TEGNA Inc. Reports Record Single Quarter Revenue; Strong Overall 2020 Third Quarter Results
34 percent revenue growth driven by a record-breaking quarter for political advertising revenues, and ongoing strength of subscription business
Performance during uncertain market conditions continues to reflect resiliency of Company’s business model and strategic plan
Free cash flow as a percentage of combined 2019/20 revenue is now expected to be 20 to 21 percent, exceeding the pre-COVID 2020 guidance of 19 to 20 percent
TYSONS, Va.--(BUSINESS WIRE)--Nov. 9, 2020--
FINANCIAL HIGHLIGHTS:
-
Total company revenue was
$738 million in the third quarter, up 34 percent year-over-year, driven by record 2020 political advertising revenue, continued strength of subscription revenue, and stronger than expected advertising and marketing services revenue despite the impact of COVID-19 on the advertising market this year, as well as the impact of acquisitions.- Excluding political advertising, third quarter revenue grew 14 percent year-over-year.
-
Political revenues were
$116 million , a new third quarter record.-
Full year political through last Tuesday’s
Election Day was$395 million . More revenue will be booked in the fourth quarter due to run-off elections for bothU.S. Senate seats inGeorgia in early January.
-
Full year political through last Tuesday’s
-
Third quarter subscription revenue of
$317 million was up 32 percent due to rate increases and acquisitions, reflecting the approximately 50 percent of subscribers repriced in the fourth quarter of 2019.- Subscriber trends have now shown sequential year-over-year improvement for three months in a row.
-
Due to improved subscriber trends, full year subscription revenue growth is now expected to be up in the high-twenties percentage-wise compared to 2019, an improvement from our prior outlook of up mid-twenties reaffirmed on
August 10, 2020 .
-
Third quarter advertising and marketing services revenue of
$299 million was approximately flat year-over-year due to the partial impact of acquisitions, very strong year-over-year growth of Premion, our OTT advertising service, return of live sporting events, and aggregate share increases in our markets.- Advertising revenues have experienced sequential improvement since the height of the pandemic in April.
-
TEGNA achieved net income of$132 million in the third quarter on a GAAP basis, more than double compared to the third quarter of 2019, or$131 million on a non-GAAP basis. Total company Adjusted EBITDA for the third quarter was$259 million , a 65 percent increase compared to the same period in 2019.- These increases were driven by strong revenues, the impact of acquisitions and the Company’s continued prudent expense management.
-
GAAP earnings per diluted share were
$0.60 in the third quarter and non-GAAP earnings per diluted share were$0.59 . -
Free cash flow for the third quarter was
$153 million . -
The Company ended the quarter with total debt of
$3.9 billion and net leverage of 4.50x.- The Company expects that its net leverage ratio will be 4.20x or less by the end of 2020, an improvement from prior guidance.2
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1 Throughout, “acquisitions” includes (1) the |
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2 The leverage ratio used for our single financial covenant in our revolving credit agreement was 4.38x as of the end of the quarter. The primary difference between the two leverage ratios is the definition of Adjusted EBITDA in the revolving credit agreement version requires additional adjustments to add back non-cash compensation and contractual synergy benefits during periods in the trailing eight quarters that preceded the acquisition. |
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FINANCIAL AND LIQUIDITY UPDATES:
-
TEGNA ended the third quarter with$165 million in cash. -
The Company finished the quarter with more than
$1.3 billion in undrawn capacity under the revolving credit facility. During October, the Company drew down its revolving credit facility to repay all of its Senior Notes due in 2021 and a portion of Senior Notes due in 2024. As ofOctober 31, 2020 , the undrawn capacity under the facility was$950 million . -
On
September 10, 2020 , the Company successfully completed a private placement offering of$550 million aggregate principal amount of 4.750% Senior Notes due 2026. Net proceeds were used to repay Senior Notes due in 2021 and 2024. TEGNA’s only maturities of Senior Notes over the next five years is $137 million due in 2024. (Press release)
CEO COMMENT
“Our record single quarter revenue performance in the third quarter reflects the strength and durability of our business model and ongoing focus of our Board and management to deliver on our long-term strategy. Local news continues to be the preferred medium for viewers to receive important, timely information, which we have seen play out several times this year throughout the COVID-19 pandemic, racial injustice demonstrations, and the 2020 elections. The strategic positioning of our portfolio, including our recent acquisitions, has served us well and our stations, journalists and all our employees have demonstrated resilience throughout this challenging period,” said Dave Lougee, president and chief executive officer.
