StockSelector.com
  Research, Select, & Monitor Tuesday, July 17, 2018 11:15:40 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
TEGNA Inc.$10.94($.19)(1.71%)

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 TEGNA Inc. Reports 2017 Fourth Quarter and Full-Year Results
   Thursday, March 01, 2018 7:30:01 AM ET

TEGNA Inc. (TGNA ) today announced financial results for the fourth quarter and full-year ended December 31, 2017.

Financial highlights for the fourth quarter:

-- Revenue was nine percent higher year-over-year on a non-GAAP* comparable basis driven by subscription revenue and growth initiatives; total company revenue from continuing operations declined 10 percent year-over-year due to the cyclical absence of political revenue as well as terminated digital businesses as reported in the prior two quarters.

-- GAAP earnings per diluted share from continuing operations were $1.40. Non-GAAP* earnings per diluted share from continuing operations were $0.32.

-- Acquired KFMB, the CBS-affiliated station in San Diego, KFMB-D2 (CW) and radio broadcast stations KFMB-AM and KFMB-FM in San Diego for $325 million in cash, which closed last month.

-- As a result of tax legislation passed in December 2017, TEGNA reported a one-time deferred tax benefit for the fourth quarter of $221 million. TEGNA expects that its cash taxes will decline by approximately $35 million in 2018 as a result of the new legislation, and plans to reinvest these proceeds to pursue organic and inorganic growth opportunities during 2018. The company expects the effective tax rate for 2018 will be 23 to 25 percent, including the impact of both federal and state tax rates.

Financial highlights for the full year 2017:

-- Full-year revenue grew seven percent year-over-year on a non-GAAP* comparable basis driven by subscription revenue and growth initiatives; total company revenue from continuing operations was five percent lower year-over-year due primarily to the cyclical absence of political and Olympics revenue as well as terminated digital businesses.

-- Full-year GAAP earnings from continuing operations of $2.06 per diluted share. Non-GAAP* earnings from continuing operations were $1.08.

-- Adjusted EBITDA* totaled $631.4 million resulting in an adjusted EBITDA margin of 33 percent.

-- Completed the successful spin-off of Cars.com and received a tax-free distribution of $650 million which was used to reduce debt; and sale of CareerBuilder for gross proceeds of $250 million in cash which was used to reduce debt, and retained 12 percent ownership on a diluted basis and two board seats.

* See "Use of Non-GAAP Information" below for more details

"TEGNA in 2017 became a pure-play media company, and this focus and strategic clarity has produced tangible results. Fourth quarter revenue grew nine percent and full-year revenue grew seven percent on a comparable basis on the strength of our growth in subscription revenue and innovation initiatives," said Dave Lougee, president and chief executive officer, TEGNA. "On top of our financial performance, our content transformation efforts produced multiple new formats, original programs and digital-first investigations, earning us more national honors than any other local broadcaster, as we continue to execute on our strategy of redefining local journalism in the digital age. Organic growth initiatives, such as Premion, an innovative solution for over-the-top (OTT) advertising that reaches cord cutters, are expanding our revenue base and giving us access to new markets."

Lougee continued, "As we begin 2018, our NBC stations took the number one spot among all NBC affiliates during the Super Bowl for ratings in Buffalo and share in Minneapolis. In the key adults 25-54 demographic, TEGNA stations had four of the top ten spots in ratings. For the Olympics, TEGNA stations held four of the top seven spots in ratings among all NBC affiliates in the key adults 25-54 demographic, and our stations in Denver and Minneapolis took the number one and two spots, respectively.

"Our acquisition of Midwest Television’s broadcasting stations in San Diego, the 29th largest U.S. TV market, will further strengthen our portfolio of Big 4 affiliates in top markets. Our strong balance sheet gives us the flexibility to continue to invest opportunistically in both organic and inorganic growth, and our culture and scale position us to continue to create value for our shareholders, customers, and audiences," Lougee concluded.

Further highlights from 2017:

-- Subscription revenue growth - Year-over-year growth in subscription revenue of 23 percent provided a stable, significant driver of free cash flow. TEGNA began to see revenue and subscriber growth from recently signed OTT streaming services for the first time during the fourth quarter, which reflects the strength of our content, geographic footprint and audience.

-- OTT advertising business acceleration - Premion executed more than 8,000 campaigns serving 1,000+ clients in more than 200 markets during 2017, with revenue growing from a small base to more than $30 million for the full year, above the high end of guidance. We expect Premion revenues to double in 2018. Premion is also launching new services to agency and content partners, including an OTT data management platform, and will continue to make strategic investments to expand and extend its OTT ecosystem footprint such as the recently announced investments in Tubi and Vizbee.

-- Award-winning investigations - In the fourth quarter, KARE in Minneapolis and KHOU in Houston won Alfred I. duPont-Columbia University Awards for investigative reporting. Overall, TEGNA won more national investigative awards in 2017 than any other local media company.

-- Growing mobile, digital, video and social platforms - TEGNA completed its mobile redesign in the fourth quarter across 38 of its digital properties. Compared to the prior year, in the fourth quarter, TEGNA increased engagement by 23 percent, and for the full year, TEGNA increased video views by 41 percent and social interactions by 24 percent.

-- New distribution partnership with Sony - In the first quarter of 2018, TEGNA announced an exclusive, multi-year, global distribution agreement for its original programming with Sony Pictures Television.

