (3) syndicated programming amortization, (4) pension reimbursements, (5) dividends received from equity method investments and (6) reimbursements from spectrum repacking. This is further adjusted by deducting payments made for (1) syndicated programming, (2) pension, (3) interest, (4) taxes (net of refunds) and (5) purchases of property and equipment. Like Adjusted EBITDA, free cash flow is not intended to be a measure of cash flow available for management’s discretionary use.
NON-GAAP FINANCIAL INFORMATION |
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TEGNA Inc. |
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Unaudited, in thousands of dollars (except per share amounts) |
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Table No. 2 |
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Reconciliations of certain line items impacted by special items to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's Consolidated Statements of Income follow. Amounts presented are on a as reported basis: |
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Special Items |
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Quarter ended September 30, 2019 |
|
GAAP measure |
|
Acquisition- related costs |
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Spectrum repacking reimbursements and other |
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Special tax benefits |
|
Non- GAAP measure |
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Corporate - General and administrative expenses |
|
$ |
29,792 |
|
|
$ |
(19,973 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,819 |
|
|
|
|
|
|
|
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Spectrum repacking reimbursements and other |
|
(80 |
) |
|
— |
|
|
80 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
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Operating expenses |
|
445,024 |
|
|
(19,973 |
) |
|
80 |
|
|
— |
|
|
425,131 |
|
|
|
|
|
|
|
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Operating income |
|
106,833 |
|
|
19,973 |
|
|
(80 |
) |
|
— |
|
|
126,726 |
|
|
|
|
|
|
|
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Total non-operating expense |
|
(53,408 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(53,408 |
) |
|
|
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|
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Income before income taxes |
|
53,425 |
|
|
19,973 |
|
|
(80 |
) |
|
— |
|
|
73,318 |
|
|
|
|
|
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|
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Provision for income taxes |
|
5,079 |
|
|
3,889 |
|
|
(3 |
) |
|
5,992 |
|
|
14,957 |
|
|
|
|
|
|
|
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Net income from continuing operations |
|
48,346 |
|
|
16,084 |
|
|
(77 |
) |
|
(5,992 |
) |
|
58,361 |
|
|
|
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Net income from continuing operations per share-diluted (a) |
|
$ |
0.22 |
|
|
$ |
0.07 |
|
|
$ |
— |
|
|
$ |
(0.03 |
) |
|
$ |
0.27 |
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(a) - Per share amounts do not sum due to rounding. |
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|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
Special Items |
|
|
|
|
|
|
||||||||||||||||||||||
Quarter ended September 30, 2018 |
|
GAAP measure |
|
Severance expense |
|
Spectrum repacking reimbursements and other |
|
Pension payment timing related charge |
|
Special tax benefits |
|
Non- GAAP measure |
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenues |
|
$ |
306,474 |
|
|
$ |
(931 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
305,543 |
|
|
|
|
|
||||
Business units - Selling, general and administrative expenses |
|
78,439 |
|
|
(875 |
) |
|
— |
|
|
— |
|
|
— |
|
|
77,564 |
|
|
|
|
|
||||||||||
Corporate - General and administrative expenses |
|
17,593 |
|
|
(5,481 |