“Third quarter political revenue is the highest we have ever seen at
“As we have highlighted before, our high-margin, stable political and subscription revenues will make up more than half of our 2019-2020 revenues, and we expect an increasing percentage thereafter. As a reminder, we now expect to see our full year subscription revenues increase by high-twenties percent year-over-year.
“Despite the significant impact of COVID-19, advertising and marketing services has benefited from our sustained efforts to diversify our platforms and an expansion of our number of new advertisers, which is reflected in an aggregate market share increase across our portfolio. Advertising and marketing services has continued to show sequential monthly improvement since April. This performance demonstrates the sales transformation improvements we have actively implemented over the past several years, including bringing national sales in-house and creating one, holistic sales organization, which we call ‘One Team TEGNA,’ to accelerate growth and better serve clients and agencies.
“In September, we proactively completed our third refinancing in twelve months. This offering is another example of our continued focus on strengthening our balance sheet, as part of our broader commitment to thoughtful capital allocation. We will continue to evaluate the most appropriate use of capital given the current market environment, with a near-term focus on debt reduction.”
OVERVIEW OF THIRD QUARTER RESULTS
Total company revenues increased by 34 percent in the quarter, driven by record 2020 political advertising revenues, continued strength of the subscription business, and stronger than expected advertising and marketing services despite the impact of COVID-19 on the advertising market, as well as the impact of acquisitions.
Subscription revenue grew 32 percent year-over-year due to significant rate increases, as well as acquisitions, partially offset by subscriber declines, which have shown sequential year-over-year improvement for three months in a row.
Despite the impact of COVID-19, advertising and marketing services revenue in the quarter was flat compared to last year, due to the partial impact of acquisitions, return of live sporting events, and an aggregate market share improvement across our portfolio. These revenues have shown sequential improvements since the height of the pandemic in April.
GAAP operating expenses were
GAAP operating income totaled
The third quarter included a few special items, the full details of which can be found in Table 2. The net effect of these items was to increase GAAP net income by
Interest expense in the quarter was
UPDATE ON KEY RECENT STRATEGIC, CONTENT AND PROGRAMMING INITIATIVES
- Premion Delivers Double Digit Revenue Growth– Capitalizing on the increase in viewing on streaming services, Premion saw very strong double digit revenue growth in the quarter, excluding political advertising.
-
Expansion of Over-the-Top (OTT) Streaming Services –
TEGNA recently completed an update of Roku streaming apps for all its stations and began rolling out station apps on Amazon Fire TV. When the rollout is complete, ad-supported access to live local news, weather forecasts and VERIFY fact-checking reporting will be available to consumers on the two dominant OTT streaming media players, which comprise 70 percent of the U.S. market. True Crime Network, which features premium curated and original content for true crime fans, is also now available on Roku. (Press Release)
-
VERIFY Fact-Checking Initiative Grows on
Snapchat – In just three months, VERIFY’s election and fact-checking content on Snap’s Discover platform has grown to 141,000 subscribers and 6.3 million unique viewers. More than 50 percent of VERIFY’s audience onSnapchat is under the age of 25, broadening TEGNA’s reach with younger news consumers.
-
TEGNA Journalists Work to
Build Trust in the Voting Process –TEGNA journalists worked to build trust and combat disinformation during the voting process, including training to detect misinformation campaigns, and creating Voter Access teams at stations to educate the public on the election process. This education included where and how to vote, holding election officials accountable for transparency in the reporting of results, and expanding stations’ VERIFY news fact-checking reporting to identify and debunk false information spread on social media platforms. VERIFY’s monthly average visitors are up 234 percent and video plays are up more than 700 percent compared to a year ago.
-
TEGNA Appoints Chief Diversity Officer, Signs CEO Action for Diversity and Inclusion Pledge –
TEGNA appointedGrady Tripp to the newly created position of vice president and chief diversity officer reporting to president and CEODave Lougee . Tripp will partner with organizational leaders to develop and execute the Company’s diversity strategy. (Press release) In September,TEGNA signed the CEO Action for Diversity and Inclusion pledge, a commitment to strengthen D&I initiatives atTEGNA .
-
TEGNA Foundation Announces 2020 Media Grants Supporting Diversity,
Professional Development and Protecting the Rights and Safety of Local Journalists –The TEGNA Foundation , the charitable foundation sponsored byTEGNA , announced a series of grants to promote diversity in journalism and professional development opportunities for media professionals and students.TEGNA Foundation also announced it was making a special$75,000 grant toReporters Committee for Freedom of the Press (RCFP) to support its mission to protect First Amendment freedoms and the newsgathering rights and safety of local journalists. (Press release)
-
Continued Strength Across Digital Platforms –
TEGNA digital properties averaged 68 million unduplicated monthly visitors in the third quarter (source: Comscore) while video plays totaled 466 million (source:Google Analytics), a 57 percent increase in visitors and 131 percent increase in video plays year-over-year.