FOURTH QUARTER CONTINUING OPERATIONS

TEGNA’s even- to odd-year results are significantly impacted by the cyclical drivers of Olympic and political spending due to our high concentration of NBC stations and traditionally favorable political advertising footprint. For 2017, comparisons to 2016 are also negatively impacted by the conclusion of a transition services agreement with Gannett and the absence of revenue from Cofactor, sold in December 2016.

The following table summarizes the year-over-year changes in revenue categories (in thousands):

                                                                                         
                                                                                       -------------------------------------                     ------------------------------------                     ---------------------
                                                                                                      Q4 2017                                                   Q4 2016                                        Percentage
                                                                                                                                                                                                                 Change
                                                                                       ----------------------------------                        ---------------------------------                        -------------------
                                                                                                                                                                                                           
Advertising and marketing services (a)                                                       $ 296,466                                                $ 302,757                                                 (2.1 %)
Political                                                                                        9,871                                                   90,758                                                (89.1 %)
Subscription                                                                                   178,405                                                  145,441                                                 22.7 %
Other                                                                                            5,581                                                    5,962                                                 (6.4 %)
Cofactor                                                                                --                                 1,937                            (100.0 %)
                                                                                       ------------------------------------                      -----------------------------------                      ---------- ---------
Total company revenues (GAAP basis)                                                          $ 490,323                             $ 546,855                             (10.3 %)
                                                                                       ======= ======= ====================                      ====== ======= ====================                      ========== =========
Factors impacting comparisons:
     Political                                                                                  (9,871 )                                                (90,758 )                                              (89.1 %)
     Cofactor (sold in December 2016)                                                   --                                                   (1,937 )                                             (100.0 %)
     Discontinued digital marketing services                                            --                               (14,023 )                                             (100.0 %)
                                                                                       ------------------------------------                      -----------------------------------                      ---------- ---------
Total company revenues (Non-GAAP basis)                                                      $ 480,452                             $ 440,137                               9.2 %
                                                                                       ======= ======= ====================                      ====== ======= ====================                      ========== =========
(a) Includes traditional advertising, digital advertising as well as
revenue from the company’s digital marketing services business.
 

On a GAAP basis, total company revenues declined 10 percent in the quarter due primarily to an $81 million decline in political revenue as well as terminated digital businesses partially offset by an increase in subscription revenue of 23 percent.

On a non-GAAP comparable basis, total company revenue was up nine percent in the quarter driven by a $33 million increase in subscription revenue as well as revenue contributions from growth initiatives, such as Premion.

As described last quarter, TEGNA now reports the revenue line advertising and marketing services. This category reflects the sales transformation strategy which focuses on customer needs versus specific products. This category includes all advertising and marketing-related revenue, including Premion, Hatch, G/O Digital and television.

On a non-GAAP basis, excluding discontinued digital marketing services, advertising and marketing services revenue increased three percent in the quarter, the best quarterly year-over-year growth in 2017. On a GAAP basis, advertising and marketing services revenue was two percent lower than the fourth quarter of 2016.

GAAP operating expenses were one percent lower compared to the fourth quarter of 2016 due primarily to higher programming fees partially offset by the absence of expenses associated with the terminated digital marketing services businesses and insurance proceeds received net of expenses in the quarter related to Hurricane Harvey. Fourth quarter total company operating expenses on a non-GAAP basis were six percent higher than the prior year due primarily to substantially higher programming fees. Excluding programming costs and terminated digital businesses, adjusted operating expenses were down two percent.

GAAP operating income declined 26 percent compared to the fourth quarter in 2016. On a non-GAAP basis, operating income was 34 percent lower due primarily to the absence of political revenue and substantially higher programming fees that drove the increase in operating expenses.

Adjusted EBITDA (a non-GAAP measure detailed in Table 3) totaled $169.4 million in the quarter and the adjusted EBITDA margin equaled 34.5 percent. Adjusted EBITDA excluding corporate expenses was $181.0 million which resulted in a margin of 36.9 percent.

Net income from continuing operations was $303.3 million which was favorably impacted by a $221 million benefit from the tax legislation. On a non-GAAP basis, net income from continuing operations declined 44 percent year-over-year to $68.5 million reflecting the absence of $81 million in political revenue compared to the fourth quarter of last year.

Special items in the fourth quarter of 2017 primarily included gains related to tax legislation, the sale of an equity method investment, and insurance proceeds related to Hurricane Harvey. Refer to Table 2 for a reconciliation of results on a GAAP and non-GAAP basis.

FOURTH QUARTER NON-OPERATING AND CASH FLOW ITEMS

Interest expense in the quarter was $48.2 million compared to $56.6 million in the fourth quarter of 2016. The decline was due primarily to lower average debt outstanding partially offset by a higher average interest rate.

Other non-operating expenses were $8.5 million in the quarter compared to expenses of $7.4 million in the fourth quarter of 2016. The 2017 expense primarily reflects costs associated with the early redemption of debt and the transaction cost associated with the Midwest Television acquisition.

Equity income totaled $12.0 million in the fourth quarter compared to a loss $0.7 million in the fourth quarter of 2016 due primarily to a $17.5 million gain on the sale of an equity method investment. On a non-GAAP basis, the equity loss was $2.9 million in the fourth quarter of 2017.

