TEGNA Inc. Reports Solid 2019 Fourth Quarter and Full-Year Results, Driving Strong 2020 Guidance
- Eight percent revenue growth in fourth quarter generated by acceleration of subscription and advertising revenues across all new and existing stations
- Successfully reached multi-year distribution agreements, repricing 50 percent of subscribers in the fourth quarter of 2019, with another 35 percent of subs repricing by the end of 2020
- Integration of strategic and accretive acquisitions added approximately
$200 million of Adjusted EBITDA on a two-year average basis while only utilizing three points of cap space under the FCC ownership rules
TYSONS, Va.--(BUSINESS WIRE)--Feb. 11, 2020--
FOURTH QUARTER FINANCIAL AND STRATEGIC HIGHLIGHTS:
- Total company revenue was
$694 million , up eight percent year-over-year, exceeding the high end of the preliminary range announced onJanuary 9, 2020 . The increase compared to last year was driven by the impact of our recent acquisitions, continued growth in subscription revenue, certain 2020 political advertising campaign spending beginning in earnest, earlier than anticipated, and stronger advertising and marketing services revenue. - Excluding political advertising, revenue grew 33 percent year-over-year, also at the high end of the range provided in our preliminary fourth quarter results.
- Subscription revenue of
$287 million increased 31 percent year-over-year due to increased subscribers from new stations acquired mid-third quarter, as well as negotiated rate increases. - Net income from continuing operations was
$84 million , down$77 million year-over-year due to the cyclical absence of political revenue, and non-GAAP* net income was$103 million . - GAAP earnings per diluted share were
$0.38 and non-GAAP* earnings per diluted share were$0.47 . - Total company Adjusted EBITDA* was
$229 million , at the high end of the range provided in our preliminary fourth quarter results. Adjusted EBITDA declined$44 million year-over-year, as expected, with the cyclical absence of high-margin political advertising revenue of$140 million in fourth quarter 2018. - Free cash flow was
$111 million or 16 percent of fourth quarter revenue; free cash flow for the year was$376 million or 16 percent of full-year revenue, also exceeding prior guidance. - Recently completed two $1 billion+ debt refinancing offerings, the most recent at 4.625%, lowering annual 2020 interest expense by approximately
$10 million . The Company ended the quarter with total debt of$4.2 billion and net leverage of 4.9x, on track to delever to approximately 4.0x by the end of 2020. - Successfully reached multi-year distribution agreements with Altice,
Comcast , Cox, and Spectrum, repricing 50 percent of our subscribers in the fourth quarter of 2019 and further increasing predictability of future cash flows, with another 35 percent repricing by the end of 2020.
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* See “Use of Non-GAAP Information” below for more detail |
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1 Throughout this earnings release, “acquisitions” includes (1) broadcast stations WTOL in Toledo, OH and KWES in Midland Odessa, TX, (2) multicast networks Justice Network and Quest, (3) the Dispatch Acquisitions, and (4) the Nexstar/Tribune Acquisitions. |
CEO COMMENT
“TEGNA ended the year on a high note, driven by excellent performance across our business and strong momentum from our key growth drivers,” said
“In 2019,
“We have also bolstered our balance sheet by completing two senior note offerings at attractive interest rates, and by extending the term of our revolving credit facility. We remain on track to delever to approximately 4.0x by the end of 2020, increasing our financial flexibility to allow for continued, thoughtful capital deployment that creates value for our shareholders.
“Looking ahead, subscription and political advertising will represent about half of TEGNA’s revenues in the ’19-’20 cycle and higher going forward, and are relatively immune from secular trends. We have repriced roughly half of our subscribers to date and will have repriced 85 percent by the end of this year. The significant rate increases we have locked in for the first year, and subsequent rate escalators for the following years, continue to support our top-of-market Big Four retransmission rates.
“We are more confident than ever that 2020 will be a record year for political advertising, producing at least
“We expect, and are more confident than ever, that
OVERVIEW OF FOURTH QUARTER RESULTS
In analyzing fourth quarter 2019 results, investors should be reminded that TEGNA’s financials are disproportionately impacted by cyclical political advertising. In even numbered years, political spending is always significantly higher than in odd numbered years due to the timing of federal elections.
Total company revenues increased eight percent in the quarter year-over-year, driven by acquisitions, continued growth in subscription revenue, earlier than anticipated onset of political advertising, as well as growth in advertising and marketing services revenue.
Subscription revenue grew 31 percent year-over-year due to rate increases and acquisitions.