) |
|
— |
|
|
— |
|
|
— |
|
|
12,112 |
|
|
|
|
|
||||||||||
Spectrum repacking reimbursements and other |
|
(3,005 |
) |
|
— |
|
|
3,005 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||||||||||
Operating expenses |
|
384,692 |
|
|
(7,287 |
) |
|
3,005 |
|
|
— |
|
|
— |
|
|
380,410 |
|
|
|
|
|
||||||||||
Operating income |
|
154,284 |
|
|
7,287 |
|
|
(3,005 |
) |
|
— |
|
|
— |
|
|
158,566 |
|
|
|
|
|
||||||||||
Other non-operating items, net |
|
(214 |
) |
|
— |
|
|
— |
|
|
1,198 |
|
|
— |
|
|
984 |
|
|
|
|
|
||||||||||
Total non-operating expense |
|
(47,669 |
) |
|
— |
|
|
— |
|
|
1,198 |
|
|
— |
|
|
(46,471 |
) |
|
|
|
|
||||||||||
Income before income taxes |
|
106,615 |
|
|
7,287 |
|
|
(3,005 |
) |
|
1,198 |
|
|
— |
|
|
112,095 |
|
|
|
|
|
||||||||||
Provision for income taxes |
|
13,789 |
|
|
1,714 |
|
|
(800 |
) |
|
301 |
|
|
9,657 |
|
|
24,661 |
|
|
|
|
|
||||||||||
Net income from continuing operations |
|
92,826 |
|
|
5,573 |
|
|
(2,205 |
) |
|
897 |
|
|
(9,657 |
) |
|
87,434 |
|
|
|
|
|
||||||||||
Net income from continuing operations per share-diluted (a) |
|
$ |
0.43 |
|
|
$ |
0.03 |
|
|
$ |
(0.01 |
) |
|
$ |
— |
|
|
$ |
(0.04 |
) |
|
$ |
0.40 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(a) - Per share amounts do not sum due to rounding. |
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Table No. 2 (continued) |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
Special Items |
|
|
|
|
||||||||||||||||||||||||
Nine months ended September 30, 2019 |
|
GAAP measure |
|
Severance expense |
|
Acquisition- related costs |
|
Spectrum repacking reimbursements and other |
|
Gains on equity method investment |
|
Other non- operating items |
|
Special tax benefits |
|
Non- GAAP measure |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenues |
|
$ |
873,078 |
|
|
$ |
(875 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
872,203 |
|
Business units - Selling, general and administrative expenses |
|
223,845 |
|
|
(376 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
223,469 |
|
||||||||
Corporate - General and administrative expenses |
|
60,363 |
|
|
(201 |
) |
|
(29,092 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
31,070 |
|
||||||||
Spectrum repacking reimbursements and other |
|
(11,399 |
) |
|
— |
|
|
— |
|
|
11,399 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||||
Operating expenses |
|
1,223,248 |
|
|
(1,452 |
) |
|
(29,092 |
) |
|
11,399 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,204,103 |
|
||||||||
Operating income |
|
382,294 |
|
|
1,452 |
|
|
29,092 |
|
|
(11,399 |
) |
|
— |
|
|
— |
|
|
— |
|
|
401,439 |
|
||||||||
Equity income in unconsolidated investments, net |
|
10,922 |
|
|
— |
|
|
— |
|
|
— |
|
|
(13,126 |
) |
|
— |
|
|
— |
|
|
(2,204 |
) |
||||||||
Other non-operating items, net |
|
6,962 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,285 |
) |
|
— |
|
|
677 |
|
||||||||
Total non-operating expense |
|
(127,282 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(13,126 |
) |
|
(6,285 |
) |
|
— |
|
|
(146,693 |
) |
||||||||
Income before income taxes |
|
255,012 |
|
|
1,452 |
|
|
29,092 |
|
|
(11,399 |
) |
|
(13,126 |
) |
|
(6,285 |
) |
|
— |
|
|
254,746 |
|
||||||||
Provision for income taxes |
|
52,732 |
|
|
359 |
|
|
5,931 |
|
|
(2,850 |
) |
|
(3,169 |
) |
|
(1,574 |
) |
|
5,992 |
|
|
57,421 |
|
||||||||
Net income from continuing operations |
|
202,280 |
|
|
1,093 |
|
|
23,161 |
|
|
(8,549 |
) |
|
(9,957 |
) |
|
(4,711 |
) |
|
(5,992 |
) |
|
197,325 |
|
||||||||
Net income from continuing operations per share-diluted |
|
$ |
0.93 |
|
|
$ |
0.01 |
|
|
$ |
0.11 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
Special Items |
|
|
||||||||||||||||||||||||||
Nine months ended September 30, 2018 |
|
GAAP measure |
|
Severance expense |
|
Spectrum repacking reimbursements and other |
|
Gain on equity method investment |
|
Other non- operating items |
