TEGNA Inc. Reports 2016 First Quarter Results
Highlights for the first quarter include the following:
-
GAAP earnings from continuing operations of
$0.42 per diluted share. Non-GAAP earnings from continuing operations of$0.45 per diluted share, an 88 percent year-over-year increase - Total company revenue up 7 percent and over 8 percent on a pro forma basis driven by strong Media and Digital Segment performances
- Media Segment revenues 12 percent higher driven by robust growth in retransmission revenue and record first quarter political advertising revenue
- Digital Segment revenues up over 4 percent on a pro forma, constant currency basis
-
Adjusted EBITDA totaled
$264 million , a 16 percent increase -
Strong free cash flow totaled
$111 million
Martore added, "Continued innovation has made us a more highly-focused, growth-driven media and digital company as we've made it our goal to be at the forefront of the evolving content consumption landscape. We continue to be extraordinarily well positioned for the rest of 2016 and beyond."
FIRST QUARTER
CONTINUING OPERATIONS
The following table summarizes the year-over-year changes in select financial categories for both GAAP and non-GAAP measures.
Continuing Operations | ||||||||||||
(Dollars in thousands) |
||||||||||||
GAAP | Non-GAAP | |||||||||||
First |
First |
First |
First |
|||||||||
Operating revenue | $ | 781,732 | $ | 731,491 | $ | 781,732 | $ | 731,491 | ||||
Operating expense | 579,813 | 549,019 | 569,415 | 555,807 | ||||||||
Operating income | $ | 201,919 | $ | 182,472 | $ | 212,317 | $ | 175,684 | ||||
Net income from continuing operations attributable to TEGNA | $ | 92,918 | $ | 69,412 | $ | 99,961 | $ | 55,396 | ||||
See Table 3 for reconciliations between non-GAAP measures and the most directly comparable GAAP reported numbers. |
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Total company GAAP revenues were 6.9 percent higher in the first quarter compared to the first quarter of 2015. On a pro forma basis, which adjusts for the impact of a business sold last year, company revenues were up 8.3 percent. Media Segment revenues rose 12.0 percent driven by substantially higher retransmission and political revenue. Digital Segment revenues were 4.1 percent higher on a pro forma, constant currency basis.
First quarter non-GAAP operating expenses rose 2.4 percent as an
increase in Media Segment expenses offset a significant decline in
corporate expenses and the absence of publishing-related unallocated
costs. Corporate expenses totaled
Operating income on a non-GAAP basis was 20.9 percent higher compared to
the first quarter in 2015. Adjusted EBITDA (a non-GAAP term detailed in
Table 4) totaled
Special items in the first quarter of 2016 unfavorably impacted GAAP
results by
FIRST QUARTER
TEGNA MEDIA
Media Segment revenues were 12.0 percent higher driven by double-digit
increases in retransmission revenues and online revenues and bolstered
by
The following table summarizes the year-over-year changes in select Media Segment revenue categories.
Media Segment Revenue Detail | ||||||
(Dollars in thousands) | ||||||
First Quarter |
Percentage
from First Quarter |
|||||
Core (Local & National) | $ | 249,021 | (1.6 | %) | ||
Political | 15,744 | 666.7 | % | |||
Retransmission (a) | 146,812 | 33.2 | % | |||
Online | 27,718 | 16.4 | % | |||
Other | 4,534 | (37.5 | %) | |||
Total | $ | 443,829 | 12.0 | % | ||
(a) Reverse compensation to networks is included as part of programming costs. | ||||||
Media Segment non-GAAP operating expenses totaled
Based on current trends, we expect increases in retransmission revenue, political advertising and digital revenue to result in Media Segment revenue growth of 10 percent to 12 percent for the second quarter of 2016, compared to the second quarter of 2015. However, revenue growth will, in part, be dependent on the timing of political spending in the second quarter.
FIRST QUARTER
TEGNA DIGITAL
The following table reconciles Digital Segment revenues reported on a GAAP basis to revenues presented on a pro forma, constant currency basis (a non-GAAP measure).