Advertising and marketing services revenue increased 35 percent in the quarter compared to last year, benefiting from acquisitions and cyclical political crowd out last year, as well as continued improvement in underlying advertising growth we have seen for much of the year.
GAAP operating expenses were
GAAP operating income totaled
Special items included
Interest expense increased to
OVERVIEW OF FULL YEAR 2019 RESULTS
Total company revenues for the full year totaled
FIRST QUARTER AND FULL YEAR 2020 OUTLOOK
In the first quarter of 2020,
First Quarter 2020 Key Guidance Metrics |
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As Reported 1 |
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Total Company GAAP Revenue |
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+ low-to-mid thirties |
Non-GAAP Revenue (excluding political) |
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+ mid-twenties |
Total Non-GAAP Operating Expenses |
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+ low-to-mid thirties |
Non-GAAP Operating Expenses (excluding programming) |
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+ high twenties |
1 Compares expected results including all acquisitions completed through the fourth quarter of 2019 to results as reported in the first quarter of 2019. |
As announced on
Full Year 2020 Key Guidance Metrics |
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Including All Acquisitions As Reported2 |
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Subscription Revenue |
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+ mid-twenties percent |
Political Revenue |
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>$300 million |
Corporate Expenses |
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$41 - 43 million |
Depreciation |
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$66 - 69 million |
Amortization |
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$73 - 75 million3 |
Interest Expense |
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$220 - 225 million |
Total Capital Expenditures4 |
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$62 - 66 million |
Non-Recurring Cap Ex5 |
$20 - 24 million |
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Effective Tax Rate |
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23.5 - 24.5% |
Leverage Ratio |
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~4.0x by year end (4.6x by mid-year) |
Free Cash Flow as a % of est. combined 2019/20 Revenue |
19 - 20% |
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Free Cash Flow as a % of est. combined 2020/21 Revenue |
19 - 20% |
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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; assumes no additional M&A or share buyback. |
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3 New guidance, previously indicated as “TBD” pending completion of appraisals of the assets and liabilities related to the new acquisitions. |
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4 Prior to reimbursements for repack. |
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5 Approximately $7 million related to repack; the remaining for efficiency projects. |
UPDATE ON KEY FOURTH QUARTER STRATEGIC, CONTENT AND PROGRAMMING INITIATIVES
- Renewed Distribution Agreements - Reached multi-year agreements with Altice,
Comcast , Cox and Spectrum, increasing predictability and strength of our future cash flows. - Launch of Fifth Vault Studios Podcast - In October, Vault Studios announced the launch of a five-episode series “Amy Should Be Forty,” another example of how the studio has leveraged local
TEGNA stations and journalists to create impactful, informative, and entertaining content. - Station Recognized for Achievements in Journalism - In December, KARE 11, TEGNA’s
NBC affiliate inMinneapolis , won two 2020 Alfred I. duPont-Columbia University Awards, among the highest honors given for excellence in journalism. The station received recognition for the documentary “Love Them First: Lessons from Lucy Laney Elementary” and “On the Veterans Beat,” an investigative series.
CAPITAL ALLOCATION AND M&A
TEGNA’s strong balance sheet and disciplined approach to capital allocation provide 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
_________________________
CONFERENCE CALL
FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, including statements with respect to the expected financial results of the company. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify forward-looking statements. Any forward-looking statements contained herein are based on our management’s current beliefs and expectations, but are subject to a number of risks, uncertainties and changes in circumstances, which may cause the company’s actual results or actions to differ materially from what is expressed or implied by these statements. Such statements include, but are not limited to: our confidence in the future performance of the company; our ability to execute on our capital allocation, growth and diversification strategies, including potential mergers and acquisitions; the realization of expected regulatory changes and our ability to monetize new content and grow subscriber revenue. Economic, competitive, governmental, technological and other factors and risks that may affect the company’s operations or financial results expressed in this presentation are discussed in the company’s most recently filed Annual Report on Form 10-K for the fiscal year ended
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 Dec. 31, |
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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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$ |
693,955 |
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$ |
642,136 |
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8.1 |
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Operating expenses: |
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Cost of revenues |
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355,159 |
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|
271,990 |
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|
30.6 |
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Business units - Selling, general and administrative expenses |
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102,959 |
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86,127 |
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19.5 |
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Corporate - General and administrative expenses |
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19,781 |
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|
10,945 |
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|
80.7 |
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Depreciation |
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15,694 |
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|
14,355 |
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9.3 |
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Amortization of intangible assets |
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17,574 |
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|
8,047 |
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*** |
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Spectrum repacking reimbursements and other, net |
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6,064 |
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(2,370 |
) |
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*** |
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Total |
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517,231 |
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389,094 |
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32.9 |
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Operating income |
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176,724 |
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253,042 |
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(30.2 |
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Non-operating income (expense): |
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Equity (loss) in unconsolidated investments, net |
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(773 |
) |
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(1,288 |
) |
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(40.0 |
) |
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Interest expense |
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(60,304 |