|
Pension payment timing related charges |
|
Special tax benefits |
|
Non- GAAP measure |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenues |
|
$ |
793,943 |
|
|
$ |
(931 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
793,012 |
|
Business units - Selling, general and administrative expenses |
|
229,193 |
|
|
(875 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
228,318 |
|
||||||||
Corporate - General and administrative expenses |
|
41,522 |
|
|
(5,481 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
36,041 |
|
||||||||
Spectrum repacking reimbursements and other |
|
(9,331 |
) |
|
— |
|
|
9,331 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||||
Operating expenses |
|
1,119,712 |
|
|
(7,287 |
) |
|
9,331 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,121,756 |
|
||||||||
Operating income |
|
445,434 |
|
|
7,287 |
|
|
(9,331 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
443,390 |
|
||||||||
Equity income in unconsolidated investments, net |
|
15,080 |
|
|
— |
|
|
— |
|
|
(16,758 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(1,678 |
) |
||||||||
Other non-operating items |
|
(13,005 |
) |
|
— |
|
|
— |
|
|
— |
|
|
15,184 |
|
|
7,498 |
|
|
— |
|
|
9,677 |
|
||||||||
Total non-operating expense |
|
(142,980 |
) |
|
— |
|
|
— |
|
|
(16,758 |
) |
|
15,184 |
|
|
7,498 |
|
|
— |
|
|
(137,056 |
) |
||||||||
Income before income taxes |
|
302,454 |
|
|
7,287 |
|
|
(9,331 |
) |
|
(16,758 |
) |
|
15,184 |
|
|
7,498 |
|
|
— |
|
|
306,334 |
|
||||||||
Provision for income taxes |
|
61,929 |
|
|
1,714 |
|
|
(798 |
) |
|
(4,216 |
) |
|
2,178 |
|
|
1,909 |
|
|
7,007 |
|
|
69,723 |
|
||||||||
Net income from continuing operations |
|
240,525 |
|
|
5,573 |
|
|
(8,533 |
) |
|
(12,542 |
) |
|
13,006 |
|
|
5,589 |
|
|
(7,007 |
) |
|
236,611 |
|
||||||||
Net income from continuing operations per share-diluted (a) |
|
$ |
1.11 |
|
|
$ |
0.03 |
|
|
$ |
(0.04 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
1.09 |
|
(a) - Per share amounts do not sum due to rounding. |
NON-GAAP FINANCIAL INFORMATION |
|||||||||||
TEGNA Inc. |
|||||||||||
Unaudited, in thousands of dollars |
|||||||||||
|
|
|
|
|
|
||||||
Table No. 3 |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Reconciliations of Adjusted EBITDA to net income presented in accordance with GAAP on the company's Consolidated Statements of Income are presented below. Amounts presented are on a as reported basis: |
|||||||||||
|
|
||||||||||
|
Quarter ended September 30, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
Net income from continuing operations (GAAP basis) |
$ |
48,346 |
|
|
$ |
92,826 |
|
|
(47.9 |
) |
|
Plus: Provision for income taxes |
5,079 |
|
|
13,789 |
|
|
(63.2 |
) |
|||
Plus: Interest expense |
52,454 |
|
|
48,226 |
|
|
8.8 |
|
|||
Plus (Less): Equity loss (income) in unconsolidated investments, net |
491 |
|
|
(771 |
) |
|
*** |
|
|||
Plus: Other non-operating items, net |
463 |
|
|
214 |
|
|
*** |
|
|||
Operating income (GAAP basis) |
106,833 |
|
|
154,284 |
|
|
(30.8 |
) |
|||
Plus: Severance expense |
— |
|
|
7,287 |
|
|
*** |
|
|||
Plus: Acquisition-related costs |
19,973 |
|
|
— |
|
|
*** |
|
|||
Less: Spectrum repacking reimbursements and other |
(80 |
) |
|
(3,005 |
) |
|
(97.3 |
) |
|||
Adjusted operating income (non-GAAP basis) |
126,726 |
|
|
158,566 |
|
|
(20.1 |
) |
|||
Plus: Depreciation |
15,381 |
|
|
14,262 |
|
|
7.8 |
|
|||
Plus: Amortization of intangible assets |
15,018 |
|
|
8,047 |
|
|
86.6 |
|
|||
Adjusted EBITDA (non-GAAP basis) |
$ |
157,125 |
|
|
$ |
180,875 |
|
|
(13.1 |
) |
|
Corporate - General and administrative expense (non-GAAP basis) |
9,819 |
|
|
12,112 |
|
|
(18.9 |
) |
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
166,944 |
|
|
$ |
192,987 |
|
|
(13.5 |
) |
|
|
|
|
|
|
|
||||||
|
Nine months ended September 30, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