(Dollars in thousands) | First Quarter | ||||||||
2016 | 2015 |
Percentage |
|||||||
Digital Segment Revenue | |||||||||
Reported (GAAP Measure) | $ | 337,903 | $ | 335,074 | 0.8% | ||||
Adjust for business sold | (9,561 | ) | |||||||
Constant currency impact | 132 | (659 | ) | ||||||
Total adjusted pro-forma revenue | $ | 338,035 | $ | 324,854 | 4.1% | ||||
The revenue increase in the Digital Segment was driven by continued growth at Cars.com offset, in part, by revenue declines at CareerBuilder and the impact of the sale of our PointRoll business. On a pro forma, constant currency basis, Digital Segment revenues were 4.1 percent higher.
Cars.com revenues sold directly by the company were up 9.4 percent. Including the impact of affiliate revenue performance, revenues were 5.9 percent higher. The increase in direct sales was driven primarily by dealer market penetration and new product sales.
CareerBuilder revenue was 2.3 percent lower in the first quarter, a sequential improvement from a 5.1 percent decline in the fourth quarter of 2015. CareerBuilder results continued to be impacted by the transition to a greater concentration of SaaS products and away from lower margin, transaction-based businesses. On a constant currency basis, CareerBuilder revenue was 1.8 percent lower.
Non-GAAP expenses in the Digital Segment were
Digital Segment operating income was
FIRST QUARTER
NON-OPERATING AND
CASH FLOW ITEMS
Interest expense totaled
The decline in reported other non-operating items reflects primarily a
gain on the sale of a business in the first quarter of 2015. Other
non-operating items on a non-GAAP basis in the first quarter totaled
In the first quarter, the company implemented the early adoption of a
new accounting standard that changes certain aspects of the accounting
for employee share-based payments. As a result, all excess tax benefits
and tax deduction shortfalls will now be recognized as income tax
expense or benefit in the income statement. The adoption of this
accounting standard increased diluted earnings per share by
Cash flow from operating activities for the first quarter was
* * * *
As previously announced, the company will hold an earnings conference
call at
About
Certain statements in this press release may be forward looking in
nature or “forward looking statements” as defined in the Private
Securities Litigation Reform Act of 1995. The forward looking statements
contained in this press release are subject to a number of risks, trends
and uncertainties that could cause actual performance to differ
materially from these forward looking statements. A number of those
risks, trends and uncertainties are discussed in the company's
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
Continuing Operations | |||||||||||
TEGNA Inc. |
|||||||||||
Unaudited, in thousands (except per share amounts) |
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Table No. 1 | |||||||||||
First Quarter |
First Quarter |
% Increase |
|||||||||
Operating revenues: | |||||||||||
Media | $ | 443,829 | $ | 396,417 | 12.0 | ||||||
Digital | 337,903 | 335,074 | 0.8 | ||||||||
Total | 781,732 | 731,491 | 6.9 | ||||||||
Operating expenses: | |||||||||||
Cost of revenues and operating expenses, exclusive of depreciation | 248,256 | 226,577 | 9.6 | ||||||||
Selling, general and administrative expenses, exclusive of depreciation | 281,034 | 264,751 | 6.2 | ||||||||
Depreciation | 22,233 | 24,279 | (8.4 | ) | |||||||
Amortization of intangible assets | 28,290 | 28,688 | (1.4 | ) | |||||||
Facility consolidation | — | 4,724 | (100.0 | ) | |||||||
Total | 579,813 | 549,019 | 5.6 | ||||||||
Operating income | 201,919 | 182,472 | 10.7 | ||||||||
Non-operating (expense) income: | |||||||||||
Equity income (loss) in unconsolidated investees, net | 2,933 | (1,249 | ) | **** | |||||||
Interest expense | (61,713 | ) | (70,670 | ) | (12.7 | ) | |||||
Other non-operating items | 2,379 | 24,464 | (90.3 | ) | |||||||
Total | (56,401 | ) | (47,455 | ) | 18.9 | ||||||
Income before income taxes | 145,518 | 135,017 | 7.8 | ||||||||
Provision for income taxes | 42,108 | 51,015 | (17.5 | ) | |||||||