) |
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(47,010 |
) |
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28.3 |
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Other non-operating items, net |
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4,998 |
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1,509 |
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*** |
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Total |
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(56,079 |
) |
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(46,789 |
) |
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19.9 |
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Income before income taxes |
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120,645 |
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206,253 |
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(41.5 |
) |
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Provision for income taxes |
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36,690 |
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45,438 |
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(19.3 |
) |
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Net income from continuing operations |
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$ |
83,955 |
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$ |
160,815 |
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(47.8 |
) |
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Earnings from continuing operations per share: |
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Basic |
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$ |
0.39 |
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$ |
0.74 |
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(47.3 |
) |
Diluted |
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$ |
0.38 |
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$ |
0.74 |
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(48.6 |
) |
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Weighted average number of common shares outstanding: |
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Basic shares |
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217,428 |
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216,105 |
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0.6 |
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Diluted shares |
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218,477 |
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216,632 |
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0.9 |
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*** Not meaningful |
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Table No. 1 (continued) |
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Year ended Dec. 31, |
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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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$ |
2,299,497 |
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$ |
2,207,282 |
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4.2 |
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Operating expenses: |
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Cost of revenues |
|
1,228,237 |
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|
1,065,933 |
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15.2 |
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Business units - Selling, general and administrative expenses |
|
326,804 |
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|
315,320 |
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3.6 |
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Corporate - General and administrative expenses |
|
80,144 |
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|
52,467 |
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|
52.8 |
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Depreciation |
|
60,525 |
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|
55,949 |
|
|
8.2 |
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Amortization of intangible assets |
|
50,104 |
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|
30,838 |
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|
62.5 |
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Spectrum repacking reimbursements and other, net |
|
(5,335 |
) |
|
(11,701 |
) |
|
(54.4 |
) |
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Total |
|
1,740,479 |
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|
1,508,806 |
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|
15.4 |
|
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Operating income |
|
559,018 |
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|
698,476 |
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(20.0 |
) |
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Non-operating income (expense): |
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|
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Equity income in unconsolidated investments, net |
|
10,149 |
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|
13,792 |
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(26.4 |
) |
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Interest expense |
|
(205,470 |
) |
|
(192,065 |
) |
|
7.0 |
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Other non-operating items, net |
|
11,960 |
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(11,496 |
) |
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*** |
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Total |
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(183,361 |
) |
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(189,769 |
) |
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(3.4 |
) |
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Income before income taxes |
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375,657 |
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508,707 |
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(26.2 |
) |
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Provision for income taxes |
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89,422 |
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|
107,367 |
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(16.7 |
) |
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Net Income from continuing operations |
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$ |
286,235 |
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$ |
401,340 |
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(28.7 |
) |
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Earnings from continuing operations per share: |
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Basic |
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$ |
1.32 |
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$ |
1.86 |
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(29.0 |
) |
Diluted |
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$ |
1.31 |
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$ |
1.85 |
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(29.2 |
) |
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Weighted average number of common shares outstanding: |
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Basic shares |
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217,138 |
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216,184 |
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0.4 |
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Diluted shares |
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217,977 |
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|
216,621 |
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0.6 |
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*** Not meaningful |
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USE OF NON-GAAP INFORMATION
The company uses non-GAAP financial performance 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, net, gains on sale of equity method investments, acquisition-related costs, professional advisor fees related to an activism defense, severance costs, gains on equity method investments 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, charges 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) professional advisor fees related to activism defense, (8) spectrum repacking reimbursements and other, (9) depreciation and (10) 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.