- Expansion of Near Me Audience Engagement Tool Across Stations – Expanded mobile app feature “Near Me” to all stations, allowing viewers and users to share photos and videos and see station-produced and user-generated content at the neighborhood and street level for breaking news events, including recent hurricanes, wildfires and social justice demonstrations.
-
ATSC 3.0 Transition Accelerates in TEGNA Markets – TEGNA’s
KONG-TV inSeattle will serve as a host, or “lighthouse” station, for the ATSC 3.0 rollout in that market, planned for early December. (Press Release)
-
TEGNA Continues to be Recognized for Excellence in Journalism –
TEGNA stations and journalists were recently honored with nine National Edward R. Murrow Awards, more than any other local broadcast television group, for excellence in journalism, innovation and multimedia. (Press release)TEGNA received seven awards for excellence by Broadcasting+Cable, the most among local broadcast station groups, including honors for investigative reporting, breaking news, Best Anchor, and Best Podcast. (Press release)
CAPITAL ALLOCATION
Strong free cash flow for the quarter of
The Company was able to extend maturities through the successful completion of a
FORWARD-LOOKING STATEMENTS
Certain statements in this communication may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to a number of risks, trends and uncertainties that could cause actual results or company actions to differ materially from what is expressed or implied by these statements, including risks relating to the coronavirus (COVID-19) pandemic and its effect on our revenues, particularly our non-political advertising revenues. Potential regulatory actions, changes in consumer behaviors and impacts on and modifications to TEGNA’s operations and business relating thereto and TEGNA’s ability to execute on its standalone plan can also cause actual results to differ materially. Other economic, competitive, governmental, technological and other factors and risks that may affect TEGNA’s operations or financial results are discussed in our Annual Report on Form 10-K for the fiscal year ended
CONFERENCE CALL
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENTS OF INCOME |
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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 |
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2020 |
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2019 |
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% Increase
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Revenues |
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$ |
738,389 |
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$ |
551,857 |
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33.8 |
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Operating expenses: |
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Cost of revenues |
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379,185 |
|
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306,474 |
|
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23.7 |
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Business units - Selling, general and administrative expenses |
|
89,943 |
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78,439 |
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14.7 |
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Corporate - General and administrative expenses |
|
11,263 |
|
|
29,792 |
|
|
(62.2) |
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Depreciation |
|
16,086 |
|
|
15,381 |
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4.6 |
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Amortization of intangible assets |
|
17,113 |
|
|
15,018 |
|
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13.9 |
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Spectrum repacking reimbursements and other, net |
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(2,902) |
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(80) |
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*** |
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Total |
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510,688 |
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|
445,024 |
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14.8 |
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Operating income |
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227,701 |
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106,833 |
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*** |
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Non-operating income (expense): |
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Equity (loss) in unconsolidated investments, net |
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(2,529) |
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(491) |
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*** |
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Interest expense |
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(51,896) |
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(52,454) |
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(1.1) |
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Other non-operating items, net |
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961 |
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(463) |
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*** |