Cash flow from operating activities for the fourth quarter of 2017 was $35.0 million. Fourth quarter free cash flow (a non-GAAP measure - refer to Table 4) from continuing operations was $22.0 million compared to $97.7 million in the third quarter, which had been significantly impacted by a one-time $32.6 million channel share payment received in the third quarter. In addition, the fourth quarter was impacted by a $48.6 million increase in anticipated interest and tax payments.

Debt outstanding was $3.0 billion and total cash was $98.8 million at the end of the quarter. The company used proceeds from the CareerBuilder sale to partially redeem early $280 million of fixed rate notes in the quarter. Dividends paid in the quarter totaled $15 million.

TEGNA recorded a one-time deferred tax benefit for the fourth quarter of $221 million as a result of the tax legislation passed at the end of 2017. Taking into account the law’s new 21 percent federal corporate tax rate and other provisions that will likely impact the company, TEGNA currently anticipates the combined federal and state effective tax rate will be 23 to 25 percent for calendar year 2018. TEGNA expects that its cash taxes will decline by approximately $35 million in 2018 as a result of the new legislation and it will reinvest these proceeds to pursue organic and inorganic growth opportunities during 2018.

FULL-YEAR 2017 CONTINUING OPERATIONS

Total operating revenues for the full year totaled $1.9 billion, a decline of five percent from 2016 reflecting primarily a $169 million decline in incremental political, Olympic and Super Bowl advertising revenue. Excluding those factors, as well as $17 million of terminated digital marketing services business revenue in 2017 and $64 million in 2016, total company revenue was up seven percent.

                                                                                                  
                                                                                            ---------------------------------------                     --------------------------------------                     ---------------------
                                                                                                             2017                                                        2016                                           Percentage
                                                                                                                                                                                                                          Change
                                                                                            ------------------------------------                        -----------------------------------                        -------------------
                                                                                                                                                                                                                    
Advertising and marketing services (a)                                                            $ 1,139,642                                                $ 1,237,735                                                 (7.9 %)
Political                                                                                              23,258                                                    154,808                                                (85.0 %)
Subscription                                                                                          718,750                                                    581,733                                                 23.6 %
Other                                                                                                  21,376                                                     19,844                                                  7.7 %
Cofactor                                                                                       --                                   9,968                            (100.0 %)
                                                                                            --------------------------------------                      -------------------------------------                      ---------- ---------
Total company revenues (GAAP basis)                                                               $ 1,903,026                             $ 2,004,088                              (5.0 %)
                                                                                            ======= ========= ====================                      ====== ========= ====================                      ========== =========
Factors impacting comparisons:
     Estimated incremental Olympic and Super Bowl                                                        (323 )                                                  (37,533 )                                              (99.1 %)
     Political                                                                                        (23,258 )                                                 (154,808 )                                              (85.0 %)
     Cofactor (sold in December 2016)                                                          --                                                     (9,968 )                                             (100.0 %)
     Discontinued digital marketing services                                                          (16,673 )                                                  (54,532 )                                              (69.4 %)
                                                                                            --------------------------------------                      -------------------------------------                      ---------- ---------
Total company revenues (Non-GAAP basis)                                                           $ 1,862,772                             $ 1,747,247                               6.6 %
                                                                                            ======= ========= ====================                      ====== ========= ====================                      ========== =========
(a) Includes traditional advertising, digital advertising as well as
revenue from the company’s digital marketing services business.
 

Operating expenses were $1.36 billion, an increase of five percent compared to 2016. On a non-GAAP basis, operating expenses increased nine percent to $1.35 billion primarily due to higher programming fees and continued investment in growth initiatives. Operating income in 2017 totaled $545.9 million and $554.8 million on a non-GAAP basis.

Adjusted EBITDA was $631.4 million in 2017 compared to $842.9 million in 2016. The adjusted EBITDA margin in 2017 was 33.2 percent compared to 42.1 percent in 2016. The decline in the margin is primarily due to increases in programming costs reflecting reverse compensation payments to NBC that began in 2017 for eleven stations. Adjusted EBITDA excluding corporate expenses was $684.5 million, which resulted in a margin of 36.0 percent.

FIRST QUARTER 2018 OUTLOOK

In the first quarter, TEGNA expects:

-- Non-GAAP total company revenue excluding the terminated digital business to increase 10 to 12 percent year-over-year driven by Olympics, Super Bowl and subscription revenue growth.

-- GAAP total company revenue to increase high-single digits year-over-year.

CONFERENCE CALL

As previously announced, the company will hold an earnings conference call at 8:30 a.m. ET today. The call can be accessed via a live webcast through the company’s Investors website, investors.TEGNA.com, or listen-only conference lines. U.S. callers should dial 1-800-281-7973 and international callers should dial 1-323-794-2093 at least 10 minutes prior to the scheduled start of the call. The confirmation code for the conference call is 7971998. A replay of the conference call will be available under "Investor Relations" at www.TEGNA.com from Thursday, March 1, at 12:30 p.m. (ET) to Thursday, March 15, at 12:30 p.m. (ET). To access the replay, dial 888-203-1112 or 719-457-0820. The confirmation code for the replay is 7971998. Materials related to the call will be available through the Investor Relations section of the company’s website Thursday morning.

