TEGNA Inc. Reports First Quarter 2017 Results
Highlights for the first quarter include the following:
-
GAAP earnings per diluted share from continuing operations of
$0.27 . Non-GAAP earnings per diluted share from continuing operations of$0.33 -
Net income from continuing operations was
$58 million ; Adjusted EBITDA totaled $212 million -
Net cash flow from operating activities totaled
$141 million ; free cash flow was$123 million
Martore continued, “2017 is a year of transformation and innovation at
FIRST QUARTER
CONTINUING OPERATIONS
The following table summarizes the year-over-year changes in continuing operations for both GAAP and non-GAAP measures (in thousands).
GAAP | Non-GAAP | |||||||||||
First |
First |
First |
First |
|||||||||
Operating revenue | $ | 778,471 | $ | 781,732 | $ | 778,471 | $ | 781,732 | ||||
Operating expense | 625,095 | 578,363 | 618,773 | 567,965 | ||||||||
Operating income | $ | 153,376 | $ | 203,369 | $ | 159,698 | $ | 213,767 | ||||
Net income from continuing operations attributable to TEGNA | $ | 57,714 | $ | 92,918 | $ | 70,784 | $ | 99,961 | ||||
See Table 3 for reconciliations between non-GAAP measures and the most directly comparable GAAP reported numbers. |
Total company revenues declined slightly in the first quarter of 2017 compared to the first quarter of 2016 as revenue growth in the Media Segment was more than offset by a decline in revenue in the Digital Segment.
On a non-GAAP basis, operating expenses were 8.9 percent higher driven
by an increase in Media Segment expenses. Corporate expenses in the
first quarter of 2017 totaled
Reported operating income was 24.6 percent lower compared to the first
quarter in 2016 while on a non-GAAP basis, operating income declined
25.3 percent. Net income from continuing operations attributable to
Special items in the first quarter of 2017 unfavorably impacted GAAP
results by
FIRST QUARTER
TEGNA MEDIA
The following table summarizes the year-over-year changes in select Media Segment revenue categories (in thousands).
First Quarter Ended | |||||||||
March 31, 2017 | March 31, 2016 | Percentage Change | |||||||
Core (Local & National) | $ | 224,928 | $ | 249,021 | (9.7 | %) | |||
Political | 2,157 | 15,744 | (86.3 | %) | |||||
Retransmission (a) | 182,310 | 146,812 | 24.2 | % | |||||
Digital |
31,742 | 27,718 | 14.5 | % | |||||
Other | 5,173 | 4,534 | 14.1 | % | |||||
Total | $ | 446,310 | $ | 443,829 | 0.6 | % | |||
(a) Reverse compensation to networks is included as part of programming costs. |
Media Segment revenues totaled
Media Segment operating expenses were
Based on current trends, we expect the percentage increase
FIRST QUARTER
TEGNA DIGITAL
Digital Segment revenues declined 1.7 percent in the first quarter
reflecting a modest increase in revenue at
Total revenues at
CareerBuilder revenues declined 1.4 percent (0.8 percent lower on a
constant currency basis) in the first quarter reflecting substantial
growth in its employer services products and human capital software
solutions as well as the acquisitions of Aurico (acquired
Digital Segment operating expenses were
Digital Segment operating income was
FIRST QUARTER
NON-OPERATING AND
CASH FLOW ITEMS
Interest expense was
Other non-operating expense was
Cash flow from operating activities for the first quarter of 2017 was
* * * *
As previously announced, the company will hold an earnings conference
call at
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 of dollars (except per share amounts) |
|||||||||||
Table No. 1 | |||||||||||
First Quarter Ended March 31, 2017 |
First Quarter Ended March 31, 2016 |
% Increase (Decrease) |
|||||||||
Operating revenues: | |||||||||||
Media | $ | 446,310 | $ | 443,829 | 0.6 | ||||||
Digital | 332,161 | 337,903 | (1.7 | ) | |||||||
Total | 778,471 | 781,732 | (0.4 | ) | |||||||
Operating expenses: | |||||||||||