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Total |
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(53,464) |
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(53,408) |
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0.1 |
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Income before income taxes |
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174,237 |
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53,425 |
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*** |
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Provision for income taxes |
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41,967 |
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|
5,079 |
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*** |
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Net income |
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132,270 |
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|
48,346 |
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*** |
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Net income attributable to redeemable noncontrolling interest |
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(51) |
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— |
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*** |
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Net income attributable to |
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$ |
132,219 |
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$ |
48,346 |
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*** |
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Earnings per share: |
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Basic |
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$ |
0.60 |
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$ |
0.22 |
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*** |
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Diluted |
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$ |
0.60 |
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$ |
0.22 |
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*** |
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Weighted average number of common shares outstanding: |
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Basic shares |
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219,579 |
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217,315 |
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1.0 |
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Diluted shares |
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219,977 |
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|
218,310 |
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0.8 |
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*** Not meaningful |
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CONSOLIDATED STATEMENTS OF INCOME |
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Unaudited, in thousands of dollars (except per share amounts) |
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Table No. 1 (continued) |
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Nine months ended |
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2020 |
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2019 |
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% Increase
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Revenues |
|
$ |
2,000,205 |
|
|
$ |
1,605,542 |
|
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24.6 |
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Operating expenses: |
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Cost of revenues |
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1,103,920 |
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|
873,078 |
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26.4 |
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Business units - Selling, general and administrative expenses |
|
267,919 |
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|
223,845 |
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19.7 |
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Corporate - General and administrative expenses |
|
61,289 |
|
|
60,363 |
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|
1.5 |
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Depreciation |
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49,697 |
|
|
44,831 |
|
|
10.9 |
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Amortization of intangible assets |
|
50,577 |
|
|
32,530 |
|
|
55.5 |
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Spectrum repacking reimbursements and other, net |
|
(10,533) |
|
|
(11,399) |
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|
(7.6) |
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Total |
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1,522,869 |
|
|
1,223,248 |
|
|
24.5 |
|
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Operating income |
|
477,336 |
|
|
382,294 |
|
|
24.9 |
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Non-operating income (expense): |
|
|
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Equity income in unconsolidated investments, net |
|
8,407 |
|
|
10,922 |
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(23.0) |
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Interest expense |
|
(160,733) |
|
|
(145,166) |