ADDITIONAL INFORMATION

TEGNA Inc. (TGNA ) is an innovative media company that serves the greater good of our communities. With 47 television stations in 39 markets, TEGNA delivers relevant content and information to consumers across platforms. It is the largest owner of top four affiliates in the top 25 markets, reaching approximately one-third of all television households nationwide. Each month, TEGNA reaches 50 million adults on-air and approximately 35 million across its digital platforms. TEGNA has been consistently honored with the industry’s top awards, including Edward R. Murrow, George Polk, Alfred I. DuPont and Emmy Awards. TEGNA delivers results for advertisers through unparalleled and innovative solutions including OTT local advertising network Premion, centralized marketing resource Hatch, and digital marketing services business (formerly G/O Digital), a one-stop shop for local businesses to connect with consumers through digital marketing. Across platforms, TEGNA tells empowering stories, conducts impactful investigations and delivers innovative marketing solutions. For more information, visit www.TEGNA.com.

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 SEC reports, including the company’s 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.

TEGNA is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this press release by wire services, Internet service providers or other media.

* * * *

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Continuing Operations
TEGNA Inc.
Unaudited, in thousands of dollars (except per share amounts)
 
Table No. 1                                                       
                                                                                                                                        Three Months Ended Dec. 31,                                  
                                                                                                         -----------------------------------------------------------------------------------------                     --------------------------------
                                                                                                                        2017                                2016                                               % Increase
                                                                                                                                                                                                                                  (Decrease)
                                                                                                         -------------------------------                        -------------------------------                        ------------------------------
                                                                                                                                                                                                                        
Revenues                                                                                                    $ 490,323                                              $ 546,855                                                (10.3 )
                                                                                                                                                                                                                        
Operating expenses:
Cost of revenues, exclusive of depreciation                                                                   237,153                                                205,396                                                 15.5
Business units - Selling, general and administrative expenses,                                                 72,751                                                 84,748                                                (14.2 )
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                  12,481                                                 14,827                                                (15.8 )
depreciation
Depreciation                                                                                                   13,347                                                 12,716                                                  5.0
Amortization of intangible assets                                                                               5,398                                                  5,721                                                 (5.6 )
Asset (gain) impairment and facility consolidation charges                                                     (6,657 )                                               13,184                                                   ****
                                                                                                         ---------------------------------                      ---------------------------------                      --------------------------------
Total                                                                                                         334,473                             336,592                              (0.6 )
                                                                                                         ---------------------------------                      ---------------------------------                      ---------- --------------------
Operating income (a)                                                                                          155,850                             210,263                             (25.9 )
                                                                                                         ---------------------------------                      ---------------------------------                      ---------- --------------------
                                                                                                                                                                                                                        
Non-operating income (expense):
Equity income (loss) in unconsolidated investments, net                                                        11,951                                                   (651 )                                                                    ****
Interest expense                                                                                              (48,171 )                                              (56,551 )                                              (14.8 )
Other non-operating items (a)                                                                                  (8,451 )                                               (7,423 )                                               13.8  
                                                                                                         ---------------------------------                      ---------------------------------                      ---------- --------------------
Total                                                                                                         (44,671 )                                              (64,625 )                                              (30.9 )
                                                                                                         ---------------------------------                      ---------------------------------                      ---------- --------------------
                                                                                                                                                                                                                        
Income before income taxes                                                                                    111,179                                                145,638                                                (23.7 )
(Benefit) provision for income taxes                                                                         (192,101 )                                               48,133                                                   ****
                                                                                                         ---------------------------------                      ---------------------------------                      --------------------------------
Income from continuing operations                                                                           $ 303,280                           $  97,505                                                   ****
                                                                                                         ==== ======= ====================                      ==== ======= ====================                      ================================
                                                                                                                                                                                                                        
Earnings from continuing operations per share:
Basic                                                                                                       $    1.41                                              $    0.45                                                                      ****
Diluted                                                                                                     $    1.40                                              $    0.45                                                                      ****
                                                                                                                                                                                                                        
Weighted average number of common shares outstanding:
Basic                                                                                                         215,672                                                214,847                                                  0.4
Diluted                                                                                                       216,431                                                217,200                                                 (0.4 )
                                                                                                                                                                                                                        
Dividends declared per share                                                                                $    0.07                                              $    0.14                                                (50.0 )
(a) - In the first quarter of 2017, the company adopted new
accounting guidance that changed the classification of certain
components of net periodic pension and other post-retirement benefit
expense (post-retirement benefit expense). The service cost
component of the post-retirement benefit expense will continue to be
presented as an operating expense while all other components of
post-retirement 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 fourth quarter of 2017 and 2016 of $1.8 million
and $1.8 million, respectively. Net income, earnings per share, and
retained earnings were not impacted by the new standard.
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Continuing Operations
TEGNA Inc.
Unaudited, in thousands of dollars (except per share amounts)
 
Table No. 1 (continued)                                           
                                                                                                                                              Year Ended Dec. 31,                                        
                                                                                                         ---------------------------------------------------------------------------------------------                     --------------------------------
                                                                                                                         2017                                  2016                                                % Increase
                                                                                                                                                                                                                                      (Decrease)
                                                                                                         ---------------------------------                        ---------------------------------                        ------------------------------
                                                                                                                                                                                                                            
Revenues                                                                                                    $ 1,903,026                                              $ 2,004,088                                                 (5.0 )
                                                                                                                                                                                                                            
