TEGNA announces second accelerated share repurchase program
of additional $325 million expected to launch after third quarter
earnings are reported
Commitment this year of more than three-quarters of a billion
dollars in share reductions through accelerated share repurchase
programs and settlement of merger termination fee
TEGNA declares regular quarterly dividend of 11.375 cents per
share, reflecting Board’s previously announced 20 percent
increase
Achieves record second quarter subscription revenue and
sequential improvement in advertising and marketing services
revenue driven by improving trends in key verticals such as
automotive
TEGNA Inc. (NYSE: TGNA) today announced financial results for
the second quarter ended June 30, 2023.
SECOND QUARTER FINANCIAL HIGHLIGHTS1:
- Total company revenue was $732 million in the second quarter,
down seven percent year-over-year, primarily due to the reduction
of political revenue from the mid-term election cycle last year.
- Total company revenue was flat compared to the second quarter
of 2021 primarily due to growth in subscription revenue, offset by
a decline in Advertising and Marketing Services (“AMS”)
revenue.
- Subscription revenue was a second quarter record of $396
million, up two percent year-over-year, driven by contractual rate
increases, partially offset by subscriber declines.
- AMS revenue was $318 million in the second quarter, down five
percent year-over-year. Underlying advertising trends were down
low-single digit percent year-over-year, adjusting for the loss of
a single national Premion account. As addressed last quarter, this
impact will continue to be felt throughout 2023. Overall,
advertising trends in the second quarter showed sequential
improvement compared to the first quarter. Automotive advertising
revenue continued to show strong year-over-year growth for the
fourth consecutive quarter.
- Compared to 2021, second quarter AMS revenue was down seven
percent driven by continued macroeconomic headwinds.
- TEGNA achieved net income of $200 million on a GAAP basis, or
$97 million on a non-GAAP basis.
- Total company Adjusted EBITDA2 was $194 million, representing a
decrease of 24 percent compared to the second quarter of 2022 due
to lower high-margin political revenue and an increase in
programming expenses.
- Second quarter Adjusted EBITDA was down 15 percent compared to
the second quarter of 2021 reflecting macroeconomic headwinds and
higher programming expenses.
- GAAP operating expenses were $450 million, down 20 percent
year-over-year, driven by the merger termination fee of $136
million from Standard General, which is reflected as a reduction to
operating expenses. Non-GAAP operating expenses3 were $565 million,
up one percent year-over-year, with the increase driven primarily
by programming costs, partially offset by operational expense
management improvements.
- Non-GAAP expenses less programming decreased two percent from
the second quarter of 2022.
- GAAP and non-GAAP operating income totaled $282 million and
$166 million, respectively.
- Interest expense was flat year-over-year at $43 million due to
our attractively priced fixed-rate debt.
- GAAP and non-GAAP earnings per diluted share were $0.92 and
$0.44, respectively.
- Free cash flow4 was $112 million for the quarter.
- For the trailing two-year period ending June 30, 2023, free
cash flow as a percentage of revenue was 21.7 percent.
- Total cash and cash equivalents and net leverage at the end of
the quarter were $489 million and 2.57x, respectively.
1 In analyzing second quarter 2023
results, investors should be reminded that TEGNA’s odd-to-even year
results are negatively impacted by the absence of even-year
political revenues.
CAPITAL ALLOCATION
Following our ongoing review of capital allocation priorities
and the incorporation of feedback from our engagement with
shareholders over the past several months, TEGNA’s Board of
Directors approved a second accelerated share repurchase (“ASR”)
program of $325 million, which is expected to commence after our
third quarter earnings are reported in early November. This next
step in TEGNA’s capital allocation review reflects our intention to
continue returning accumulated capital to shareholders and follows
our $300 million ASR program and 20 percent increase to our regular
quarterly dividend announced when we terminated the merger
agreement in May 2023. The initial ASR program reduced shares
outstanding by approximately 15.2 million shares representing 80
percent ($240 million) of the value on June 6, 2023, with final
settlement of approximately 3 million shares based on current
market prices expected to be completed by the end of the third
quarter of 2023.
Additionally, as previously disclosed, Standard General’s $136
million termination fee was satisfied by the transfer of
approximately 8.6 million shares of TEGNA common stock by Standard
General to TEGNA on June 1, 2023.