Income from continuing operations | 103,410 | 84,002 | 23.1 | ||||||||
Net income attributable to noncontrolling interests | (10,492 | ) | (14,590 | ) | (28.1 | ) | |||||
Net income from continuing operations attributable to TEGNA Inc. | $ | 92,918 | $ | 69,412 | 33.9 | ||||||
Earnings from continuing operations per share: | |||||||||||
Basic | $ | 0.42 | $ | 0.31 | 35.5 | ||||||
Diluted | $ | 0.42 | $ | 0.30 | 40.0 | ||||||
Weighted average number of common shares outstanding: | |||||||||||
Basic | 219,286 | 227,089 | (3.4 | ) | |||||||
Diluted | 223,254 | 231,931 | (3.7 | ) | |||||||
Dividends declared per share | $ | 0.14 | $ | 0.20 | (30.0 | ) | |||||
BUSINESS SEGMENT INFORMATION | |||||||||||
TEGNA Inc. |
|||||||||||
Unaudited, in thousands of dollars |
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Table No. 2 | |||||||||||
First Quarter |
First Quarter |
% Increase (Decrease) |
|||||||||
Operating revenues: | |||||||||||
Media | $ | 443,829 | $ | 396,417 | 12.0 | ||||||
Digital | 337,903 | 335,074 | 0.8 | ||||||||
Total | $ | 781,732 | $ | 731,491 | 6.9 | ||||||
Operating income (net of depreciation, amortization and facility consolidation and asset impairment charges): | |||||||||||
Media | $ | 169,299 | $ | 176,880 | (4.3 | ) | |||||
Digital | 47,219 | 48,181 | (2.0 | ) | |||||||
Corporate | (14,599 | ) | (18,860 | ) | (22.6 | ) | |||||
Unallocated costs (b) | — | (23,729 | ) | (100.0 | ) | ||||||
Total | $ | 201,919 | $ | 182,472 | 10.7 | ||||||
Depreciation, amortization and facility consolidation: | |||||||||||
Media | $ | 19,441 | $ | 21,261 | (8.6 | ) | |||||
Digital | 30,361 | 33,709 | (9.9 | ) | |||||||
Corporate | 721 | 2,721 | (73.5 | ) | |||||||
Total | $ | 50,523 | $ | 57,691 | (12.4 | ) | |||||
Adjusted EBITDA (a): | |||||||||||
Media | $ | 199,138 | $ | 185,780 | 7.2 | ||||||
Digital | 77,580 | 82,739 | (6.2 | ) | |||||||
Corporate | (12,228 | ) | (16,139 | ) | (24.2 | ) | |||||
Unallocated costs (b) | — | (23,729 | ) | (100.0 | ) | ||||||
Total | $ | 264,490 | $ | 228,651 | 15.7 | ||||||
(a) |
"Adjusted EBITDA" is a non-GAAP measure used by management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. The definition of "Adjusted EBITDA" is provided in the section "Use of Non-GAAP Information" and Table No. 4 provides reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income. |
|
(b) |
Unallocated expenses represent certain expenses that historically were allocated to the former Publishing Segment but that could not be allocated to discontinued operations because they were not clearly and specifically identifiable to the spun-off businesses, the accounting criteria for reclassification to discontinued operations. |
|
USE OF NON-GAAP INFORMATION
The company uses non-GAAP financial performance and liquidity 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, and should be read together with financial information presented on a GAAP basis.
The company discusses in this report non-GAAP financial performance measures that exclude from its reported GAAP results the impact of special items consisting of workforce restructuring charges, facility consolidation charges, certain gains and expenses recognized in operating and non-operating categories and a credit to our income tax provision. The company believes that such expenses, charges and gains are not indicative of normal, ongoing operations and their inclusion in results makes for more difficult comparisons between years.
The company also discusses Adjusted EBITDA, a non-GAAP financial
performance measure that it believes offers a useful view of the overall
operation of its businesses. Adjusted EBITDA is defined as net income
from continuing operations attributable to
Management uses non-GAAP financial performance measures for purposes of evaluating business unit and consolidated company performance. The company, therefore, believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view our businesses through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its businesses. Tabular reconciliations for the non-GAAP financial measures are contained in Tables 3 through 6 attached to this news release.
NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||||||||||||
TEGNA Inc. |
||||||||||||||||||||||||||||
Unaudited, in thousands of dollars (except per share amounts) |
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Table No. 3 | ||||||||||||||||||||||||||||
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 condensed consolidated statements of income follow: | ||||||||||||||||||||||||||||
GAAP Measure |
Special Items |
Non-GAAP Measure |
||||||||||||||||||||||||||
First |
Primarily restructuring |
Non- |
First Quarter |
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Cost of revenues and operating expenses, exclusive of depreciation | $ | 248,256 | $ | (6,035 | ) | $ | — | $ | 242,221 | |||||||||||||||||||
Selling general and administrative expenses, exclusive of depreciation | 281,034 | (4,363 | ) | — | 276,671 | |||||||||||||||||||||||
Operating expenses | 579,813 | (10,398 | ) | — | 569,415 | |||||||||||||||||||||||
Operating income | 201,919 | 10,398 | — | 212,317 | ||||||||||||||||||||||||
Other non-operating items | 2,379 | — | 653 | 3,032 | ||||||||||||||||||||||||
Total non-op (expense) income | (56,401 | ) | — | 653 | (55,748 | ) | ||||||||||||||||||||||
Income before income taxes | 145,518 | 10,398 | 653 | 156,569 | ||||||||||||||||||||||||
Provision for income taxes | 42,108 | 4,008 | — | 46,116 | ||||||||||||||||||||||||
Net income from continuing operations attributable to TEGNA | 92,918 | 6,390 | 653 | 99,961 | ||||||||||||||||||||||||
Net income from continuing operations per share-diluted | $ | 0.42 | $ | 0.03 | $ | — | $ | 0.45 | ||||||||||||||||||||
GAAP Measure |
Special Items |
Non- |
||||||||||||||||||||||||||
First |
Workforce restructuring |
Facility |
Building sale |
Non- |
Special tax |
First |
||||||||||||||||||||||
Cost of revenues and operating expenses, exclusive of depreciation | $ | 226,577 | $ | (1,017 | ) | $ | — | $ | 12,709 | $ | — | $ | — | $ | 238,269 | |||||||||||||
Selling general and administrative expenses, exclusive of depreciation | 264,751 | (180 | ) | — | — | — | — | 264,571 | ||||||||||||||||||||
Facility consolidation | 4,724 | — | (4,724 | ) | — | — | — | — | ||||||||||||||||||||
Operating expenses | 549,019 | (1,197 | ) | (4,724 | ) | 12,709 | — | — | 555,807 | |||||||||||||||||||
Operating income | 182,472 | 1,197 | 4,724 | (12,709 | ) | — | — | 175,684 | ||||||||||||||||||||
Other non-operating items | 24,464 | — | — | — | (25,680 | ) | — | (1,216 | ) | |||||||||||||||||||
Total non-op (expense) income | (47,455 | ) | — | — | — | (25,680 | ) | — | (73,135 | ) | ||||||||||||||||||
Income before income taxes | 135,017 | 1,197 | 4,724 | (12,709 | ) | (25,680 | ) | — | 102,549 | |||||||||||||||||||
Provision for income taxes | 51,015 | 445 | 1,757 | (4,726 | ) | (16,318 | ) | 390 | 32,563 | |||||||||||||||||||
Net income from continuing operations attributable to TEGNA | 69,412 | 752 | 2,967 | (7,983 | ) | (9,362 | ) | (390 | ) | 55,396 | ||||||||||||||||||
Net income from continuing operations per share - diluted | $ | 0.30 | $ | — | $ | 0.01 | $ | (0.03 | ) | $ | (0.04 | ) | $ | — | $ | 0.24 | ||||||||||||
NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||||
TEGNA Inc. |
||||||||||||||||||||
Unaudited, in thousands of dollars |
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Table No. 4 | ||||||||||||||||||||
Reconciliations of Adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income follow: | ||||||||||||||||||||
First Quarter 2016: | ||||||||||||||||||||
Media | Digital | Corporate |
Consolidated Total |
|||||||||||||||||
Net income from continuing operations attributable to TEGNA Inc. (GAAP basis) | $ | 92,918 | ||||||||||||||||||
Net income attributable to noncontrolling interests | 10,492 | |||||||||||||||||||