Operating expenses:
Cost of revenues, exclusive of depreciation                                                                     933,718                                                  795,454                                                 17.4
Business units - Selling, general and administrative expenses,                                                  287,396                                                  331,028                                                (13.2 )
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                    54,943                                                   58,692                                                 (6.4 )
depreciation
Depreciation                                                                                                     55,068                                                   55,369                                                 (0.5 )
Amortization of intangible assets                                                                                21,570                                                   23,263                                                 (7.3 )
Asset impairment and facility consolidation charges                                                               4,429                                32,130                             (86.2 )
                                                                                                         -----------------------------------                      -----------------------------------                      ---------- --------------------
Total                                                                                                         1,357,124                             1,295,936                               4.7  
                                                                                                         -----------------------------------                      -----------------------------------                      ---------- --------------------
Operating income (a)                                                                                            545,902                               708,152                             (22.9 )
                                                                                                         -----------------------------------                      -----------------------------------                      ---------- --------------------
                                                                                                                                                                                                                            
Non-operating expense:
Equity income (loss) in unconsolidated investments, net                                                          10,402                                                   (3,414 )                                                                    ****
Interest expense                                                                                               (210,284 )                                               (231,995 )                                               (9.4 )
Other non-operating items (a)                                                                                   (35,304 )                                                (23,452 )                                               50.5  
                                                                                                         -----------------------------------                      -----------------------------------                      ---------- --------------------
Total                                                                                                          (235,186 )                                               (258,861 )                                               (9.1 )
                                                                                                         -----------------------------------                      -----------------------------------                      ---------- --------------------
                                                                                                                                                                                                                            
Income before income taxes                                                                                      310,716                                                  449,291                                                (30.8 )
(Benefit) provision for income taxes                                                                           (137,246 )                                                140,171                                                   ****
                                                                                                         -----------------------------------                      -----------------------------------                      --------------------------------
Income from continuing operations                                                                           $   447,962                           $   309,120                              44.9  
                                                                                                         ==== ========= ====================                      ==== ========= ====================                      ========== ====================
                                                                                                                                                                                                                            
Earnings from continuing operations per share:
Basic                                                                                                       $      2.08                                              $      1.43                                                 45.5
Diluted                                                                                                     $      2.06                                              $      1.41                                                 46.1
                                                                                                                                                                                                                            
Weighted average number of common shares outstanding:
Basic                                                                                                           215,587                                                  216,358                                                 (0.4 )
Diluted                                                                                                         217,478                                                  219,681                                                 (1.0 )
                                                                                                                                                                                                                            
Dividends declared per share                                                                                $      0.35                                              $      0.56                                                (37.5 )
(a) - In the first quarter of 2017, the company adopted new
accounting guidance that changed the classification of certain
components of net periodic pension and other post-retirement benefit
expense (post-retirement benefit expense). The service cost
component of the post-retirement benefit expense will continue to be
presented as an operating expense while all other components of
post-retirement 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 the twelve months ended December 31, 2017 and
2016 of $6.7 million and $7.6 million, respectively. Net income,
earnings per share, and retained earnings were not impacted by the
new standard.
 

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, Adjusted revenues 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, charges related to asset impairment and facility consolidations, gain on sale and an impairment of equity method investments, gains/losses related to business disposals, costs associated with debt repayment, TEGNA Foundation donations, costs associated with the Cars.com spin-off transaction, and certain tax benefits associated with the impact of tax reform that was enacted in December 2017. The company believes that such expenses, charges and gains are not indicative of normal, ongoing operations. Such items vary from period to period and are significantly impacted by the timing and nature of these events. Therefore, while the company may incur or recognize these types of expenses, charges and gains in the future, management believes that removing these items for purposes of calculating the non-GAAP financial measures provides investors with a more focused presentation of the company’s ongoing operating performance.

The company also discusses Adjusted EBITDA (with and without corporate expenses), non-GAAP financial performance measures that it believes offer a useful view of the overall operation of its businesses. The company defines Adjusted EBITDA as net income from continuing operations before (1) interest expense, (2) income taxes, (3) equity income (losses) in unconsolidated investments, net, (4) other non-operating items such as spin-off transaction expenses and investment income, (5) severance expense, (6) facility consolidation charges, (7) impairment charges, (8) depreciation and (9) amortization. The most directly comparable GAAP financial measure to Adjusted EBITDA is Net income from continuing operations. 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 alternative 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 free 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, (2) political revenues, (3) revenues from a previously sold business (Cofactor), and (4) revenues associated with a discontinued portion of our Digital Marketing Services business. These adjustments are made to the company’s 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 broadcast business.