Taken together, since the termination of the merger agreement,
TEGNA has committed this year to more than three-quarters of a
billion dollars in share repurchases with approximately 45-50
million5 shares that will be retired by end of March 2024, which is
more than twenty percent of shares outstanding prior to these
actions. As of June 30, 2023, TEGNA had retired a total of 23.8
million shares.
Additionally, in July 2023, TEGNA sold a portion of its
investment in MadHive, Inc., receiving cash of approximately $26
million. These proceeds, along with other cash on hand, will be
used to fund the $325 million ASR program.
2 A non-GAAP measure detailed in Table
3
3 A non-GAAP measure detailed in Table
2
4 A non-GAAP measure detailed in Table
5
DIVIDEND ANNOUNCEMENT
TEGNA’s Board of Directors declared a regular quarterly dividend
of 11.375 cents per share, payable on October 2, 2023, to
stockholders of record as of the close of business on September 8,
2023.
In May, TEGNA’s Board approved a 20 percent increase to the
Company’s regular quarterly dividend from 9.5 to 11.375 cents per
share. This increase brings TEGNA’s total dividend payout growth to
63 percent since March 2021.
CEO COMMENT
"Our ability to navigate the changing trends in our industry has
been key to our success. After terminating the merger agreement, we
swiftly transitioned to an offensive strategy focused on
performance, operating efficiency and delivering maximum value to
our shareholders. During the second quarter, we successfully met
the outlook for our key financial metrics, achieved a record second
quarter for subscription revenue and saw sequential improvement in
advertising and marketing services revenue driven by improving
trends in key verticals such as automotive,” said Dave Lougee,
president and chief executive officer. “Automotive, our largest
category within AMS, has steadily recovered and is generating
strong year-over-year growth for the fourth consecutive quarter.
Underlying advertising trends were down low-single digit percent
year-over-year, adjusting for the loss of a single large Premion
national account we discussed last quarter.
“Our high-margin subscription revenue remains a core driver of
our cash flow, with a new second quarter record achieved.
Subscription revenue was up two percent compared to the second
quarter of last year. Looking ahead, we will be repricing
approximately 30 percent of our traditional subscribers at the end
of this year, improving multi-year visibility for a significant
portion of our subscription revenue.
“Our results reflect the strength of our high-quality local
station brands in large and important markets, dependable cash
flows, and a healthy balance sheet with the lowest leverage levels
since we became a pure-play broadcasting company. With no near-term
debt maturities and attractively priced fixed-rate debt, our
balance sheet is among the best in our industry, and we expect to
maintain net leverage below 3.0x.
“We continue to focus on returning accumulated capital to our
shareholders. The additional $325 million ASR program we are
announcing today reflects our methodical approach to return capital
accumulated during the pendency of the merger while re-engaging
with investors to inform our actions to drive shareholder value
over time. We have committed this year to more than three-quarters
of a billion dollars in share repurchases through these two ASR
programs and the settlement of our merger termination fee in
shares.
“Our people play an essential role in our success. As we seek to
attract and develop the highest caliber talent in our industry,
during the quarter, we were proud to welcome our sixth group of
Producer-In-Residence program participants to TEGNA. This program
has grown to one of the largest entry-level producer development
programs in the industry, and we actively recruit diverse
candidates from major journalism schools, regional universities and
colleges and historically black institutions. This is just one of
the ways we are developing the next generation of talent in our
newsrooms. Together with the work we continue to do as part of our
Inclusive Journalism program, we remain committed to fostering new
ways for our newsrooms to engage with and represent our communities
even better.
“Finally, we are honored to be named a 2023 recipient of The
Civic 50 by Points of Light and the Telecommunications Sector
Leader. The Civic 50 honors the most community-minded companies in
the United States and 2023 marks TEGNA’s fourth consecutive year on
the list, and the third year as Telecommunications Sector Leader. I
want to thank all our colleagues for contributing to this honor
that reflects our purpose to serve the greater good of our
communities.”
5 Share retirement projection based on
TEGNA Inc. July 21, 2023, close price of $16.84. Actual share
retirement will depend on future share prices of TEGNA. As a
result, actual share retirement may vary from this projection.
THIRD QUARTER AND FULL-YEAR 2023 OUTLOOK
In the third quarter of 2023, TEGNA expects to be
disproportionately impacted by cyclical even-to-odd year results
due to the absence of $93 million high-margin political revenue
reported in the third quarter of 2022.