The Company also provides guidance ranges for non-GAAP Operating Expenses, non-GAAP Operating Expenses (excluding programming), and non-GAAP Corporate Expenses. The Company is not able to reconcile these amounts to their comparable GAAP financial measures without unreasonable efforts because certain information necessary to calculate such measures on a GAAP basis is unavailable, dependent on future events outside of our control and cannot be predicted. Examples of such information include (1) government reimbursement for spectrum repacking, the amount and timing of which are uncertain (2) share based compensation, which is impacted by future share price movement in the Company’s stock price and also dependent on future hiring and attrition (3) expenses related to acquisitions and dispositions, the timing and volume of which cannot be predicted. In addition, the Company believes such reconciliations could imply a degree of precision that might be confusing or misleading to investors. The actual effect of the reconciling items that the Company may exclude from these non-GAAP expense numbers, when determined, may be significant to the calculation of the comparable GAAP measures.
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: |
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Special Items |
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Quarter ended Dec. 31, 2019 |
GAAP measure |
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Severance expense |
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Acquisition- related costs |
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Advisor fees related to activism defense |
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Spectrum repacking reimbursements and other |
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Other non- operating items |
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Special tax items |
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Non- GAAP measure |
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Cost of revenues |
$ |
355,159 |
|
|
$ |
(3,776 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
351,383 |
|
|
|
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Business units - Selling, general and administrative expenses |
102,959 |
|
|
(1,114 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
101,845 |
|
|
|
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Corporate - General and administrative expenses |
19,781 |
|
|
(22 |
) |
|
(1,664 |
) |
|
(6,080 |
) |
|
— |
|
|
— |
|
|
— |
|
|
12,015 |
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Spectrum repacking reimbursements and other, net |
6,064 |
|
|
— |
|
|
— |
|
|
— |
|
|
(6,064 |
) |
|
— |
|
|
— |
|
|
— |
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|||||||||||
Operating expenses |
517,231 |
|
|
(4,912 |
) |
|
(1,664 |
) |
|
(6,080 |
) |
|
(6,064 |
) |
|
— |
|
|
— |
|
|
498,511 |
|
|
|
|||||||||||
Operating income |
176,724 |
|
|
4,912 |
|
|
1,664 |
|
|
6,080 |
|
|
6,064 |
|
|
— |
|
|
— |
|
|
195,444 |
|
|
|
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Other non-operating items, net |
4,998 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,606 |
) |
|
— |
|
|
2,392 |
|
|
|
|||||||||||
Total non-operating expenses |
(56,079 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,606 |
) |
|
— |
|
|
(58,685 |
) |
|
|
|||||||||||
Income before income taxes |
120,645 |
|
|
4,912 |
|
|
1,664 |
|
|
6,080 |
|
|
6,064 |
|
|
(2,606 |
) |
|
— |
|
|
136,759 |
|
|
|
|||||||||||
Provision for income taxes |
36,690 |
|
|
1,237 |
|
|
318 |
|
|
1,472 |
|
|
1,539 |
|
|
(656 |
) |
|
(6,560 |
) |
|
34,040 |
|
|
|
|||||||||||
Net income from continuing operations |
83,955 |
|
|
3,675 |
|
|
1,346 |
|
|
4,608 |
|
|
4,525 |
|
|
(1,950 |
) |
|
6,560 |
|
|
102,719 |
|
|
|
|||||||||||
Net income from continuing operations per share-diluted |