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. 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 condensed
consolidated statements of income follow:
 
                                                                         GAAP                                                                                                                Special Items                                                                                                               Non-GAAP
                                                                                                              Measure                                                                                                                                                                                                                                                                                 Measure
                                                                                                         -------------                        ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                        ------------------
                                                                                                               Three                                   Severance                     Operating                   Net gain on                  Other non-                   Tax reform                                      Three
                                                                                                              Months                                    expense                                           asset                                          equity                                         operating                                        impact                                       Months
                                                                                                               Ended                                                                                   impairment                                        method                                           items                                                                                        Ended
                                                                                                             Dec. 31,                                                                                 and facility                                     investment                                                                                                                                    Dec. 31,
                                                                                                               2017                                                                                   consolidation                                                                                                                                                                                    2017
                                                                                                         -------------                        ------------------------                        -------------------------                        ------------------------   -------------------- ------------------------                        ------------------------                        ------------------
                                                                                                                                                                                                                                                                           
Cost of revenues, exclusive of depreciation                                                                 $ 237,153                               $           (550 )                              $ --                                 $ --                                $ --                                $ --                                $ 236,603
Business units - Selling, general and administrative expenses,                                                 72,751                                            (14 )                                --                                   --                                  --                                  --                                   72,737
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                  12,481                                           (849 )                                --                                   --                                  --                                  --                                   11,632
depreciation
Asset impairment and facility consolidation charges                                                            (6,657 )                               --                                           6,657                                   --                                  --                                  --                           --
Operating expenses                                                                                            334,473                                         (1,413 )                                         6,657                                   --                                  --                                  --                                  339,717
Operating income                                                                                              155,850                                          1,413                                          (6,657 )                                 --                                  --                                  --                                  150,606
Equity income                                                                                                  11,951                                 --                                  --                                          (14,877 )                                --                                  --                                   (2,926 )
Other non-operating items                                                                                      (8,451 )                               --                                  --                                   --                                           8,463                                  --                                       12
Total non-operating expenses                                                                                  (44,671 )                               --                                  --                                          (14,877 )                                         8,463                                  --                                  (51,085 )
Income before income taxes                                                                                    111,179                                          1,413                                          (6,657 )                                        (14,877 )                                         8,463                                  --                                   99,521
(Benefit) provision for income taxes                                                                         (192,101 )                                          545                                          (2,455 )                                            720                                           2,906                                         221,450                                   31,065
Net income from continuing operations                                                                         303,280                                            868                                          (4,202 )                                        (15,597 )                                         5,557                                        (221,450 )                                 68,456
Net income from continuing operations per share-diluted                                                     $    1.40                               $ --                                $          (0.02 )                               $          (0.07 )                              $           0.03                                $          (1.02 )                              $    0.32
                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                                               GAAP                                                                                                           Special Items                                                                                                             Non-GAAP
                                                                                                              Measure                                                                                                                                                                                                                                    Measure
                                                                                                         -------------                        -------------------------------------------------------------------------------------------------------------------------------------------------------------                                    ------------------------
                                                                                                               Three                                   Severance                                        Operating                                      Other non-                                      Special tax                                        Three
                                                                                                              Months                                    expense                                           asset                                         operating                                        benefit                                         Months
                                                                                                               Ended                                                                                   impairment                                         items                                                                                           Ended
                                                                                                             Dec. 31,                                                                                 and facility                                                                                                                                      Dec. 31,
                                                                                                               2016                                                                                   consolidation                                                                                                                                       2016
                                                                                                         -------------                        ------------------------                        -------------------------                        ------------------------                        ------------------------                        ------------------------
                                                                                                                                                                                                                                                                                                                                                                                                
Cost of revenues, exclusive of depreciation                                                                 $ 205,396                               $           (377 )                              $ --                                 $ --                                $ --                                $        205,019
Business units - Selling, general and administrative expenses,                                                 84,748                                         (2,299 )                                --                                   --                                  --                                          82,449
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                  14,827                                         (1,165 )                                --                                   --                                  --                                          13,662
depreciation
Asset impairment and facility consolidation charges                                                            13,184                                 --                                         (13,184 )                                 --                                  --                                  --
Operating expenses                                                                                            336,592                                         (3,841 )                                       (13,184 )                                 --                                  --                                         319,567
Operating income                                                                                              210,263                                          3,841                                          13,184                                   --                                  --                                         227,288
Other non-operating items                                                                                      (7,423 )                               --                                  --                                            9,007                                                                                           1,584
Total non-operating expenses                                                                                  (64,625 )                               --                                  --                                            9,007                                  --                                         (55,618 )
Income before income taxes                                                                                    145,638                                          3,841                                          13,184                                            9,007                                  --                                         171,670
Provision for income taxes                                                                                     48,133                                          1,489                                           5,111                                           (8,723 )                                         3,339                                          49,349
Net income from continuing operations                                                                          97,505                                          2,352                                           8,073                                           17,730                                          (3,339 )                                       122,321
Net income from continuing operations per share-diluted                                                     $    0.45                               $           0.01                                $           0.04                                 $           0.08                                $          (0.02 )                              $           0.56
                                                                                                                                                                                                                                                                                                                                                                                                
 
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars (except per share amounts)
 
Table No. 2 (continued)
 
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
                                                                                                              Measure                                                                                                                                                                                                                                                                                 Measure
                                                                                                         -------------                        -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                        ----------------------------------
                                                                                                               Year                                 Severance                Operating                    Net gain                    Other non-                       Tax                                                 Year
                                                                                                               Ended                                 expense                                      asset                                         on equity                                       operating                                        reform                                                Ended
                                                                                                             Dec. 31,                                                                          impairment                                        method                                           items                                         and other                                            Dec. 31,
                                                                                                               2017                                                                                                                            investment                                                                                        special                                               2017
                                                                                                                                                                                                                                                                                                                                                   tax
                                                                                                                                                                                                                                                                                                                                                benefits
                                                                                                         -------------                        -----------------                        ------------------------                        ------------------------                        ------------------------                        ------------------------                        ----------------------------------
                                                                                                                                                                                                                                                                                                                                                                                        