TEGNA has updated full-year 2023 net leverage guidance to
reflect the second ASR program of $325 million expected to commence
after our third quarter earnings are reported in early
November.
Third Quarter 2023 Key Guidance
Metrics
Reflects expectations relative to third
quarter 2022 results
Total Company GAAP Revenue
Down Low-Double Digit percent
Total Non-GAAP Operating Expenses
Up Low-Single Digit percent
Non-GAAP Operating Expenses (excluding
programming)
Down Low-Single Digit percent
Full-Year 2023 Key Guidance
Metrics
Corporate Expenses
$40 - 45 million
Depreciation
$60 - 65 million
Amortization
$53 - 54 million
Interest Expense
$170 - 175 million
Capital Expenditures
$55 - 60 million
Effective Tax Rate
23.5 - 24.5%
Net Leverage Ratio
Below 3x
KEY STRATEGIC UPDATES
- TEGNA Station Streaming Apps Now on Apple TV – In June, TEGNA
launched Apple TV streaming apps for all stations. Previously,
station streaming apps were available on Roku and Fire TV. In the
second quarter, station’s streaming apps generated 580 million
minutes on streaming, an 82 percent increase year-over-year. TEGNA
has begun testing station streaming apps for Samsung, LG,
Chromecast and additional platforms, which are expected to launch
in the third quarter.
- Premion Delivers New Advertiser Innovations – Premion continues
its momentum in the fast-growing streaming TV advertising space
with established, proven, and unique sales channels. Premion
sellers reach almost 80 percent of U.S. households driven by the
breadth of TEGNA and Gray’s local salesforce and footprint of local
stations, a unique advantage in selling CTV and OTT. During the
quarter, Premion delivered new advertiser innovations, including
the introduction of sales conversion attribution, which provides
insights into the efficacy of advertising spends, as well as
Premion IQ, a comprehensive customer reporting dashboard that
integrates campaign delivery and outcome metrics for improved
transparency. Premion garnered several industry recognitions during
the quarter, including exceeding industry benchmarks for co-viewing
as measured by a TVision study and earning the CYNOPSIS Measure Up!
Award for Outstanding Brand Safety Strategy and the ITVI Award for
Achievement in Advanced Advertising. (Press Release)
- VERIFY Growth Continues – VERIFY, TEGNA’s national brand that
combats disinformation, ended the second quarter with approximately
446,000 followers across its various dedicated channels including
YouTube, which has seen a 98 percent increase in subscribers over
the past year. In the quarter, unique visitors to VERIFYThis.com
grew 30 percent year-over-year and video views grew 33 percent
year-over-year. Viewership to VERIFY’s weekly “VERIFY This” show
increased for the third consecutive quarter with more than 2.18
million minutes watched across TEGNA station streaming apps during
the second quarter.
- Locked On’s Audience Hits New Audio Download and Video View
Record – Locked On Podcast Network exceeded 24 million monthly
audio downloads and video views for the first time in May 2023. In
the first six months of 2023, total views and listens grew 44
percent year-over-year. The growth in college sports, fueled by
interest in shifting conference alliances and the active transfer
portal, grew Locked On’s daily college podcasts by 149 percent
year-over-year compared to the same period last year. The addition
of video podcasts remains a significant catalyst for growth,
increasing video podcast views by 134 percent year-over-year in the
first half of 2023.
- TEGNA Stations Honored with 84 Regional Edward R. Murrow Awards
– KARE in Minneapolis received 12 individual awards, the most given
this year, and the most in its history. Three stations – KARE, KGW
and WFAA – garnered overall excellence honors. KUSA, KGW and WTIC
received excellence in innovation awards and six stations – KARE,
KING, KUSA, KXTV, News Center Maine and WXIA – received excellence
in diversity, equity and inclusion awards, more than any other
station group. (Press Release)
- Producer-In-Residence Program Welcomes Sixth Class – TEGNA’s
Producer-In-Residence (PIR) program welcomed its sixth class of 49
participants to TEGNA and our stations during the quarter. The
program includes an eight-day producer boot camp followed by two
years of training at one of our local stations. For the 2023
program, 63 percent of participants were represented by people of
color. The program has attained an approximately 80 percent
promotion rate to a regular producer role after completing the PIR
program. 132 current or promoted PIRs are currently creating
content for TEGNA stations.