Cost of revenues and operating expenses, exclusive of depreciation | 295,809 | 247,531 | 19.5 | ||||||||
Selling, general and administrative expenses, exclusive of depreciation | 274,998 | 280,309 | (1.9 | ) | |||||||
Depreciation | 23,087 | 22,233 | 3.8 | ||||||||
Amortization of intangible assets | 29,018 | 28,290 | 2.6 | ||||||||
Asset impairment and facility consolidation charges | 2,183 | — | **** | ||||||||
Total | 625,095 | 578,363 | 8.1 | ||||||||
Operating income (a) | 153,376 | 203,369 | (24.6 | ) | |||||||
Non-operating expense: | |||||||||||
Equity (loss) income in unconsolidated investments, net | (1,469 | ) | 2,933 | **** | |||||||
Interest expense | (55,416 | ) | (61,713 | ) | (10.2 | ) | |||||
Other non-operating items (a) | (4,009 | ) | 929 | **** | |||||||
Total | (60,894 | ) | (57,851 | ) | 5.3 | ||||||
Income before income taxes | 92,482 | 145,518 | (36.4 | ) | |||||||
Provision for income taxes | 28,583 | 42,108 | (32.1 | ) | |||||||
Income from continuing operations | 63,899 | 103,410 | (38.2 | ) | |||||||
Net income attributable to noncontrolling interests | (6,185 | ) | (10,492 | ) | (41.1 | ) | |||||
Net income from continuing operations attributable to TEGNA Inc. | $ | 57,714 | $ | 92,918 | (37.9 | ) | |||||
Earnings from continuing operations per share: | |||||||||||
Basic | $ | 0.27 | $ | 0.42 | (35.7 | ) | |||||
Diluted | $ | 0.27 | $ | 0.42 | (35.7 | ) | |||||
Weighted average number of common shares outstanding: | |||||||||||
Basic | 215,305 | 219,286 | (1.8 | ) | |||||||
Diluted | 217,569 | 223,254 | (2.5 | ) | |||||||
Dividends declared per share | $ | 0.14 | $ | 0.14 | — | ||||||
(a) In the first quarter of 2017 we adopted new accounting guidance that changed the classification of certain components of net periodic pension and other postretirement benefit expense (postretirement benefit expense). The service cost component of the postretirement benefit expense will continue to be presented as an operating expense while all other components of postretirement benefit expense will be presented as non-operating expense. The prior year period was adjusted to reflect the effects of applying the new guidance. This resulted in an increase to operating income in first quarter of 2016 of $1.5 million. Net income, earnings per share, and retained earnings was not impacted by the new standard. |
BUSINESS SEGMENT INFORMATION | |||||||||||
TEGNA Inc. |
|||||||||||
Unaudited, in thousands of dollars |
|||||||||||
Table No. 2 | |||||||||||
First Quarter Ended March 31, 2017 |
First Quarter Ended March 31, 2016 |
% Increase
(Decrease) |
|||||||||
Operating revenues: | |||||||||||
Media | $ | 446,310 | $ | 443,829 | 0.6 | ||||||
Digital | 332,161 | 337,903 | (1.7 | ) | |||||||
Total | $ | 778,471 | $ | 781,732 | (0.4 | ) | |||||
Operating income (net of depreciation, amortization, asset impairment and facility consolidation charges): | |||||||||||
Media | $ | 139,624 | $ | 170,358 | (18.0 | ) | |||||
Digital | 28,775 | 47,219 | (39.1 | ) | |||||||
Corporate | (15,023 | ) | (14,208 | ) | 5.7 | ||||||
Total | $ | 153,376 | $ | 203,369 | (24.6 | ) | |||||
Depreciation, amortization, asset impairment and facility consolidation charges: | |||||||||||
Media | $ | 20,000 | $ | 19,441 | 2.9 | ||||||
Digital | 34,051 | 30,361 | 12.2 | ||||||||
Corporate | 237 | 721 | (67.1 | ) | |||||||
Total | $ | 54,288 | $ | 50,523 | 7.5 | ||||||
Adjusted EBITDA (a): | |||||||||||
Media | $ | 160,064 | $ | 200,197 | (20.0 | ) | |||||
Digital | 65,602 | 77,580 | (15.4 | ) | |||||||
Corporate | (13,863 | ) | (13,487 | ) | 2.8 | ||||||
Total | $ | 211,803 | $ | 264,290 | (19.9 | ) | |||||
(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. | |
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, 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 business unit and