Cost of revenues, exclusive of depreciation                                                                 $ 933,718                               $  (1,072 )                              $ --                                $ --                                $ --                                $ --                                $ 932,646
Business units - Selling, general and administrative expenses,                                                287,396                                  (1,485 )                                --                                  --                                  --                                  --                                  285,911
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                  54,943                                  (1,909 )                                --                                  --                                  --                                  --                                   53,034
depreciation
Asset impairment and facility consolidation charges                                                             4,429                          --                                          (4,429 )                                --                                  --                                  --                           --
Operating expenses                                                                                          1,357,124                                  (4,466 )                                        (4,429 )                                --                                  --                                  --                                1,348,229
Operating income                                                                                              545,902                                   4,466                                           4,429                                  --                                  --                                  --                                  554,797
Equity income (loss) in unconsolidated investments, net                                                        10,402                          --                                  --                                         (14,877 )                                --                                  --                                   (4,475 )
Other non-operating items                                                                                     (35,304 )                        --                                  --                                  --                                          40,454                                  --                                    5,150
Total non-operating expenses                                                                                 (235,186 )                        --                                  --                                         (14,877 )                                        40,454                                  --                                 (209,609 )
Income before income taxes                                                                                    310,716                                   4,466                                           4,429                                         (14,877 )                                        40,454                                  --                                  345,188
(Benefit) provision for income taxes                                                                         (137,246 )                                 1,719                                           1,649                                             720                                           9,827                                         233,174                                  109,843
Net income from continuing operations                                                                         447,962                                   2,747                                           2,780                                         (15,597 )                                        30,627                                        (233,174 )                                235,345
Net income from continuing operations per share-diluted                                                     $    2.06                               $    0.01                                $           0.01                                $          (0.07 )                              $           0.14                                $          (1.07 )                              $    1.08
                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                               GAAP                                                                                                                               Special Items                                                                                                                                      Non-GAAP
                                                                                                              Measure                                                                                                                                                                                                                                                                                 Measure
                                                                                                         -------------                        -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                        ----------------------------------
                                                                                                               Year                                 Severance                                   Operating                                        Equity                                        Other non-                                        Special                                               Year
                                                                                                               Ended                                 expense                                      asset                                        investment                                       operating                                          tax                                                 Ended
                                                                                                             Dec. 31,                                                                          impairment                                      impairment                                         items                                          benefit                                             Dec. 31,
                                                                                                               2016                                                                                                                                                                                                                                                                                    2016
                                                                                                         -------------                        -----------------                        ------------------------                        ------------------------                        ------------------------                        ------------------------                        ----------------------------------
                                                                                                                                                                                                                                                                                                                                                                                        
Cost of revenues, exclusive of depreciation                                                                 $ 795,454                               $ (12,978 )                              $ --                                $ --                                $ --                                $ --                                $ 782,476
Business units - Selling, general and administrative expenses,                                                331,028                                  (8,259 )                                --                                  --                                  --                                  --                                  322,769
exclusive of depreciation
Corporate - General and administrative expenses, exclusive of                                                  58,692                                  (2,722 )                                --                                  --                                  --                                  --                                   55,970
depreciation
Asset impairment and facility consolidation charges                                                            32,130                          --                                         (32,130 )                                --                                  --                                  --                           --
Operating expenses                                                                                          1,295,936                                 (23,959 )                                       (32,130 )                                --                                  --                                  --                                1,239,847
Operating income                                                                                              708,152                                  23,959                                          32,130                                  --                                  --                                  --                                  764,241
Equity (loss) income in unconsolidated investments, net                                                        (3,414 )                        --                                  --                                           1,869                                  --                                  --                                   (1,545 )
Other non-operating items                                                                                     (23,452 )                        --                                  --                                  --                                          25,331                                                                                    1,879
Total non-operating expenses                                                                                 (258,861 )                        --                                  --                                           1,869                                          25,331                                  --                                 (231,661 )
Income before income taxes                                                                                    449,291                                  23,959                                          32,130                                           1,869                                          25,331                                  --                                  532,580
Provision (benefit) for income taxes                                                                          140,171                                   9,288                                          12,456                                             725                                          (4,140 )                                         3,339                                  161,839
Net income from continuing operations                                                                         309,120                                  14,671                                          19,674                                           1,144                                          29,471                                          (3,339 )                                370,741
Net income from continuing operations per share-diluted                                                     $    1.41                               $    0.07                                $           0.09                                $           0.01                                $           0.13                                $          (0.02 )                              $    1.69
                                                                                                                                                                                                                                                                                                                                                                                                        