- Education and Training for the Next Generation of Diverse
Journalists – TEGNA’s Diversity & Inclusion office awarded
grants to more than 30 TEGNA journalists to attend 2023
conferences, including Investigative Reporters & Editors (IRE),
National Association of Black Journalists (NABJ), National
Association of Hispanic Journalists (NAHJ), Native American
Journalists Association (NAJA), NLGJA: The Association of LFBTW
Journalists, Online News Association (ONA), and Asian American
Journalists Association (AAJA). TEGNA Foundation has made nine
Media Grants to support education and training for all journalists
at the following organizations: Asian American Journalists
Association (AAJA), IRE, NABJ, NAHJ, Native American Journalists
Association (NAJA), NLGJA, ONA, Poynter Institute for Media
Studies, Inc. and Radio Television Digital News Foundation. Grants
support student scholarships and programs, FOIA and Media Lawyer
sessions, professional development, NABJ’s Black Male Media
Project, NAHJ’s Emerging Journalists Puerto Rico Summit and
Poynter’s Leadership Academy for Diversity in Media. (Press
Release)
FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements within
the meaning of the “safe harbor” provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements are based on a number of assumptions about future events
and are subject to various risks, uncertainties and other factors
that may cause actual results to differ materially from the views,
beliefs, projections and estimates expressed in such statements.
These risks, uncertainties and other factors include, but are not
limited to, risks and uncertainties related to: changes in the
market price of the Company's shares, general market conditions,
constraints, volatility, or disruptions in the capital markets or
other factors affecting share repurchases, including the Company's
ASR program; the possibility that the Company's ASR program, or any
future share repurchases, may not enhance long-term stockholder
value; the possibility that share repurchases pursuant to the ASR
program could increase the volatility of the price of the Company's
common stock and diminish the Company's cash reserves; legal
proceedings, judgments or settlements; the response of customers,
suppliers and business partners to the termination of the merger
agreement, including impacts on and modifications to the Company's
plans, operations and business relating thereto; difficulties in
employee retention due to the termination of the merger agreement;
the Company's ability to re-price or renew subscribers; potential
regulatory actions; changes in consumer behaviors and impacts on
and modifications to TEGNA's operations and business relating
thereto; and economic, competitive, governmental, technological and
other factors and risks that may affect the Company's operations or
financial results, which are discussed in our Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. Any forward-looking
statements in this press release should be evaluated in light of
these important risk factors. The Company is not responsible for
updating the information contained in this communication beyond the
published date, or for changes made to this press release by wire
services, Internet service providers or other media.
Readers are cautioned not to place undue reliance on
forward-looking statements made by or on behalf of the Company.
Each such statement speaks only as of the day it was made. The
Company undertakes no obligation to update or to revise any
forward-looking statements. The factors described above cannot be
controlled by the Company. When used in this communication, the
words “believes,” “estimates,” “plans,” “expects,” “should,”
“could,” “outlook,” and “anticipates” and similar expressions as
they relate to the Company or its management are intended to
identify forward-looking statements. Forward-looking statements in
this communication may include, without limitation: anticipated
growth rates and the Company's plans, objectives and
expectations.
ADDITIONAL INFORMATION
TEGNA Inc. (NYSE: TGNA) is an innovative media company that
serves the greater good of our communities. Across platforms, TEGNA
tells empowering stories, conducts impactful investigations and
delivers innovative marketing solutions. With 64 television
stations in 51 U.S. markets, TEGNA is the largest owner of top 4
network affiliates in the top 25 markets among independent station
groups, reaching approximately 39 percent of all television
households nationwide. TEGNA also owns leading multicast networks
True Crime Network, Twist and Quest. TEGNA offers innovative
solutions to help businesses reach consumers across television,
digital and over-the-top (OTT) platforms, including Premion,
TEGNA’s OTT advertising service. For more information, visit
www.TEGNA.com.