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|
10.7 |
|
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Other non-operating items, net |
|
(17,270) |
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|
6,962 |
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*** |
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Total |
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(169,596) |
|
|
(127,282) |
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|
33.2 |
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Income before income taxes |
|
307,740 |
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|
255,012 |
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20.7 |
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Provision for income taxes |
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69,699 |
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|
52,732 |
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|
32.2 |
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Net income |
|
238,041 |
|
|
202,280 |
|
|
17.7 |
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Net loss attributable to redeemable noncontrolling interest |
|
433 |
|
|
— |
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*** |
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Net income attributable to |
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$ |
238,474 |
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$ |
202,280 |
|
|
17.9 |
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Earnings from continuing operations per share: |
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Basic |
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$ |
1.08 |
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$ |
0.93 |
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|
16.1 |
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Diluted |
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$ |
1.08 |
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$ |
0.93 |
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16.1 |
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Weighted average number of common shares outstanding: |
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Basic shares |
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218,997 |
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|
217,040 |
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0.9 |
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Diluted shares |
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219,423 |
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|
217,808 |
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0.7 |
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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 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 related to businesses we account for under the equity method, acquisition-related costs, advisory fees related to activism defense, M&A due diligence costs, workforce restructuring costs, intangible asset impairment charges, certain non-operating expenses related to the early extinguishment of debt and a
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 attributable to
This earnings release also discusses free cash flow, a non-GAAP performance measure that the Board of Directors uses to review the performance of the business. The most directly comparable GAAP financial measure to free cash flow is Net income attributable to
The Company is furnishing guidance with respect to free cash flow as a percentage of revenue for the combined 2019-20 years. As noted above, the most directly comparable GAAP financial measure to free cash flow is net income attributable to
NON-GAAP FINANCIAL INFORMATION |
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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: |
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Special Items |
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Quarter ended |
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GAAP
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Workforce
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Spectrum
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Non-GAAP
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Cost of revenues |
|
$ |
379,185 |
|
|
$ |
(595) |
|
|
$ |
— |
|
|
$ |
378,590 |
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|
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Business units - Selling, general and administrative expenses |
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89,943 |
|
|
(372) |
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— |
|
|
89,571 |
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Corporate - General and administrative expenses |
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11,263 |
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|
(54) |
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|
— |
|
|
11,209 |
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|
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Spectrum repacking reimbursements and other, net |
|
(2,902) |
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|
— |
|
|
2,902 |
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|
— |
|
|
|
|
|
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|
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|
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Operating expenses |