Net income from continuing operations (GAAP basis) |
$ |
202,280 |
|
|
$ |
240,525 |
|
|
(15.9 |
) |
|
Plus: Provision for income taxes |
52,732 |
|
|
61,929 |
|
|
(14.9 |
) |
|||
Plus: Interest expense |
145,166 |
|
|
145,055 |
|
|
0.1 |
|
|||
(Less): Equity (income) in unconsolidated investments, net |
(10,922 |
) |
|
(15,080 |
) |
|
(27.6 |
) |
|||
Plus: Other non-operating items, net |
(6,962 |
) |
|
13,005 |
|
|
*** |
|
|||
Operating income (GAAP basis) |
382,294 |
|
|
445,434 |
|
|
(14.2 |
) |
|||
Plus: Severance expense |
1,452 |
|
|
7,287 |
|
|
(80.1 |
) |
|||
Plus: Acquisition-related costs |
29,092 |
|
|
— |
|
|
*** |
|
|||
Less: Spectrum repacking reimbursements and other |
(11,399 |
) |
|
(9,331 |
) |
|
22.2 |
|
|||
Adjusted operating income (non-GAAP basis) |
401,439 |
|
|
443,390 |
|
|
(9.5 |
) |
|||
Plus: Depreciation |
44,831 |
|
|
41,594 |
|
|
7.8 |
|
|||
Plus: Amortization of intangible assets |
32,530 |
|
|
22,791 |
|
|
42.7 |
|
|||
Adjusted EBITDA (non-GAAP basis) |
$ |
478,800 |
|
|
$ |
507,775 |
|
|
(5.7 |
) |
|
Corporate - General and administrative expense (non-GAAP basis) |
31,070 |
|
|
36,041 |
|
|
(13.8 |
) |
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
509,870 |
|
|
$ |
543,816 |
|
|
(6.2 |
) |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION |
||||||||||||||||||||||
TEGNA Inc. |
||||||||||||||||||||||
Unaudited, in thousands of dollars |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Table No. 4 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reconciliations of adjusted revenues to our revenues presented in accordance with GAAP on the company's Consolidated Statements of Income are presented below. Amounts presented are on a as reported basis: |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Quarter ended September 30, |
|
Nine months ended September 30, |
|||||||||||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
|
2019 |
|
2018 |
|
% Increase (Decrease) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Advertising and Marketing Services |
$ |
297,333 |
|
|
$ |
264,852 |
|
|
12.3 |
|
|
$ |
851,304 |
|
|
$ |
829,638 |
|
|
2.6 |
|
|
Subscription |
240,735 |
|
|
207,463 |
|
|
16.0 |
|
|
718,472 |
|
|
622,382 |
|
|
15.4 |
|
|||||
Political |
8,131 |
|
|
60,410 |
|
|
(86.5 |
) |
|
14,064 |
|
|
93,725 |
|
|
(85.0 |
) |
|||||
Other |
5,658 |
|
|
6,251 |
|
|
(9.5 |
) |
|
21,702 |
|
|
19,401 |
|
|
11.9 |
|
|||||
Total revenues (GAAP basis) |
$ |
551,857 |
|
|
$ |
538,976 |
|
|
2.4 |
|
|
$ |
1,605,542 |
|
|
$ |
1,565,146 |
|
|
2.6 |
|
|
Factors impacting comparisons: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Estimated net incremental Olympic and Super Bowl |
$ |
— |
|
|
$ |
— |
|
|
*** |
|
|
$ |
(8,000 |
) |
|
$ |
(24,000 |
) |
|
(66.7 |
) |
|
Political |
(8,131 |
) |
|
(60,410 |
) |
|
(86.5 |
) |
|
(14,064 |
) |
|
(93,725 |
) |
|
(85.0 |
) |
|||||
Total company adjusted revenues (non-GAAP basis) |
$ |
543,726 |
|
|
$ |
478,566 |
|
|
13.6 |
|
|
$ |
1,583,478 |
|
|
$ |
1,447,421 |
|
|
9.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
*** Not meaningful |
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL INFORMATION |
|||||||||||
TEGNA Inc. |
|||||||||||
Unaudited, in thousands of dollars |
|||||||||||
|
|
|
|
|
|
||||||
Table No. 5 |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
“Free cash flow” is a non-GAAP performance measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of similar GAAP financial measures. Amounts presented are on a as reported basis: |
|||||||||||
|
|
|
|
|
|
||||||
|
Quarter ended September 30, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
|
|
|
|
|
|
||||||
Net income from continuing operations (GAAP Basis) |
$ |
48,346 |
|
|
$ |
92,826 |
|
|
(47.9 |
) |
|
Plus: Provision for income taxes |
5,079 |
|
|
13,789 |
|
|
(63.2 |
) |
|||
Plus: Interest expense |
52,454 |
|
|
48,226 |
|
|
8.8 |
|
|||
Plus: Acquisition-related costs |