CONSOLIDATED STATEMENTS OF
INCOME
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 1
Quarter ended June 30,
2023
2022
% Increase
(Decrease)
Revenues
$
731,506
$
784,881
(6.8
)
Operating expenses:
Cost of revenues
430,528
420,235
2.4
Business units - Selling, general and
administrative expenses
97,231
99,585
(2.4
)
Corporate - General and administrative
expenses
26,506
13,612
94.7
Depreciation
14,987
15,534
(3.5
)
Amortization of intangible assets
13,296
14,999
(11.4
)
Asset impairment and other
3,359
(105
)
***
Merger termination fee
(136,000
)
—
***
Total
449,907
563,860
(20.2
)
Operating income
281,599
221,021
27.4
Non-operating (expense) income:
Equity loss in unconsolidated investments,
net
(283
)
(236
)
19.9
Interest expense
(42,797
)
(42,950
)
(0.4
)
Other non-operating items, net
5,781
(1,865
)
***
Total
(37,299
)
(45,051
)
(17.2
)
Income before income taxes
244,300
175,970
38.8
Provision for income taxes
44,207
44,030
0.4
Net income
200,093
131,940
51.7
Net loss (income) attributable to
redeemable noncontrolling interest
12
(371
)
***
Net income attributable to TEGNA
Inc.
$
200,105
$
131,569
52.1
Earnings per share:
Basic
$
0.92
$
0.59
55.9
Diluted
$
0.92
$
0.59
55.9
Weighted average number of common
shares outstanding:
Basic shares
217,830
223,675
(2.6
)
Diluted shares
217,979
224,489
(2.9
)
*** Not meaningful
CONSOLIDATED STATEMENTS OF
INCOME
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 1 (continued)
Six months ended June 30,
2023
2022
% Increase
(Decrease)
Revenues
1,471,833
1,559,004
(5.6
)
Operating expenses:
Cost of revenues
857,460
831,685
3.1
Business units - Selling, general and
administrative expenses
196,340
201,554
(2.6
)
Corporate - General and administrative
expenses
38,606
34,932
10.5
Depreciation
30,036
30,839
(2.6
)
Amortization of intangible assets
26,878
29,999
(10.4
)
Asset impairment and other
3,359
(163
)
***
Merger termination fee
(136,000
)
—
***
Total
1,016,679
1,128,846
(9.9
)
Operating income
455,154
430,158
5.8
Non-operating (expense) income:
Equity loss in unconsolidated investments,
net
(520
)
(4,047
)
(87.2
)
Interest expense
(85,703
)
(86,570
)
(1.0
)
Other non-operating items, net
11,192
15,454
(27.6
)
Total
(75,031
)
(75,163
)
(0.2
)
Income before income taxes
380,123
354,995
7.1
Provision for income taxes
76,026
88,768
(14.4
)
Net income
304,097
266,227
14.2
Net loss (income) attributable to
redeemable noncontrolling interest
311
(424
)
***
Net income attributable to TEGNA
Inc.
$
304,408
$
265,803
14.5
Earnings per share:
Basic
$
1.37
$
1.19
15.1
Diluted
$
1.37
$
1.19
15.1
Weighted average number of common
shares outstanding:
Basic shares
221,168
223,197
(0.9
)
Diluted shares
221,391
223,867
(1.1
)
*** Not meaningful
USE OF NON-GAAP
INFORMATION
The company uses non-GAAP financial performance measures to
supplement the financial information presented on a GAAP basis.
These non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the related GAAP measures,
nor should they be considered superior to the related GAAP
measures, and should be read together with financial information
presented on a GAAP basis. Also, our non-GAAP measures may not be
comparable to similarly titled measures of other companies.
Management and the company’s Board of Directors use non-GAAP
financial measures for purposes of evaluating company performance.
Furthermore, the Leadership Development and 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 also believes these non-GAAP measures
are frequently used by investors, securities analysts and other
interested parties in their evaluation of our business and other
companies in the broadcast industry.
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 asset impairment and
other, M&A-related costs, Merger termination fee, a gain on an
available for sale investment, and an impairment charge recorded
for another investment. In addition, we have excluded certain
income tax special items associated with a valuation allowance on a
deferred tax asset related to an equity method investment and a tax
benefit associated with previously disallowed transaction
costs.
The company believes that such expenses and gains are not
indicative of normal, ongoing operations. While these items 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
attributable to TEGNA before (1) net loss (income) attributable to
redeemable noncontrolling interest, (2) income taxes, (3) interest
expense, (4) equity loss in unconsolidated investments, net, (5)
other non-operating items, net, (6) the Merger termination fee, (7)
M&A-related costs, (8) asset impairment 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 and equipment (and related depreciation expense). The
most directly comparable GAAP financial measure to Adjusted EBITDA
is Net income attributable to TEGNA. 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.