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510,688 |
|
|
(1,021) |
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|
2,902 |
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|
512,569 |
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|
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|
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Operating income |
|
227,701 |
|
|
1,021 |
|
|
(2,902) |
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|
225,820 |
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Income before income taxes |
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174,237 |
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|
1,021 |
|
|
(2,902) |
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|
172,356 |
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|
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|
|
|
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Provision for income taxes |
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41,967 |
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|
256 |
|
|
(749) |
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|
41,474 |
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|
|
|
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Net income attributable to |
|
132,219 |
|
|
765 |
|
|
(2,153) |
|
|
130,831 |
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Net income per share-diluted |
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$ |
0.60 |
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|
$ |
— |
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$ |
(0.01) |
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$ |
0.59 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Special Items |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Quarter ended |
|
GAAP
|
|
Acquisition-
|
|
Spectrum
|
|
Special tax
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Corporate - General and administrative expenses |
|
$ |
29,792 |
|
|
$ |
(19,973) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,819 |
|
|
|
|
|
|
|
|
|
||||||||
Spectrum repacking reimbursements and other, net |
|
(80) |
|
|
— |
|
|
80 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating expenses |
|
445,024 |
|
|
(19,973) |
|
|
80 |
|
|
— |
|
|
425,131 |
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating income |
|
106,833 |
|
|
19,973 |
|
|
(80) |
|
|
— |
|
|
126,726 |
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
|
53,425 |
|
|
19,973 |
|
|
(80) |
|
|
— |
|
|
73,318 |
|
|
|
|
|
|
|
|
|
|||||||||||||
Provision for income taxes |
|
5,079 |
|
|
3,889 |
|
|
(3) |
|
|
5,992 |
|
|
14,957 |
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income attributable to |
|
48,346 |
|
|
16,084 |
|
|
(77) |
|
|
(5,992) |
|
|
58,361 |
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income per share-diluted (a) |
|
$ |
0.22 |
|
|
$ |
0.07 |
|
|
$ |
— |
|
|
$ |
(0.03) |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(a) - Per share amounts do not sum due to rounding. |
|
|||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
NON-GAAP FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Unaudited, in thousands of dollars (except per share amounts) |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Table No. 2 (continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Special Items |
|
|
||||||||||||||||||||||||||||||
Nine months ended |
|
GAAP
|
|
Workforce
|
|
M&A due
|
|
Advisory fees
|
|
Spectrum
|
|
Gains on
|
|
Other
|
|
Special
|
|
Non-GAAP
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Cost of revenues |
|
$ |
1,103,920 |
|
|
$ |
(595) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,103,325 |
|
Business units - Selling, general and administrative expenses |
|
267,919 |
|
|
(372) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
267,547 |
|
|||||||||
Corporate - General and administrative expenses |
|
61,289 |
|
|
(54) |
|
|
(4,588) |
|
|
(23,087) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
33,560 |
|
|||||||||
Spectrum repacking reimbursements and other, net |
|
(10,533) |
|
|
— |
|
|
— |
|
|
— |
|
|
10,533 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||||||
Operating expenses |
|
1,522,869 |
|
|
(1,021) |
|
|
(4,588) |
|
|
(23,087) |
|
|
10,533 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,504,706 |
|
|||||||||
Operating income |
|
477,336 |
|
|
1,021 |
|
|
4,588 |
|
|
23,087 |
|
|
(10,533) |
|
|
— |
|
|
— |
|
|
— |
|
|
495,499 |
|
|||||||||
Equity income (loss) in unconsolidated investments, net |
|
8,407 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(18,585) |
|
|
— |
|
|
— |
|
|
(10,178) |
|
|||||||||
Other non-operating items, net |
|
(17,270) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21,744 |
|
|
— |
|
|
4,474 |
|
|||||||||
Total non-operating expenses |
|
(169,596) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(18,585) |
|
|
21,744 |
|
|
— |
|
|
(166,437) |
|
|||||||||
Income before income taxes |
|
307,740 |
|
|
1,021 |
|
|
4,588 |
|
|
23,087 |
|
|
(10,533) |
|
|
(18,585) |
|
|
21,744 |
|
|
— |
|
|
329,062 |
|
|||||||||
Provision for income taxes |
|
69,699 |
|
|
256 |
|
|
1,151 |
|
|
5,801 |
|
|
(2,766) |
|
|
(4,670) |
|
|
5,463 |
|
|
3,944 |
|
|
78,878 |
|
|||||||||
Net income attributable to |
|
238,474 |
|
|
765 |
|
|
3,437 |
|
|
17,286 |
|
|
(7,767) |
|
|
(13,915) |
|
|
16,281 |
|
|
(3,944) |
|
|
250,617 |
|
|||||||||
Net income per share-diluted (a) |
|
$ |
1.08 |
|
|
$ |
— |
|
|