$ |
0.38 |
|
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
0.47 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
Special Items |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Quarter ended Dec. 31, 2018 |
GAAP measure |
|
Spectrum repacking reimbursements and other |
|
Gain on equity method investment |
|
Other non- operating items |
|
Non-GAAP measure |
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Spectrum repacking reimbursements and other, net |
$ |
(2,370 |
) |
|
$ |
2,370 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses |
389,094 |
|
|
2,370 |
|
|
— |
|
|
— |
|
|
391,464 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income |
253,042 |
|
|
(2,370 |
) |
|
— |
|
|
— |
|
|
250,672 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Equity (loss) in unconsolidated investments, net |
(1,288 |
) |
|
— |
|
|
(1,125 |
) |
|
— |
|
|
(2,413 |
) |
|
|
|
|
|
|
|
|
||||||||||||||
Other non-operating items, net |
1,509 |
|
|
— |
|
|
— |
|
|
4,222 |
|
|
5,731 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Total non-operating expenses |
(46,789 |
) |
|
— |
|
|
(1,125 |
) |
|
4,222 |
|
|
(43,692 |
) |
|
|
|
|
|
|
|
|
||||||||||||||
Income before income taxes |
206,253 |
|
|
(2,370 |
) |
|
(1,125 |
) |
|
4,222 |
|
|
206,980 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Provision for income taxes |
45,438 |
|
|
(581 |
) |
|
(282 |
) |
|
2,803 |
|
|
47,378 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income from continuing operations |
160,815 |
|
|
(1,789 |
) |
|
(843 |
) |
|
1,419 |
|
|
159,602 |
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income from continuing operations per share-diluted |
$ |
0.74 |
|
|
$ |
(0.01 |
) |
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Table No. 2 (continued) |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
Special Items |
|
|
|||||||||||||||||||||||||||||||
Year ended Dec. 31, 2019 |
GAAP measure |
|
Severance expense |
|
Acquisition- related costs |
|
Advisor fees related to activism defense |
|
Spectrum repacking reimbursements and other |
|
Gains on equity method investments |
|
Other non- operating items |
|
Special tax items |
|
Non-GAAP measure |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Cost of revenues |
$ |
1,228,237 |
|
|
$ |
(4,651 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,223,586 |
|
|
Business units - Selling, general and administrative expenses |
326,804 |
|
|
(1,490 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
325,314 |
|
||||||||||
Corporate - General and administrative expenses |
80,144 |
|
|
(223 |
) |
|
(30,756 |
) |
|
(6,080 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
43,085 |
|
||||||||||
Spectrum repacking reimbursements and other, net |
(5,335 |
) |
|
— |
|
|
— |
|
|
— |
|
|
5,335 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||||||
Operating expenses |
1,740,479 |
|
|
(6,364 |
) |
|
(30,756 |
) |
|
(6,080 |
) |
|
5,335 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,702,614 |
|
||||||||||
Operating income |
559,018 |
|
|
6,364 |
|
|
30,756 |
|
|
6,080 |
|
|
(5,335 |
) |
|
— |
|
|
— |
|
|
— |
|
|
596,883 |
|
||||||||||
Equity income (loss) in unconsolidated investments, net |
10,149 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13,126 |
) |
|
— |
|
|
— |
|
|
(2,977 |
) |
||||||||||
Other non-operating items, net |
11,960 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,891 |
) |
|
— |
|
|
3,069 |
|
||||||||||
Total non-operating expenses |
(183,361 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13,126 |
) |
|
(8,891 |
) |
|
— |
|
|
(205,378 |
) |
||||||||||
Income before income taxes |
375,657 |
|
|
6,364 |
|
|
30,756 |
|
|
6,080 |
|
|
(5,335 |
) |
|
(13,126 |
) |
|
(8,891 |
) |
|
— |
|
|
391,505 |
|
||||||||||
Provision for income taxes |
89,422 |
|
|
1,596 |
|
|
6,249 |
|
|
1,472 |
|
|
(1,311 |
) |
|
(3,169 |
) |
|
(2,230 |