This earnings release also discusses free cash flow, a non-GAAP
performance measure that the Board of Directors uses to review the
performance of the business. Free cash flow is reviewed by the
Board of Directors as a percentage of revenue over a trailing
two-year period (reflecting both an even and odd year reporting
period given the political cyclicality of the business). The most
directly comparable GAAP financial measure to free cash flow is Net
income attributable to TEGNA. Free cash flow is 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)
dividends received from equity method investments, (5)
reimbursements from spectrum repacking and (6) proceeds from
company-owned life insurance policies. 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.
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 2
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:
Special Items
Quarter ended June 30, 2023
GAAP
measure
M&A-related costs
Merger termination fee
Asset impairment and
other
Special tax item
Non-GAAP measure
Corporate - General and administrative
expenses
$
26,506
$
(17,082
)
$
—
$
—
$
—
$
9,424
Asset impairment and other
3,359
—
—
(3,359
)
—
—
Merger termination fee
(136,000
)
—
136,000
—
—
—
Operating expenses
449,907
(17,082
)
136,000
(3,359
)
—
565,466
Operating income
281,599
17,082
(136,000
)
3,359
—
166,040
Income before income taxes
244,300
17,082
(136,000
)
3,359
—
128,741
Provision for income taxes
44,207
4,371
(24,504
)
860
6,443
31,377
Net income attributable to TEGNA Inc.
200,105
12,711
(111,496
)
2,499
(6,443
)
97,376
Earnings per share-diluted (a)
$
0.92
$
0.06
$
(0.51
)
$
0.01
$
(0.03
)
$
0.44
(a) Per share amounts do not sum due to
rounding.
Special Items
Quarter ended June 30, 2022
GAAP
measure
M&A-related costs
Asset impairment and
other
Non-GAAP measure
Corporate - General and administrative
expenses
$
13,612
$
(4,212
)
$
—
$
9,400
Asset impairment and other
(105
)
—
105
—
Operating expenses
563,860
(4,212
)
105
559,753
Operating income
221,021
4,212
(105
)
225,128
Income before income taxes
175,970
4,212
(105
)
180,077
Provision for income taxes
44,030
7
(27
)
44,010
Net income attributable to TEGNA Inc.
131,569
4,205
(78
)
135,696
Earnings per share-diluted (a)
$
0.59
$
0.02
$
—
$
0.60
(a) Per share amounts do not sum due to
rounding.
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 2 (continued)
Special Items
Six months ended June 30, 2023
GAAP
measure
M&A-related costs
Merger termination fee
Asset impairment and
other
Special tax item
Non-GAAP measure
Corporate - General and administrative
expenses
$
38,606
$
(19,848
)
$
—
$
—
$
—
$
18,758
Asset impairment and other
3,359
—
—
(3,359
)
—
—
Merger termination fee
(136,000
)
—
136,000
—
—
—
Operating expenses
1,016,679
(19,848
)
136,000
(3,359
)
—
1,129,472
Operating income
455,154
19,848
(136,000
)
3,359
—
342,361
Income before income taxes
380,123
19,848
(136,000
)
3,359
—
267,330
Provision for income taxes
76,026
4,552
(24,504
)
860
6,443
63,377
Net income attributable to TEGNA Inc.
304,408
15,296
(111,496
)
2,499
(6,443
)
204,264
Earnings per share-diluted (a)
$
1.37
$
0.07
$
(0.50
)
$
0.01
$
(0.03
)
$
0.91
(a) Per share amounts do not sum due to
rounding.
Special Items
Six months ended June 30, 2022
GAAP
measure
M&A-related costs
Asset impairment and
other
Other non-operating
items
Special tax items
Non-GAAP measure
Corporate - General and administrative
expenses
$
34,932
$
(14,446
)
$
—
$
—
$
—
$
20,486
Asset impairment and other
(163
)
—
163
—
—
—
Operating expenses
1,128,846
(14,446
)
163
—
—
1,114,563
Operating income
430,158
14,446
(163
)
—
—
444,441
Other non-operating items, net
15,454
—
—
(18,308
)
—
(2,854
)
Total non-operating expenses
(75,163
)
—
—
(18,308
)
—
(93,471
)
Income before income taxes
354,995
14,446
(163
)
(18,308
)
—
350,970
Provision for income taxes
88,768
38
(41
)
168
(7,117
)
81,816
Net income attributable to TEGNA Inc.