19,973 |
|
|
— |
|
|
*** |
|
|||
Plus: Depreciation |
15,381 |
|
|
14,262 |
|
|
7.8 |
|
|||
Plus: Amortization |
15,018 |
|
|
8,047 |
|
|
86.6 |
|
|||
Plus: Stock-based compensation |
4,445 |
|
|
4,325 |
|
|
2.8 |
|
|||
Plus: Company stock 401(k) contribution |
3,242 |
|
|
— |
|
|
*** |
|
|||
Plus: Syndicated programming amortization |
15,516 |
|
|
13,423 |
|
|
15.6 |
|
|||
Plus: Severance expense |
— |
|
|
7,287 |
|
|
*** |
|
|||
Plus: Cash dividend from Equity Investments for return on capital |
751 |
|
|
— |
|
|
*** |
|
|||
Plus (Less): Equity (loss) income in unconsolidated investments, net |
491 |
|
|
(771 |
) |
|
*** |
|
|||
Plus: Cash reimbursements from spectrum repacking |
5,536 |
|
|
3,032 |
|
|
82.6 |
|
|||
(Less) Plus: Other non-operating items, net |
463 |
|
|
214 |
|
|
*** |
|
|||
Less: Spectrum repacking reimbursements and other |
(80 |
) |
|
(3,005 |
) |
|
(97.3 |
) |
|||
Less: Syndicated programming payments |
(16,316 |
) |
|
(14,503 |
) |
|
12.5 |
|
|||
Less: Pension contributions |
(2,460 |
) |
|
(8,791 |
) |
|
(72.0 |
) |
|||
Less: Interest payments |
(31,952 |
) |
|
(30,256 |
) |
|
5.6 |
|
|||
Less: Tax payments, net of refunds |
(17,672 |
) |
|
(14,312 |
) |
|
23.5 |
|
|||
Less: Purchases of property and equipment |
(13,547 |
) |
|
(14,417 |
) |
|
(6.0 |
) |
|||
Free cash flow (non-GAAP basis) |
$ |
104,668 |
|
|
$ |
119,376 |
|
|
(12.3 |
) |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Table No. 5 (continued) |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
“Free cash flow” is a non-GAAP performance measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of similar GAAP financial measures. Amounts presented are on a as reported basis: |
|||||||||||
|
|
||||||||||
|
Nine months ended September 30, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
|
|
|
|
|
|
||||||
Net income from continuing operations (GAAP basis) |
$ |
202,280 |
|
|
$ |
240,525 |
|
|
(15.9 |
) |
|
Plus: Provision for income taxes |
52,732 |
|
|
61,929 |
|
|
(14.9 |
) |
|||
Plus: Interest expense |
145,166 |
|
|
145,055 |
|
|
0.1 |
|
|||
Plus: Acquisition-related costs |
29,092 |
|
|
— |
|
|
*** |
|
|||
Plus: Depreciation |
44,831 |
|
|
41,594 |
|
|
7.8 |
|
|||
Plus: Amortization |
32,530 |
|
|
22,791 |
|
|
42.7 |
|
|||
Plus: Stock-based compensation |
13,887 |
|
|
12,292 |
|
|
13.0 |
|
|||
Plus: Company stock 401(k) contribution |
6,486 |
|
|
— |
|
|
*** |
|
|||
Plus: Syndicated programming amortization |
42,510 |
|
|
40,235 |
|
|
5.7 |
|
|||
Plus: Pension reimbursements |
— |
|
|
29,240 |
|
|
*** |
|
|||
Plus: Severance expense |
1,452 |
|
|
7,287 |
|
|
(80.1 |
) |
|||
Plus: Cash dividend from equity investments for return on capital |
751 |
|
|
11,295 |
|
|
(93.4 |
) |
|||
Plus: Cash reimbursements from spectrum repacking |
13,975 |
|
|
5,057 |
|
|
*** |
|
|||
(Less) Plus: Other non-operating items, net |
(6,962 |
) |
|
13,005 |
|
|
*** |
|
|||
Less: Tax payments, net of refunds |
(73,457 |
) |
|
(51,325 |
) |
|
43.1 |
|
|||
Less: Spectrum repacking reimbursements and other |
(11,399 |
) |
|
(9,331 |
) |
|
22.2 |
|
|||
Less: Equity income in unconsolidated investments, net |
(10,922 |
) |
|
(15,080 |
) |
|
(27.6 |
) |
|||
Less: Syndicated programming payments |
(40,038 |
) |
|
(40,523 |
) |
|
(1.2 |
) |
|||
Less: Pension contributions |
(8,407 |
) |
|
(44,175 |
) |
|
(81.0 |
) |
|||
Less: Interest payments |
(117,913 |
) |
|
(121,616 |
) |
|
(3.0 |
) |
|||
Less: Purchases of property and equipment |
(51,231 |
) |
|
(35,281 |
) |
|
45.2 |
|
|||
Free cash flow (non-GAAP basis) |
$ |
265,363 |
|
|
$ |
312,974 |
|
|
(15.2 |
) |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005510/en/
Source:
For investor inquiries, contact:
John Janedis, CFA
SVP, Capital Markets & Investor Relations
703-873-6222
jjanedis@TEGNA.com
For media inquiries, contact:
Anne Bentley
VP, Communications
703-873-6366
abentley@TEGNA.com