) |
|
(568 |
) |
|
91,461 |
|
||||||||||
Net income from continuing operations |
286,235 |
|
|
4,768 |
|
|
24,507 |
|
|
4,608 |
|
|
(4,024 |
) |
|
(9,957 |
) |
|
(6,661 |
) |
|
568 |
|
|
300,044 |
|
||||||||||
Net income from continuing operations per share-diluted (a) |
$ |
1.31 |
|
|
$ |
0.02 |
|
|
$ |
0.11 |
|
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.03 |
) |
|
$ |
— |
|
|
$ |
1.38 |
|
|
(a) - Per share amounts do not sum due to rounding. |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
Special Items |
|
|
|
|
|||||||||||||||||||||||||||||
Year ended Dec. 31, 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 |
$ |
1,065,933 |
|
|
$ |
(931 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,065,002 |
|
|
|
|||
Business units - Selling, general and administrative expenses |
315,320 |
|
|
(875 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
314,445 |
|
|
|
|||||||||||
Corporate - General and administrative expenses |
52,467 |
|
|
(5,481 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
46,986 |
|
|
|
|||||||||||
Spectrum repacking reimbursements and other, net |
(11,701 |
) |
|
— |
|
|
11,701 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|||||||||||
Operating expenses |
1,508,806 |
|
|
(7,287 |
) |
|
11,701 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,513,220 |
|
|
|
|||||||||||
Operating income |
698,476 |
|
|
7,287 |
|
|
(11,701 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
694,062 |
|
|
|
|||||||||||
Equity income (loss) in unconsolidated investments, net |
13,792 |
|
|
— |
|
|
— |
|
|
(17,883 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(4,091 |
) |
|
|
|||||||||||
Other non-operating items, net |
(11,496 |
) |
|
— |
|
|
— |
|
|
— |
|
|
19,406 |
|
|
7,498 |
|
|
— |
|
|
15,408 |
|
|
|
|||||||||||
Total non-operating expenses |
(189,769 |
) |
|
— |
|
|
— |
|
|
(17,883 |
) |
|
19,406 |
|
|
7,498 |
|
|
— |
|
|
(180,748 |
) |
|
|
|||||||||||
Income before income taxes |
508,707 |
|
|
7,287 |
|
|
(11,701 |
) |
|
(17,883 |
) |
|
19,406 |
|
|
7,498 |
|
|
— |
|
|
513,314 |
|
|
|
|||||||||||
Provision for income taxes |
107,367 |
|
|
1,714 |
|
|
(1,379 |
) |
|
(4,498 |
) |
|
4,981 |
|
|
1,909 |
|
|
7,007 |
|
|
117,101 |
|
|
|
|||||||||||
Net income from continuing operations |
401,340 |
|
|
5,573 |
|
|
(10,322 |
) |
|
(13,385 |
) |
|
14,425 |
|
|
5,589 |
|
|
(7,007 |
) |
|
396,213 |
|
|
|
|||||||||||
Net income from continuing operations per share-diluted (a) |
$ |
1.85 |
|
|
$ |
0.03 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
0.07 |
|
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
1.83 |
|
|
|
|||
(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 from continuing operations presented in accordance with GAAP on the company's Consolidated Statements of Income are presented below: |
|||||||||||
|
|
||||||||||
|
Quarter ended Dec. 31, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
Net income from continuing operations (GAAP basis) |
$ |
83,955 |
|
|
$ |
160,815 |
|
|
(47.8 |
) |
|
Plus: Provision for income taxes |
36,690 |
|
|
45,438 |
|
|
(19.3 |
) |
|||
Plus: Interest expense |
60,304 |
|
|
47,010 |
|
|
28.3 |
|
|||
Plus: Equity loss in unconsolidated investments, net |
773 |
|
|
1,288 |
|
|
(40.0 |
) |
|||
Plus: Other non-operating items, net |
(4,998 |
) |
|
(1,509 |
) |
|
*** |
||||
Operating income (GAAP basis) |
176,724 |
|
|
253,042 |
|
|
(30.2 |
) |
|||
Plus: Severance expense |
4,912 |
|
|
— |
|
|
*** |
||||
Plus: Acquisition-related costs |
1,664 |
|
|
— |
|
|
*** |
||||
Plus: Professional advisor fees related to activism defense |
6,080 |
|
|
— |
|
|
*** |
||||
Plus (Less): Spectrum repacking reimbursements and other, net |
6,064 |
|
|
(2,370 |
) |
|
*** |
||||
Adjusted operating income (non-GAAP basis) |
195,444 |
|
|
250,672 |
|
|
(22.0 |
) |
|||
Plus: Depreciation |
15,694 |
|
|
14,355 |
|
|
9.3 |
|
|||