consolidated company performance. Furthermore, the Executive
Compensation Committee of our Board of Directors uses non-GAAP measures
such as Adjusted EBITDA, non-GAAP net income, non-GAAP EPS and free cash
flow to evaluate management’s performance. The company, therefore,
believes that each of the non-GAAP measures presented provides useful
information to investors and other stakeholders by allowing them to view
our business through the eyes of management and our Board of Directors,
facilitating comparisons of results across historical periods and focus
on the underlying ongoing operating performance of our business. 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 severance expense, an impairment charge on an
operating asset, costs associated with the
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. The company defines Adjusted EBITDA as net
income from continuing operations attributable to
This earnings release also discusses free cash flow, a non-GAAP liquidity measure. Free cash flow is defined as “net cash flow from operating activities” as reported on the statement of cash flows reduced by “purchase of property and equipment”. The company believes that free cash flow is a useful measure for management and investors to evaluate the level of cash generated by operations and the ability of its operations to fund investments in new and existing businesses, return cash to shareholders under the company’s capital program, repay indebtedness, add to the company’s cash balance, or use in other discretionary activities. Management uses free cash flow to monitor cash available for repayment of indebtedness and in its discussions with the investment community. Like Adjusted EBITDA, free cash flow is not intended to be a measure of cash flow available for management’s discretionary use.
Tabular reconciliations for all of the non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the following tables.
NON-GAAP FINANCIAL INFORMATION |
TEGNA Inc. |
Unaudited, in thousands of dollars (except per share amounts) |
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 |
Special Items |
Non-GAAP |
||||||||||||||||||
First |
Severance |
Operating |
Other non- |
First |
||||||||||||||||
Cost of revenues and operating expenses, exclusive of depreciation | $ | 295,809 | $ | (384 | ) | $ | — | $ | — | $ | 295,425 | |||||||||
Selling general and administrative expenses, exclusive of depreciation | 274,998 | (3,755 | ) | — | — | 271,243 | ||||||||||||||
Asset impairment and facility consolidation charges | 2,183 | — | (2,183 | ) | — | — | ||||||||||||||
Operating expenses | 625,095 | (4,139 | ) | (2,183 | ) | — | 618,773 | |||||||||||||
Operating income | 153,376 | 4,139 | 2,183 | — | 159,698 | |||||||||||||||
Other non-operating (expense) income | (4,009 | ) | — | — | 11,921 | 7,912 | ||||||||||||||
Total non-operating expense | (60,894 | ) | — | — | 11,921 | (48,973 | ) | |||||||||||||
Income before income taxes | 92,482 | 4,139 | 2,183 | 11,921 | 110,725 | |||||||||||||||
Provision for income taxes | 28,583 | 1,582 | 805 | 2,786 | 33,756 | |||||||||||||||
Net income from continuing operations attributable to TEGNA | 57,714 | 2,557 | 1,378 | 9,135 | 70,784 | |||||||||||||||
Net income from continuing operations per share-diluted | $ | 0.27 | $ | 0.01 | $ | 0.01 | $ | 0.04 | $ | 0.33 | ||||||||||
GAAP |
Special Items |
Non-GAAP |
||||||||||||||||||
First |
Severance |
Other non- |
First |
|||||||||||||||||
Cost of revenues and operating expenses, exclusive of depreciation | $ | 247,531 | $ | (6,035 | ) | $ | — | $ | 241,496 | |||||||||||
Selling general and administrative expenses, exclusive of depreciation | 280,309 | (4,363 | ) | — | 275,946 | |||||||||||||||
Operating expenses | 578,363 | (10,398 | ) | — | 567,965 | |||||||||||||||
Operating income | 203,369 | 10,398 | — | 213,767 | ||||||||||||||||