265,803
14,408
(122
)
(18,476
)
7,117
268,730
Earnings per share-diluted
$
1.19
$
0.06
$
—
$
(0.08
)
$
0.03
$
1.20
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 3
Reconciliations of Adjusted EBITDA to net
income presented in accordance with GAAP on the company's
Consolidated Statements of Income are presented below:
Quarter ended June 30,
2023
2022
2021
Net income attributable to TEGNA Inc.
(GAAP basis)
$
200,105
$
131,569
$
106,627
(Less) Plus: Net (loss) income
attributable to redeemable noncontrolling interest
(12
)
371
227
Plus: Provision for income taxes
44,207
44,030
30,986
Plus: Interest expense
42,797
42,950
46,609
Plus: Equity loss in unconsolidated
investments, net
283
236
2,597
(Less) Plus: Other non-operating items,
net
(5,781
)
1,865
(1,524
)
Operating income (GAAP basis)
281,599
221,021
185,522
Plus: M&A-related costs
17,082
4,212
—
Plus: Advisory fees related to activism
defense
—
—
12,012
Plus (Less): Asset impairment and
other
3,359
(105
)
(1,475
)
Less: Merger termination fee
(136,000
)
—
—
Adjusted operating income (non-GAAP
basis)
166,040
225,128
196,059
Plus: Depreciation
14,987
15,534
15,838
Plus: Amortization of intangible
assets
13,296
14,999
15,773
Adjusted EBITDA (non-GAAP basis)
$
194,323
$
255,661
$
227,670
Corporate - General and administrative
expense (non-GAAP basis)
9,424
9,400
11,171
Adjusted EBITDA, excluding Corporate
(non-GAAP basis)
$
203,747
$
265,061
$
238,841
Six months ended June 30,
2023
2022
2021
Net income attributable to TEGNA Inc.
(GAAP basis)
$
304,408
$
265,803
$
219,244
(Less) Plus: Net (loss) income
attributable to redeemable noncontrolling interest
(311
)
424
442
Plus: Provision for income taxes
76,026
88,768
66,600
Plus: Interest expense
85,703
86,570
93,094
Plus: Equity loss in unconsolidated
investments, net
520
4,047
3,926
Less: Other non-operating items, net
(11,192
)
(15,454
)
(1,854
)
Operating income (GAAP basis)
455,154
430,158
381,452
Plus: M&A and acquisition-related
costs
19,848
14,446
—
Plus: Advisory fees related to activism
defense
—
—
16,611
Plus (Less): Asset impairment and
other
3,359
(163
)
(2,898
)
Less: Merger termination fee
(136,000
)
—
—
Adjusted operating income (non-GAAP
basis)
342,361
444,441
395,165
Plus: Depreciation
30,036
30,839
31,734
Plus: Amortization of intangible
assets
26,878
29,999
31,533
Adjusted EBITDA (non-GAAP basis)
$
399,275
$
505,279
$
458,432
Corporate - General and administrative
expense (non-GAAP basis)
18,758
20,486
23,442
Adjusted EBITDA, excluding Corporate
(non-GAAP basis)
$
418,033
$
525,765
$
481,874
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 4
Below is a detail of our primary sources
of revenue presented in accordance with GAAP on company’s
Consolidated Statements of Income. In addition, we show Adjusted
EBITDA and Adjusted EBITDA margins (see non-GAAP reconciliations at
Table No. 3).
Quarter ended June 30,
2023
2022
% Increase
(Decrease)
2021
% Increase
(Decrease)
Subscription
$
396,126
$
389,079
1.8
$
375,081
5.6
Advertising and Marketing Services
317,726
335,259
(5.2
)
340,889
(6.8
)
Political
5,991
50,858
(88.2
)
9,581
(37.5
)
Other
11,663
9,685
20.4
7,357
58.5
Total revenues
$
731,506
$
784,881
(6.8
)
$
732,908
(0.2
)
Adjusted EBITDA
$
194,323
$
255,661
(24.0
)
$
227,670
(14.6
)
Adjusted EBITDA Margin
26.6
%
32.6
%
31.1
%
Six months ended June 30,
2023
2022
% Increase
(Decrease)
2021
% Increase
(Decrease)
Subscription
$
810,406
$
780,733
3.8
$
761,818
6.4
Advertising and Marketing Services
625,571
689,726
(9.3
)
663,723
(5.7
)
Political
11,282
68,823
(83.6
)
19,009
(40.6
)
Other
24,574
19,722
24.6
15,409
59.5
Total revenues
$
1,471,833
$
1,559,004
(5.6
)
$
1,459,959
0.8
Adjusted EBITDA
$
399,275
$
505,279
(21.0
)
$
458,432
(12.9
)
Adjusted EBITDA Margin
27.1
%
32.4
%
31.4
%
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 June 30,
2023
2022
% Increase (Decrease)
Net income attributable to TEGNA Inc.