 
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
 
Table No. 3                                                     
                                                                                                        
                                                                                                                                          Three Months Ended                                      
                                                                                                                                               Dec. 31,
                                                                                                       ---------------------------------------------------------------------------------                            ------------------------------
                                                                                                                      2017                               2016                                               % Increase
                                                                                                                                                                                                                               (Decrease)
                                                                                                       -------------------------------                        ------------------------------                        ------------------------------
Net income from continuing operations (GAAP basis)                                                        $ 303,280                                             $  97,505                                                                      ****
(Benefit) provision for income taxes                                                                       (192,101 )                                              48,133                                                                      ****
Interest expense                                                                                             48,171                                                56,551                                                (14.8 )
Equity (income) loss in unconsolidated investments, net                                                     (11,951 )                                                 651                                                                      ****
Other non-operating expense                                                                                   8,451                              7,423                              13.8  
                                                                                                       ---------------------------------                      --------------------------------                      ---------- --------------------
Operating income (GAAP basis)                                                                               155,850                                               210,263                                                (25.9 )
Severance expense                                                                                             1,413                                                 3,841                                                (63.2 )
Asset (gain) impairment and facility consolidation charges                                                   (6,657 )                                              13,184                                                   ****
                                                                                                       ---------------------------------                      --------------------------------                      --------------------------------
Adjusted operating income (non-GAAP basis)                                                                  150,606                                               227,288                                                (33.7 )
Depreciation                                                                                                 13,347                                                12,716                                                  5.0
Amortization of intangible assets                                                                             5,398                              5,721                              (5.6 )
                                                                                                       ---------------------------------                      --------------------------------                      ---------- --------------------
Adjusted EBITDA (non-GAAP basis)                                                                          $ 169,351                          $ 245,725                             (31.1 )
                                                                                                       ==== ======= ====================                      === ======= ====================                      ========== ====================
Corporate - General and administrative expense, exclusive of                                                 11,632                             13,662                             (14.9 )
depreciation (non-GAAP basis)
                                                                                                       -----------  --------------------                      ----------  --------------------                      ---------- --------------------
Adjusted EBITDA, excluding Corporate (non-GAAP basis)                                                     $ 180,983                          $ 259,387                             (30.2 )
                                                                                                       ==== ======= ====================                      === ======= ====================                      ========== ====================
                                                                                                                                                                                                                     
                                                                                                                                              Year Ended                                                             
                                                                                                                                               Dec. 31,
                                                                                                       ---------------------------------------------------------------------------------                            ------------------------------
                                                                                                                      2017                                                  2016                                               % Increase
                                                                                                                                                                                                                               (Decrease)
                                                                                                       -------------------------------                        ------------------------------                        ------------------------------
Net income from continuing operations (GAAP basis)                                                        $ 447,962                                             $ 309,120                                                 44.9
(Benefit) provision for income taxes                                                                       (137,246 )                                             140,171                                                                      ****
Interest expense                                                                                            210,284                                               231,995                                                 (9.4 )
Equity (income) loss in unconsolidated investments, net                                                     (10,402 )                                               3,414                                                                      ****
Other non-operating expense                                                                                  35,304                             23,452                              50.5  
                                                                                                       ---------------------------------                      --------------------------------                      ---------- --------------------
Operating income (GAAP basis)                                                                               545,902                                               708,152                                                (22.9 )
Severance expense                                                                                             4,466                                                23,959                                                (81.4 )
Asset impairment and facility consolidation charges                                                           4,429                             32,130                             (86.2 )
                                                                                                       ---------------------------------                      --------------------------------                      ---------- --------------------
Adjusted operating income (non-GAAP basis)                                                                  554,797                                               764,241                                                (27.4 )
Depreciation                                                                                                 55,068                                                55,369                                                 (0.5 )
Amortization of intangible assets                                                                            21,570                             23,263                              (7.3 )
                                                                                                       ---------------------------------                      --------------------------------                      ---------- --------------------
Adjusted EBITDA (non-GAAP basis)                                                                          $ 631,435                          $ 842,873                             (25.1 )
                                                                                                       ==== ======= ====================                      === ======= ====================                      ========== ====================
Corporate - General and administrative expense, exclusive of                                                 53,034                             55,970                              (5.2 )
depreciation (non-GAAP basis)
                                                                                                       -----------  --------------------                      ----------  --------------------                      ---------- --------------------
Adjusted EBITDA, excluding Corporate (non-GAAP basis)                                                     $ 684,469                          $ 898,843                             (23.8 )
                                                                                                       ==== ======= ====================                      === ======= ====================                      ========== ====================
                                                                                                                                                                                                                                
 
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
 
Table No. 4
 
"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.
                                                                                                                                                   
                                                                                                                    Three Months Ended                                                                                           Year Ended Dec. 31,
                                                                                                                         Dec. 31,
                                                                                  -------------------------------------------------------------------------------                            -----------------------------------------------------------------------------------
                                                                                                2017                                                 2016                                                  2017                                                    2016
                                                                                  --------------------------------                     ---------------------------------                     ---------------------------------                     ------------------------------------
                                                                                                                                                                                                                                                    
Net cash flow from operating activities                                             $ 35,028                                             $ 228,666                                             $ 386,211                                                $ 683,429
Purchase of property and equipment                                                   (13,040 )                                             (26,219 )                                             (76,886 )                                                (94,796 )
                                                                                  -------------------------------                      --------------------------------                      --------------------------------                      -----------------------------------
Free cash flow                                                                      $ 21,988                          $ 202,447                          $ 309,325                             $ 588,633  
                                                                                  === ====== ====================                      === ======= ====================                      === ======= ====================                      ====== ======= ====================
                                                                                                                                                                                                                                                                   

Note: The free cash flow numbers presented in the table above includes Cars.com through the date of its spin-off (May 31, 2017) and CareerBuilder through the date of its sale (July 31, 2017).

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180301005738r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180301005738/en/

SOURCE: TEGNA Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@TEGNA

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


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2018 StockSelector.com. All rights reserved.