Provision for income taxes | 42,108 | |||||||||||||||||||
Interest expense | 61,713 | |||||||||||||||||||
Equity (income) in unconsolidated investees, net | (2,933 | ) | ||||||||||||||||||
Other non-operating (income) items, net | (2,379 | ) | ||||||||||||||||||
Operating income (GAAP basis) | $ | 169,299 | $ | 47,219 | $ | (14,599 | ) | $ | 201,919 | |||||||||||
Primarily workforce restructuring | 10,398 | — | — | 10,398 | ||||||||||||||||
Adjusted operating income (non-GAAP basis) | 179,697 | 47,219 | (14,599 | ) | 212,317 | |||||||||||||||
Depreciation | 13,748 | 7,764 | 721 | 22,233 | ||||||||||||||||
Amortization | 5,693 | 22,597 | — | 28,290 | ||||||||||||||||
Non-cash rent | — | — | 1,650 | 1,650 | ||||||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 199,138 | $ | 77,580 | $ | (12,228 | ) | $ | 264,490 | |||||||||||
First Quarter 2015: | ||||||||||||||||||||
Media | Digital | Corporate |
Unallocated |
Consolidated Total |
||||||||||||||||
Net income from continuing operations attributable to TEGNA Inc. (GAAP basis) | $ | 69,412 | ||||||||||||||||||
Net income attributable to noncontrolling interests | 14,590 | |||||||||||||||||||
Provision for income taxes | 51,015 | |||||||||||||||||||
Interest expense | 70,670 | |||||||||||||||||||
Equity loss in unconsolidated investees, net | 1,249 | |||||||||||||||||||
Other non-operating items | (24,464 | ) | ||||||||||||||||||
Operating income (GAAP basis) | $ | 176,880 | $ | 48,181 | $ | (18,860 | ) | $ | (23,729 | ) | $ | 182,472 | ||||||||
Workforce restructuring | 348 | 849 | — | — | 1,197 | |||||||||||||||
Facility consolidation | 2,367 | 2,357 | — | — | 4,724 | |||||||||||||||
Building sale gain | (12,709 | ) | — | — | — | (12,709 | ) | |||||||||||||
Adjusted operating income (non-GAAP basis) | 166,886 | 51,387 | (18,860 | ) | (23,729 | ) | 175,684 | |||||||||||||
Depreciation | 13,296 | 8,262 | 2,721 | — | 24,279 | |||||||||||||||
Amortization | 5,598 | 23,090 | — | — | 28,688 | |||||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 185,780 | $ | 82,739 | $ | (16,139 | ) | $ | (23,729 | ) | $ | 228,651 | ||||||||
NON-GAAP FINANCIAL INFORMATION | |
TEGNA Inc. |
|
Unaudited, in thousands of dollars |
|
Table No. 5 | |
"Free cash flow" is a non-GAAP liquidity measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of GAAP financial measures. | |
First Quarter |
||||
Net cash flow from operating activities | $ | 127.1 | ||
Purchase of property, plant and equipment | (16.5 | ) | ||
Free cash flow | $ | 110.6 | ||
TAX RATE CALCULATION | ||||||||||||||||
TEGNA Inc. |
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Unaudited, in thousands of dollars |
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Table No. 6 | ||||||||||||||||
The calculations of the company's effective tax rate on a GAAP and non-GAAP basis are below: | ||||||||||||||||
GAAP | Non-GAAP | |||||||||||||||
First Quarter |
First Quarter |
First Quarter |
First Quarter |
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Income before taxes (per Table 3) | $ | 145,518 | $ | 135,017 | $ | 156,569 | $ | 102,549 | ||||||||
Noncontrolling interests (per Table 1) | (10,492 | ) | (14,590 | ) | (10,492 | ) | (14,590 | ) | ||||||||
Income before taxes attributable to TEGNA | $ | 135,026 | $ | 120,427 | $ | 146,077 | $ | 87,959 | ||||||||
Provision for income taxes (per Table 3) | $ | 42,108 | $ | 51,015 | $ | 46,116 | $ | 32,563 | ||||||||
Effective tax rate | 31.2 | % | 42.4 | % | 31.6 | % | 37.0 | % | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160427005894/en/
Source:
TEGNA Inc.
For investor inquiries, contact:
Jeffrey Heinz
Vice
President, Investor Relations
703-854-6917
jheinz@TEGNA.com
or
For
media inquiries, contact:
Steve Kidera
Corporate Communications
703-854-6077
skidera@TEGNA.com