$ |
0.02 |
|
|
$ |
0.08 |
|
|
$ |
(0.04) |
|
|
$ |
(0.06) |
|
|
$ |
0.07 |
|
|
$ |
(0.02) |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(a) Per share amounts do not sum due to rounding |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
Special Items |
|
|
|
|
||||||||||||||||||||||||||||
Nine months ended |
|
GAAP
|
|
Workforce restructuring expense |
|
Acquisition-
|
|
Spectrum
|
|
Gain on equity
|
|
Other non
|
|
Special
|
|
Non-
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
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, net |
|
(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 (loss) 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 attributable to |
|
202,280 |
|
|
1,093 |
|
|
23,161 |
|
|
(8,549) |
|
|
(9,957) |
|
|
(4,711) |
|
|
(5,992) |
|
|
197,325 |
|
|
|
||||||||||
Net income per share-diluted |
|
$ |
0.93 |
|
|
$ |
0.01 |
|
|
$ |
0.11 |
|
|
$ |
(0.04) |
|
|
$ |
(0.05) |
|
|
$ |
(0.02) |
|
|
$ |
(0.03) |
|
|
$ |
0.91 |
|
|
|
||
NON-GAAP FINANCIAL INFORMATION
|
|||||||||||
|
|
|
|
|
|
||||||
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: |
|||||||||||
|
|
||||||||||
|
Quarter ended |
||||||||||
|
2020 |
|
2019 |
|
2018 |
||||||
Net income attributable to |
$ |
132,219 |
|
|
$ |
48,346 |
|
|
$ |
92,826 |
|
Plus: Net income attributable to redeemable noncontrolling interest |
51 |
|
|
— |
|
|
— |
|
|||
Plus: Provision for income taxes |
41,967 |
|
|
5,079 |
|
|
13,789 |
|
|||
Plus: Interest expense |
51,896 |
|
|
52,454 |
|
|
48,226 |
|
|||
Plus: Equity loss in unconsolidated investments, net |
2,529 |
|
|
491 |
|
|
(771) |
|
|||
(Less) Plus: Other non-operating items, net |
(961) |
|
|
463 |
|
|
214 |
|
|||
Operating income (GAAP basis) |
227,701 |
|
|
106,833 |
|
|
154,284 |
|
|||
Plus: Workforce restructuring expense |
1,021 |
|
|
— |
|
|
7,287 |
|
|||
Plus: Acquisition-related costs |
— |
|
|
19,973 |
|
|
— |
|
|||
Less: Spectrum repacking reimbursements and other, net |
(2,902) |
|
|
(80) |
|
|
(3,005) |
|
|||
Adjusted operating income (non-GAAP basis) |
225,820 |
|
|
126,726 |
|
|
158,566 |
|
|||
Plus: Depreciation |
16,086 |
|
|
15,381 |
|
|
14,262 |
|
|||
Plus: Amortization of intangible assets |
17,113 |
|
|
15,018 |
|
|
8,047 |
|
|||
Adjusted EBITDA (non-GAAP basis) |
$ |
259,019 |
|
|
$ |
157,125 |
|
|
$ |
180,875 |
|
Corporate - General and administrative expense (non-GAAP basis) |
11,209 |
|
|
9,819 |
|
|
12,112 |
|
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
270,228 |
|
|
$ |
166,944 |
|
|
$ |
192,987 |
|
|
|
|
|
|
|
||||||
|
Nine months ended |
||||||||||
|
2020 |
|
2019 |
|
2018 |
||||||
Net income attributable to |
$ |
238,474 |
|
|
$ |
202,280 |
|
|
$ |
240,525 |
|
Less: Net loss attributable to redeemable noncontrolling interest |
(433) |
|
|
— |
|
|
— |
|
|||
Plus: Provision for income taxes |
69,699 |
|
|
52,732 |
|
|
61,929 |
|
|||
Plus: Interest expense |
160,733 |
|
|
145,166 |
|
|
145,055 |
|
|||
Less: Equity income in unconsolidated investments, net |
(8,407) |
|
|
(10,922) |
|
|
(15,080) |
|
|||
Plus (Less): Other non-operating items, net |
17,270 |
|
|
(6,962) |
|
|
13,005 |
|
|||
Operating income (GAAP basis) |
477,336 |
|
|
382,294 |
|
|
445,434 |
|
|||
Plus: Workforce restructuring expense |
1,021 |
|
|
1,452 |
|
|
7,287 |
|
|||
Plus: M&A due diligence costs |
4,588 |
|
|
— |
|
|
— |
|
|||
Plus: Acquisition-related costs |
— |
|
|
29,092 |
|
|
— |
|
|||
Plus: Advisory fees related to activism defense |
23,087 |
|
|
— |
|
|
— |
|
|||
Less: Spectrum repacking reimbursements and other, net |
(10,533) |
|
|
(11,399) |
|
|
(9,331) |
|
|||
Adjusted operating income (non-GAAP basis) |
495,499 |
|
|
401,439 |
|
|
443,390 |
|
|||
Plus: Depreciation |
49,697 |
|
|
44,831 |
|
|
41,594 |
|
|||
Plus: Amortization of intangible assets |
50,577 |
|
|
32,530 |
|
|
22,791 |
|
|||
Adjusted EBITDA (non-GAAP basis) |
$ |
595,773 |
|
|
$ |
478,800 |
|
|
$ |
507,775 |
|
Corporate - General and administrative expense (non-GAAP basis) |
33,560 |
|
|
31,070 |
|
|
36,041 |
|
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
629,333 |
|
|
$ |
509,870 |
|
|
$ |
543,816 |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
|
|
|
|
|
||||||
NON-GAAP FINANCIAL INFORMATION |
|||||||||||||||||
|
|||||||||||||||||
Unaudited, in thousands of dollars |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Table No. 4 |
|
|
|
|
|
|
|
|
|
||||||||
Below is a detail of our primary sources of revenue presented in accordance with GAAP on company’s Consolidated Statements of Income. In addition, we show Adjusted EBITDA and Adjusted EBITDA margins (see non-GAAP reconciliations at Table No. 3). |
|||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
|
Quarter ended |
||||||||||||||||
|
2020 |
|
2019 |
|
% Increase
|
|
2018 |
|
% Increase
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Advertising and Marketing Services |
$ |
298,605 |
|
|
$ |
297,333 |
|
|
0.4 |
|
|
$ |
264,852 |
|
|
12.7 |
|
Subscription |
316,677 |
|
|
240,735 |
|
|
31.5 |
|
|
207,463 |
|
|
52.6 |
|
|||
Political |
116,494 |
|
|
8,131 |
|
|
*** |
|
|
60,410 |
|
|
92.8 |
|
|||
Other |
6,613 |
|
|
5,658 |
|
|
16.9 |
|
|
6,251 |
|
|
5.8 |
|
|||
Total revenues |
$ |
738,389 |
|
|
$ |
551,857 |
|
|
33.8 |
|
|
$ |
538,976 |
|
|
37.0 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA |
$ |
259,019 |
|
|
$ |
157,125 |
|
|
64.8 |
|
|
$ |
180,875 |
|
|
43.2 |
|
Adjusted EBITDA Margin |
35.1 |
% |
|
28.5 |
% |
|
|
|
33.6 |
% |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Nine months ended |