(GAAP basis)
$
200,105
$
131,569
52.1
Plus: Provision for income taxes
44,207
44,030
0.4
Plus: Interest expense
42,797
42,950
(0.4
)
Plus: M&A-related costs
17,082
4,212
***
Plus: Depreciation
14,987
15,534
(3.5
)
Plus: Amortization
13,296
14,999
(11.4
)
Plus: Stock-based compensation
5,157
6,714
(23.2
)
Plus: Company stock 401(k)
contribution
4,662
4,591
1.5
Plus: Syndicated programming
amortization
17,546
18,461
(5.0
)
Plus: Net income attributable to
redeemable noncontrolling interest
(12
)
371
***
Plus: Equity loss in unconsolidated
investments, net
283
236
19.9
Plus: Reimbursement from company-owned
life insurance policies
—
451
***
Plus: Cash reimbursements from spectrum
repacking
—
105
***
Plus (Less): Asset impairment and
other
3,359
(105
)
***
(Less) Plus: Other non-operating items,
net
(5,781
)
1,865
***
Less: Merger termination fees
(136,000
)
—
***
Less: Income tax payments
(73,458
)
(80,163
)
(8.4
)
Less: Syndicated programming payments
(13,968
)
(15,984
)
(12.6
)
Less: Pension contributions
(959
)
(960
)
(0.1
)
Less: Interest payments
(9,196
)
(9,298
)
(1.1
)
Less: Purchases of property and
equipment
(11,646
)
(17,556
)
(33.7
)
Free cash flow (non-GAAP basis)
$
112,461
$
162,022
(30.6
)
*** Not meaningful
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 5 (continued)
Two-year period ended June 30,
2023
Net income attributable to TEGNA Inc.
(GAAP basis)
$
1,192,588
Plus: Provision for income taxes
347,277
Plus: Interest expense
352,281
Plus: M&A-related costs
44,103
Plus: Depreciation
124,338
Plus: Amortization
118,238
Plus: Stock-based compensation
54,669
Plus: Company stock 401(k)
contribution
36,645
Plus: Syndicated programming
amortization
136,535
Plus: Cash dividend from equity
investments for return on capital
4,238
Plus: Cash reimbursements from spectrum
repacking
827
Plus: Net income attributable to
redeemable noncontrolling interest
1,218
Plus: Reimbursement from Company-owned
life insurance policies
1,929
Plus: Equity income in unconsolidated
investments, net
10,780
Plus: Asset impairment and other
3,627
Less: Other non-operating items, net
(37,594
)
Less: Merger termination fees
(136,000
)
Less: Syndicated programming payments
(134,274
)
Less: Income tax payments, net of
refunds
(307,031
)
Less: Pension contributions
(12,172
)
Less: Interest payments
(339,372
)
Less: Purchases of property and
equipment
(101,279
)
Free cash flow (non-GAAP basis)
$
1,361,571
Revenue
$
6,282,212
Free cash flow as a % of revenue
21.7
%
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 6
Below is a reconciliation of non-GAAP operating expenses to GAAP
operating expenses on the company's Consolidated Statements of
Income:
Quarter ended June 30,
2023
2022
Operating expenses (GAAP basis)
$
449,907
$
563,860
Plus (Less): Special items 1, 2
115,559
(4,107
)
Operating expenses (non-GAAP basis)
565,466
559,753
Less: Programming expenses
(250,116
)
(237,007
)
Operating expenses, less Programming
(non-GAAP basis)
$
315,350
$
322,746
1 Q2 2023 special items include
M&A-related costs, Merger termination fee, and a programming
asset impairment (see Table 2).
2 Q2 2022 special items include
reimbursements from the FCC for required spectrum repacking and
M&A-related costs (see Table 2).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802231373/en/
For media inquiries, contact: Anne Bentley Vice President,
Corporate Communications 703-873-6366 abentley@TEGNA.com
For investor inquiries, contact: Julie Heskett Senior Vice
President, Financial Planning & Analysis 703-873-6747
investorrelations@TEGNA.com
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