Plus: Amortization of intangible assets |
17,574 |
|
|
8,047 |
|
|
*** |
||||
Adjusted EBITDA (non-GAAP basis) |
$ |
228,712 |
|
|
$ |
273,074 |
|
|
(16.2 |
) |
|
Corporate - General and administrative expense (non-GAAP basis) |
12,015 |
|
|
10,945 |
|
|
9.8 |
|
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
240,727 |
|
|
$ |
284,019 |
|
|
(15.2 |
) |
|
|
|
|
|
|
|
||||||
|
Year ended Dec. 31, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
Net income from continuing operations (GAAP basis) |
$ |
286,235 |
|
|
$ |
401,340 |
|
|
(28.7 |
) |
|
Plus: Provision for income taxes |
89,422 |
|
|
107,367 |
|
|
(16.7 |
) |
|||
Plus: Interest expense |
205,470 |
|
|
192,065 |
|
|
7.0 |
|
|||
(Less): Equity income in unconsolidated investments, net |
(10,149 |
) |
|
(13,792 |
) |
|
(26.4 |
) |
|||
Plus: Other non-operating items, net |
(11,960 |
) |
|
11,496 |
|
|
*** |
||||
Operating income (GAAP basis) |
559,018 |
|
|
698,476 |
|
|
(20.0 |
) |
|||
Plus: Severance expense |
6,364 |
|
|
7,287 |
|
|
(12.7 |
) |
|||
Plus: Acquisition-related costs |
30,756 |
|
|
— |
|
|
*** |
||||
Plus: Professional advisor fees related to activism defense |
6,080 |
|
|
— |
|
|
*** |
||||
Less: Spectrum repacking reimbursements and other, net |
(5,335 |
) |
|
(11,701 |
) |
|
(54.4 |
) |
|||
Adjusted operating income (non-GAAP basis) |
596,883 |
|
|
694,062 |
|
|
(14.0 |
) |
|||
Plus: Depreciation |
60,525 |
|
|
55,949 |
|
|
8.2 |
|
|||
Plus: Amortization of intangible assets |
50,104 |
|
|
30,838 |
|
|
62.5 |
|
|||
Adjusted EBITDA (non-GAAP basis) |
$ |
707,512 |
|
|
$ |
780,849 |
|
|
(9.4 |
) |
|
Corporate - General and administrative expense (non-GAAP basis) |
43,085 |
|
|
46,986 |
|
|
(8.3 |
) |
|||
Adjusted EBITDA, excluding Corporate (non-GAAP basis) |
$ |
750,597 |
|
|
$ |
827,835 |
|
|
(9.3 |
) |
|
|
|
|
|
|
|
||||||
*** 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: |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Quarter ended Dec. 31, |
|
Year ended Dec. 31, |
|||||||||||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
|
2019 |
|
2018 |
|
% Increase (Decrease) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Advertising and Marketing Services |
$ |
375,303 |
|
|
$ |
277,116 |
|
|
35.4 |
|
|
$ |
1,226,607 |
|
|
$ |
1,106,754 |
|
|
10.8 |
|
|
Subscription |
286,558 |
|
|
218,456 |
|
|
31.2 |
|
|
1,005,030 |
|
|
840,838 |
|
|
19.5 |
|
|||||
Political |
24,414 |
|
|
139,888 |
|
|
(82.5 |
) |
|
38,478 |
|
|
233,613 |
|
|
(83.5 |
) |
|||||
Other |
7,680 |
|
|
6,676 |
|
|
15.0 |
|
|
29,382 |
|
|
26,077 |
|
|
12.7 |
|
|||||
Total revenues (GAAP basis) |
$ |
693,955 |
|
|
$ |
642,136 |
|
|
8.1 |
|
|
$ |
2,299,497 |
|
|
$ |
2,207,282 |
|
|
4.2 |
|
|
Factors impacting comparisons: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Estimated net incremental Olympic and Super Bowl |
$ |
— |
|
|
$ |
— |
|
|
*** |
|
$ |
(8,000 |
) |
|
$ |
(24,000 |
) |
|
(66.7 |
) |
||
Political |
(24,414 |
) |
|
(139,888 |
) |
|
(82.5 |
) |
|
(38,478 |
) |
|
(233,613 |
) |
|
(83.5 |
) |
|||||
Total company adjusted revenues (non-GAAP basis) |
$ |
669,541 |
|
|
$ |
502,248 |
|
|
33.3 |
|
|
$ |
2,253,019 |
|
|
$ |
1,949,669 |
|
|
15.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
*** Not meaningful |
NON-GAAP FINANCIAL INFORMATION |
|||||||||||
TEGNA Inc. |
|||||||||||
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 Consolidated Statements of Income are presented below: |
|||||||||||
|
|
|
|
|
|
||||||
|
Quarter ended Dec. 31, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
|
|
|
|
|
|
||||||
Net income from continuing operations (GAAP Basis) |
$ |
83,955 |
|
|
$ |
160,815 |
|
|
(47.8 |
) |
|
Plus: Provision for income taxes |
36,690 |
|
|
45,438 |
|
|
(19.3 |
) |
|||
Plus: Interest expense |
60,304 |
|
|
47,010 |
|
|
28.3 |
|
|||
Plus: Acquisition-related costs |
1,664 |
|
|
— |
|
|
*** |
||||
Plus: Depreciation |
15,694 |
|
|
14,355 |
|
|