Other non-operating income (expense) | 929 | — | 653 | 1,582 | ||||||||||||||||
Total non-operating expense | (57,851 | ) | — | 653 | (57,198 | ) | ||||||||||||||
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 | ||||||||||||
NON-GAAP FINANCIAL INFORMATION |
TEGNA Inc. |
Unaudited, in thousands of dollars |
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 Ended March 31, 2017: | ||||||||||||||||
Media | Digital | Corporate |
Consolidated |
|||||||||||||
Net income from continuing operations attributable to TEGNA Inc. (GAAP basis) | $ | 57,714 | ||||||||||||||
Net income attributable to noncontrolling interests | 6,185 | |||||||||||||||
Provision for income taxes | 28,583 | |||||||||||||||
Interest expense | 55,416 | |||||||||||||||
Equity loss in unconsolidated investments, net | 1,469 | |||||||||||||||
Other non-operating expense | 4,009 | |||||||||||||||
Operating income (GAAP basis) | $ | 139,624 | $ | 28,775 | $ | (15,023 | ) | $ | 153,376 | |||||||
Severance expense | 440 | 2,776 | 923 | 4,139 | ||||||||||||
Asset impairment and facility consolidation charges | 2,183 | — | — | 2,183 | ||||||||||||
Adjusted operating income (non-GAAP basis) | 142,247 | 31,551 | (14,100 | ) | 159,698 | |||||||||||
Depreciation | 12,428 | 10,422 | 237 | 23,087 | ||||||||||||
Amortization | 5,389 | 23,629 | — | 29,018 | ||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 160,064 | $ | 65,602 | $ | (13,863 | ) | $ | 211,803 | |||||||
First Quarter Ended March 31, 2016: | ||||||||||||||||
Media | Digital | Corporate |
Consolidated |
|||||||||||||
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 investments, net | (2,933 | ) | ||||||||||||||
Other non-operating (income) | (929 | ) | ||||||||||||||
Operating income (GAAP basis) | $ | 170,358 | $ | 47,219 | $ | (14,208 | ) | $ | 203,369 | |||||||
Severance expense | 10,398 | — | — | 10,398 | ||||||||||||
Adjusted operating income (non-GAAP basis) | 180,756 | 47,219 | (14,208 | ) | 213,767 | |||||||||||
Depreciation | 13,748 | 7,764 | 721 | 22,233 | ||||||||||||
Amortization | 5,693 | 22,597 | — | 28,290 | ||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 200,197 | $ | 77,580 | $ | (13,487 | ) | $ | 264,290 | |||||||
Note: Starting in second quarter of 2016, the company revised the method for computing Adjusted EBITDA to no longer treat non-cash rent as a reconciling item. The first quarter 2016 number was updated to conform to this new method that resulted in a $1.6 million reduction to our previously reported first quarter 2016 Adjusted EBITDA. |
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 similar GAAP financial measures. |
First Quarter |
||||
Net cash flow from operating activities | $ | 140,888 | ||
Purchase of property and equipment |
(17,959 | ) | ||
Free cash flow | $ | 122,929 | ||
TAX RATE CALCULATION |
TEGNA Inc. |
Unaudited, in thousands of dollars |
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 Ended March 31, 2017 |
First Quarter Ended March 31, 2016 |
First Quarter Ended March 31, 2017 |
First Quarter Ended March 31, 2016 |
|||||||||||||
Income before taxes (per Table 3) | $ | 92,482 | $ | 145,518 | $ | 110,725 | $ | 156,569 | ||||||||
Noncontrolling interests (per Table 1) | (6,185 | ) | (10,492 | ) | (6,185 | ) | (10,492 | ) | ||||||||
Income before taxes attributable to TEGNA | $ | 86,297 | $ | 135,026 | $ | 104,540 | $ | 146,077 | ||||||||
Provision for income taxes (per Table 3) | $ | 28,583 | $ | 42,108 | $ | 33,756 | $ | 46,116 | ||||||||
Effective tax rate | 33.1 | % | 31.2 | % | 32.3 | % | 31.6 | % | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170509005937/en/
Source:
TEGNA Inc.
For investor inquiries:
Jeffrey Heinz, 703-873-6917
Vice
President, Investor Relations
jheinz@TEGNA.com
or
For
media inquiries:
Anne Bentley, 703-873-6366
Vice President,
Corporate Communications
abentley@TEGNA.com