SEC Filings

TEGNA INC filed this Form 10-Q on 11/08/2018
Entire Document

In the third quarter of 2018 Adjusted EBITDA margin was 36% without corporate expense or 34% with corporate expense. For the nine months ended September 30, 2018, Adjusted EBITDA margin was 35% without corporate or 32% with corporate. Our total Adjusted EBITDA increased $35.9 million or 25% in the third quarter of 2018 compared to 2017 and increased $45.7 million or 10% for the first nine months of 2018 from the prior year comparable period. The increase in the third quarter was primarily driven by the operational factors discussed above within the revenue and operating expense fluctuation explanation sections. Most notably, for the third quarter, the increase was primarily driven by an increase in political and subscription revenues offset by higher programming costs and investments in Premion. For the first nine months of 2018, the Adjusted EBITDA increase of $45.7 million is primarily due to the impact of political, Olympic, and Super Bowl advertising and subscription revenue, partially offset by higher programming costs and investments in Premion.

Free cash flow reconciliation

Our free cash flow, a non-GAAP liquidity measure, was $297.4 million for the first nine months of 2018 compared to $287.9 million for the same period in 2017. Our free cash flow for the first nine months of 2018 was higher than the first nine months of 2017 because of the same factors affecting cash flow from operating activities discussed in the ”Liquidity, Capital Resources and Cash Flows” section below.

Reconciliations from “Net cash flow from operating activities” to “Free cash flow” follow (in thousands):
Nine months ended September 30,
Net cash flow from operating activities


Purchase of property and equipment
Free cash flow


Forward Looking Financial Information

In the fourth quarter of 2018, we expect total revenue will increase 30% to 32% year-over-year, driven by continued strong political advertising and subscription revenue growth. Political revenue is expected to be $144 million for the fourth quarter and approximately $238 million for the full year (up from our previous guidance of $180 million to $200 million), reflecting the central role our strong TEGNA stations play in all local political marketing strategies. Adjusted revenue, excluding political advertising, is expected to be up mid-single digits despite being negatively impacted by political displacement.

Premion remains on pace to achieve full-year revenue guidance of $75 million, excluding Premion political revenue, which is included in total reported political revenue.

We expect fourth quarter non-GAAP operating expenses will increase percentage-wise in the mid-teens year-over-year due to continued growth in programming fees and Premion reinvestments, as well as the fact that the majority of political advertising revenue will be recognized in the fourth quarter of 2018.

We expect our full year Adjusted EBITDA margin to be toward the high end of the previously guided range of 36% to 38%, excluding corporate expenses.

Liquidity, Capital Resources and Cash Flows

Our cash generation capability and financial condition, together with our significant borrowing capacity under our revolving credit agreement, are more than sufficient to fund our capital expenditures, interest expense, dividends, share repurchases, investments in strategic initiatives and other operating requirements. Over the longer term, we expect to continue to fund debt maturities, acquisitions and investments through a combination of cash flows from operations, borrowings under our revolving credit agreement and funds raised in the capital markets.

On June 21, 2018, we amended our Amended and Restated Competitive Advance and Revolving Credit Agreement. Under the amended terms, the $1.51 billion of revolving credit commitments and letter of credit commitments have been extended until June 21, 2023. The amendment also extended our permitted total leverage ratio of 5.0x from June 21, 2018 through the end of the fiscal quarter ending June 30, 2019, reducing to 4.75x for the fiscal quarter ending September 30, 2019 through the end of the fiscal quarter ending June 30, 2020, and then reducing to 4.50x for the fiscal quarter ending September 30, 2020 and thereafter.
On February 15, 2018, we borrowed $220.0 million under the revolving credit facility primarily to finance the acquisition of KFMB. At the end of the third quarter of 2018, our total debt was $3.01 billion and cash and cash equivalents totaled $23.8 million.