9.3 |
|
|||
Plus: Amortization |
17,574 |
|
|
8,047 |
|
|
*** |
||||
Plus: Stock-based compensation |
6,259 |
|
|
239 |
|
|
*** |
||||
Plus: Company stock 401(k) contribution |
3,072 |
|
|
— |
|
|
*** |
||||
Plus: Syndicated programming amortization |
18,247 |
|
|
13,200 |
|
|
38.2 |
|
|||
Plus: Severance expense |
4,912 |
|
|
— |
|
|
*** |
||||
Plus: Professional advisor fees related to activism defense |
6,080 |
|
|
— |
|
|
*** |
||||
Plus: Cash dividend from equity investments for return on capital |
573 |
|
|
2,247 |
|
|
(74.5 |
) |
|||
Plus: Equity loss in unconsolidated investments, net |
773 |
|
|
1,288 |
|
|
(40.0 |
) |
|||
Plus: Cash reimbursements from spectrum repacking |
2,999 |
|
|
2,343 |
|
|
28.0 |
|
|||
Less: Other non-operating items, net |
(4,998 |
) |
|
(1,509 |
) |
|
*** |
||||
Plus (Less): Spectrum repacking reimbursements and other, net |
6,064 |
|
|
(2,370 |
) |
|
*** |
||||
Less: Syndicated programming payments |
(18,398 |
) |
|
(14,021 |
) |
|
31.2 |
|
|||
Less: Pension contributions |
(14,694 |
) |
|
(1,044 |
) |
|
*** |
||||
Less: Interest payments |
(68,173 |
) |
|
(60,849 |
) |
|
12.0 |
|
|||
Less: Tax payments, net of refunds |
(10,588 |
) |
|
(11,564 |
) |
|
(8.4 |
) |
|||
Less: Purchases of property and equipment |
(37,125 |
) |
|
(29,949 |
) |
|
24.0 |
|
|||
Free cash flow (non-GAAP basis) |
$ |
110,884 |
|
|
$ |
173,676 |
|
|
(36.2 |
) |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
|||||||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Table No. 5 (continued) |
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Reconciliations of free cash flow to net income presented in accordance with GAAP on the company's Consolidated Statements of Income are presented below: |
|||||||||||
|
|
||||||||||
|
Year ended Dec. 31, |
||||||||||
|
2019 |
|
2018 |
|
% Increase (Decrease) |
||||||
|
|
|
|
|
|
||||||
Net income from continuing operations (GAAP basis) |
$ |
286,235 |
|
|
$ |
401,340 |
|
|
(28.7 |
) |
|
Plus: Provision for income taxes |
89,422 |
|
|
107,367 |
|
|
(16.7 |
) |
|||
Plus: Interest expense |
205,470 |
|
|
192,065 |
|
|
7.0 |
|
|||
Plus: Acquisition-related costs |
30,756 |
|
|
— |
|
|
*** |
||||
Plus: Depreciation |
60,525 |
|
|
55,949 |
|
|
8.2 |
|
|||
Plus: Amortization |
50,104 |
|
|
30,838 |
|
|
62.5 |
|
|||
Plus: Stock-based compensation |
20,146 |
|
|
12,531 |
|
|
60.8 |
|
|||
Plus: Company stock 401(k) contribution |
9,558 |
|
|
— |
|
|
*** |
||||
Plus: Syndicated programming amortization |
60,757 |
|
|
53,435 |
|
|
13.7 |
|
|||
Plus: Pension reimbursements |
— |
|
|
29,240 |
|
|
*** |
||||
Plus: Severance expense |
6,364 |
|
|
7,287 |
|
|
(12.7 |
) |
|||
Plus: Professional advisor fees related to activism defense |
6,080 |
|
|
— |
|
|
*** |
||||
Plus: Cash dividend from equity investments for return on capital |
1,325 |
|
|
13,543 |
|
|
(90.2 |
) |
|||
Plus: Cash reimbursements from spectrum repacking |
16,974 |
|
|
7,400 |
|
|
*** |
||||
(Less) Plus: Other non-operating items, net |
(11,960 |
) |
|
11,496 |
|
|
*** |
||||
Less: Spectrum repacking reimbursements and other, net |
(5,335 |
) |
|
(11,701 |
) |
|
(54.4 |
) |
|||
Less: Equity income in unconsolidated investments, net |
(10,149 |
) |
|
(13,792 |
) |
|
(26.4 |
) |
|||
Less: Syndicated programming payments |
(58,436 |
) |
|
(54,543 |
) |
|
7.1 |
|
|||
Less: Pension contributions |
(23,101 |
) |
|
(45,219 |
) |
|
(48.9 |
) |
|||
Less: Interest payments |
(186,086 |
) |
|
(182,465 |
) |
|
2.0 |
|
|||
Less: Tax payments, net of refunds |
(84,045 |
) |
|
(62,889 |
) |
|
33.6 |
|
|||
Less: Purchases of property and equipment |
(88,356 |
) |
|
(65,230 |
) |
|
35.5 |
|
|||
Free cash flow (non-GAAP basis) |
$ |
376,248 |
|
|
$ |
486,652 |
|
|
(22.7 |
) |
|
|
|
|
|
|
|
||||||
*** Not meaningful |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200211005572/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