||||||||||||||||
|
2020 |
|
2019 |
|
% Increase
|
|
2018 |
|
% Increase
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Advertising and Marketing Services |
$ |
822,841 |
|
|
$ |
851,304 |
|
|
(3.3) |
|
|
$ |
829,638 |
|
|
(0.8) |
|
Subscription |
972,954 |
|
|
718,472 |
|
|
35.4 |
|
|
622,382 |
|
|
56.3 |
|
|||
Political |
181,425 |
|
|
14,064 |
|
|
*** |
|
93,725 |
|
|
93.6 |
|
||||
Other |
22,985 |
|
|
21,702 |
|
|
5.9 |
|
|
19,401 |
|
|
18.5 |
|
|||
Total revenues |
$ |
2,000,205 |
|
|
$ |
1,605,542 |
|
|
24.6 |
|
|
$ |
1,565,146 |
|
|
27.8 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA |
$ |
595,773 |
|
|
$ |
478,800 |
|
|
24.4 |
|
|
$ |
507,775 |
|
|
17.3 |
|
Adjusted EBITDA Margin |
29.8 |
% |
|
29.8 |
% |
|
|
|
32.4 |
% |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
*** Not meaningful |
|
|
|
|
|
|
|
|
|
||||||||
NON-GAAP FINANCIAL INFORMATION |
||||||||||
|
||||||||||
Unaudited, in thousands of dollars |
||||||||||
|
||||||||||
Table No. 5 |
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Reconciliations of free cash flow to net income presented in accordance with GAAP on the company's
|
||||||||||
|
|
|
|
|
|
|||||
|
Quarter ended |
|||||||||
|
2020 |
|
2019 |
|
% Increase
|
|||||
|
|
|
|
|
|
|||||
Net income attributable to |
$ |
132,219 |
|
|
$ |
48,346 |
|
|
*** |
|
Plus: Provision for income taxes |
41,967 |
|
|
5,079 |
|
|
*** |
|||
Plus: Interest expense |
51,896 |
|
|
52,454 |
|
|
(1.1) |
|
||
Plus: Acquisition-related costs |
— |
|
|
19,973 |
|
|
*** |
|||
Plus: Depreciation |
16,086 |
|
|
15,381 |
|
|
4.6 |
|
||
Plus: Amortization |
17,113 |
|
|
15,018 |
|
|
13.9 |
|
||
Plus: Stock-based compensation |
5,010 |
|
|
4,445 |
|
|
12.7 |
|
||
Plus: Company stock 401(k) contribution |
4,458 |
|
|
3,242 |
|
|
37.5 |
|
||
Plus: Syndicated programming amortization |
17,628 |
|
|
15,516 |
|
|
13.6 |
|
||
Plus: Workforce restructuring expense |
1,021 |
|
|
— |
|
|
*** |
|||
Plus: Cash dividend from equity investments for return on capital |
2,205 |
|
|
751 |
|
|
*** |
|||
Plus: Cash reimbursements from spectrum repacking |
2,902 |
|
|
5,536 |
|
|
(47.6) |
|
||
Plus: Equity income in unconsolidated investments, net |
2,529 |
|
|
491 |
|
|
*** |
|||
Add: Net income attributable to redeemable noncontrolling interest |
51 |
|
|
— |
|
|
*** |
|||
Less: Other non-operating items, net |
(961) |
|
|
463 |
|
|
*** |
|||
Less: Income tax payments, net of refunds |
(39,407) |
|
|
(17,672) |
|
|
*** |
|||
Less: Spectrum repacking reimbursements and other, net |
(2,902) |
|
|
(80) |
|
|
*** |
|||
Less: Syndicated programming payments |
(17,009) |
|
|
(16,316) |
|
|
4.2 |
|
||
Less: Pension contributions |
(942) |
|
|
(2,460) |
|
|
(61.7) |
|
||
Less: Interest payments |
(74,499) |
|
|
(31,952) |
|
|
*** |
|||
Less: Purchases of property and equipment |
(6,276) |
|
|
(13,547) |
|
|
(53.7) |
|
||
Free cash flow (non-GAAP basis) |
$ |
153,089 |
|
|
$ |
104,668 |
|
|
46.3 |
|
|
|
|
|
|
|
|||||
*** Not meaningful |
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
NON-GAAP FINANCIAL INFORMATION |
||||||||||
|
||||||||||
Unaudited, in thousands of dollars |
||||||||||
|
|
|
|
|
|
|||||
Table No. 5 (continued) |
|
|
|
|
|
|||||
|
|
|||||||||
|
Nine months ended |
|||||||||
|
2020 |
|
2019 |
|
% Increase
|
|||||
|
|
|
|
|
|
|||||
Net income attributable to |
$ |
238,474 |
|
|
$ |
202,280 |
|
|
17.9 |
|
Plus: Provision for income taxes |
69,699 |
|
|
52,732 |
|
|
32.2 |
|
||
Plus: Interest expense |
160,733 |
|
|
145,166 |
|
|
10.7 |
|
||
Plus: M&A due diligence costs |
4,588 |
|
|
— |
|
|
*** |
|||
Plus: Acquisition-related costs |
— |
|
|
29,092 |
|
|
*** |
|||
Plus: Depreciation |
49,697 |
|
|
44,831 |
|
|
10.9 |
|
||
Plus: Amortization |
50,577 |
|
|
32,530 |
|
|
55.5 |
|
||
Plus: Stock-based compensation |
12,578 |
|
|
13,887 |
|
|
(9.4) |
|
||
Plus: Company stock 401(k) contribution |
13,023 |
|
|
6,486 |
|
|
*** |
|||
Plus: Syndicated programming amortization |
53,599 |
|
|
42,510 |
|
|
26.1 |
|
||
Plus: Workforce restructuring expense |
1,021 |
|
|
1,452 |
|
|
(29.7) |
|
||
Plus: Advisory fees related to activism defense |
23,087 |
|
|
— |
|
|
*** |
|||
Plus: Cash dividend from equity investments for return on capital |
5,771 |
|
|
751 |
|
|
*** |
|||
Plus: Cash reimbursements from spectrum repacking |
12,670 |
|
|
13,975 |
|
|
(9.3) |
|
||
Plus: Other non-operating items, net |
17,270 |
|
|
(6,962) |
|
|
*** |
|||
Less: Net loss attributable to redeemable noncontrolling interest |
(433) |
|
|
— |
|
|
*** |
|||
Less: Income tax payments, net of refunds |
(39,872) |
|
|
(73,457) |
|
|
(45.7) |
|
||
Less: Spectrum repacking reimbursements and other, net |
(10,533) |
|
|
(11,399) |
|
|
(7.6) |
|
||
Less: Equity income in unconsolidated investments, net |
(8,407) |
|
|
(10,922) |
|
|
(23.0) |
|
||
Less: Syndicated programming payments |
(52,840) |
|
|
(40,038) |
|
|
32.0 |
|
||
Less: Pension contributions |
(4,192) |
|
|
(8,407) |
|
|
(50.1) |
|
||
Less: Interest payments |
(174,575) |
|
|
(117,913) |
|
|
48.1 |
|
||
Less: Purchases of property and equipment |
(30,583) |
|
|
(51,231) |
|
|
(40.3) |
|
||
Free cash flow (non-GAAP basis) |
$ |
391,352 |
|
|
$ |
265,363 |
|
|
47.5 |
|
|
|
|
|
|
|
|||||
*** Not meaningful |
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201109005568/en/
For media inquiries:
Vice President, Corporate Communications
703-873-6366
abentley@TEGNA.com
For investor inquiries:
Head of Investor Relations
703-873-6764
dkuckelman@TEGNA.com
Source: