Reports full-year 2023 results which met or exceeded all
full-year 2023 guidance metrics
Provides full-year 2024 outlook and free cash flow guidance
for 2024-2025
Plans to return 40-60% of 2024-2025 free cash flow to
shareholders through new capital allocation framework; represents
an expected return of capital of $1.3 billion from the date of
merger termination through 2025, with $350 million commitment in
2024
Received $153 million of pre-tax cash proceeds from the sale
of ownership interest in BMI (Broadcast Music, Inc.)
Board authorizes new two-year $650 million share repurchase
to capitalize on industry-leading balance sheet and leverage
position
TEGNA Inc. (NYSE: TGNA) today announced financial results for
the fourth quarter and full-year ended December 31, 2023.
FOURTH QUARTER FINANCIAL HIGHLIGHTS1:
- Total company revenue was $726 million in the fourth quarter,
down 21 percent year-over-year, primarily due to the reduction of
political revenue from the mid-term election cycle last year.
- Total company revenue was down six percent compared to the
fourth quarter of 2021 due to macroeconomic headwinds in
Advertising and Marketing Services (“AMS”) revenue.
- Subscription revenue was $339 million in the fourth quarter,
down nine percent year-over-year, primarily due to the temporary
disruption of service with a distribution partner, which was
successfully resolved on January 13, 2024.
- Excluding the service disruption, subscription revenue would
have been nearly flat year-over-year driven by subscriber attrition
and partially offset by contractual rate increases. Since our third
quarter earnings release on November 7, 2023, TEGNA has renewed
multiple comprehensive retransmission consent agreements
representing approximately 30 percent of our traditional
subscribers.
- AMS revenue was $352 million in the fourth quarter, in-line
with the prior year. Underlying advertising trends were up four
percent year-over-year, adjusting for the loss of a single national
Premion account in the same quarter of last year.
- Advertising trends in the fourth quarter showed sequential
improvement compared to the third quarter based on easier
comparisons with political crowd out last year resulting in
continued sequential improvement throughout 2023. Nearly all
categories of underlying advertising trends were positive in the
fourth quarter.
1 In analyzing fourth quarter 2023
results, investors should be reminded that TEGNA’s odd-to-even year
results are negatively impacted by the absence of even-year
political revenues.
- GAAP operating expenses were $582 million, down one percent
year-over-year. Non-GAAP operating expenses2 of $577 million
finished down two percent year-over-year due to lower
non-programming expenses.
- Non-GAAP expenses less programming decreased four percent from
the fourth quarter of 2022 driven by lower variable cost of sales
for digital revenue, and operating expense improvements.
- GAAP and non-GAAP operating income totaled $144 million and
$149 million, respectively.
- Interest expense was flat year-over-year at $44 million due to
our attractively priced fixed-rate debt, with no near-term
maturities until 2026.
- TEGNA achieved net income of $76 million on a GAAP basis, or
$81 million on a non-GAAP basis.
- GAAP and non-GAAP earnings per diluted share were $0.40 and
$0.43, respectively.
- Total company Adjusted EBITDA3 was $177 million, representing a
decrease of 51 percent compared to the fourth quarter of 2022, as
expected, due to the absence of high-margin political revenue from
mid-term elections and the disruption of service with a
distributor.
- Fourth quarter Adjusted EBITDA was down 28 percent compared to
the fourth quarter of 2021 reflecting lower high-margin AMS and
political revenue and higher programming expenses.
- Free cash flow4 was $130 million for the quarter.
- For the trailing two-year period ending December 31, 2023, free
cash flow as a percentage of revenue was 20.3 percent.
- Cash and cash equivalents totaled $361 million at the end of
the quarter. Net leverage5 finished the year at 2.8x, below
full-year guidance of 3.0x.
2 A non-GAAP measure detailed in Table
2
3 A non-GAAP measure detailed in Table
3
4 A non-GAAP measure detailed in Table
5
5 A non-GAAP measure detailed in Table
7
FULL-YEAR FINANCIAL HIGHLIGHTS:
- Total company revenue was $2.9 billion, down 11 percent
year-over-year, due to a reduction in political revenue from the
mid-term election cycle last year. In addition, the absence of
Winter Olympics and Super Bowl airing on NBC in 2022, our largest
affiliate portfolio, compared to FOX in 2023, our smallest
portfolio, also contributed to the less favorable even-to-odd year
comparisons.
- Compared to 2021, total company revenue was down three percent
primarily due to lower AMS revenue, partially offset by higher
subscription revenue.
- Subscription revenue of $1.5 billion was in-line with the prior
year, driven by rate increases, which were offset by subscriber
declines as well as the temporary disruption of service with a
distribution partner. Excluding the service disruption,
subscription revenue would have been up two percent compared to
last year.
- AMS revenue was $1.3 billion, down five percent year-over-year
driven by macroeconomic headwinds and the loss of a national
Premion account. Underlying advertising trends were down two
percent year-over-year, adjusting for the Winter Olympics, Super
Bowl, and loss of the national Premion account. Automotive and
Services, our two largest advertising categories generated strong
growth throughout 2023.
- GAAP operating expenses of $2.2 billion were down five percent.
Non-GAAP operating expenses2 of $2.3 billion were up one percent
year-over-year driven by higher programming costs, partially offset
by lower non-programming expenses.
- Non-GAAP expenses less programming decreased two percent
compared to last year due to lower variable cost of sales for
digital revenue, and operational expense management
improvements.
- TEGNA achieved net income of $476 million on a GAAP basis, or
$363 million on a non-GAAP basis.
- GAAP earnings per diluted share were $2.28 and non-GAAP
earnings per diluted share were $1.74.
- Total company Adjusted EBITDA3 of $742 million was down 34
percent year-over-year, primarily due to reduction of high-margin
political and AMS revenues coupled with higher programming costs.
- Compared to 2021, Adjusted EBITDA was down 22 percent driven by
higher programming costs as well as macroeconomic headwinds
resulting in lower high-margin advertising revenue.
FREE CASH FLOW GUIDANCE THROUGH 2024-2025
Based on management’s current expectations and following
affiliation renewal agreements with NBC and ABC, as well as
retransmission consent agreements repricing 30 percent of
traditional subscribers, the Company expects to generate free cash
flow in the range of $900 million - $1.1 billion during the
2024-2025 period.
TEGNA’s free cash flow guidance includes the impact of
transformation initiatives to streamline operations, pursue
innovation-driven opportunities, and achieve cost reductions. TEGNA
expects to complete these transformation initiatives through 2025,
with initial benefits expected to occur in the second half of 2024.
TEGNA will provide additional updates on its business
transformation initiatives over the coming quarters.
CAPITAL ALLOCATION FRAMEWORK
TEGNA’s Board of Directors has approved a comprehensive capital
allocation framework to support shareholder value creation that
includes a predictable and sustained distribution of free cash flow
to shareholders. As part of this framework, the Company expects to
return 40-60 percent of its free cash flow generated in 2024-2025
to shareholders in the form of share repurchases and dividends,
with the remaining free cash flow expected to be used for organic
investments and/or bolt-on acquisitions and preparing for future
debt retirement. TEGNA will analyze all uses of capital, including
regularly evaluating the dividend rate, with a goal of maximizing
long-term shareholder value creation.
In December 2023, TEGNA’s Board of Directors authorized a new
share repurchase program for up to $650 million of our common
stock. This new share repurchase program expires on December 31,
2025.
TEGNA’s new capital allocation framework builds on the Company’s
previous actions of returning capital to shareholders, with nearly
$800 million in share repurchases and a 20 percent dividend
increase in 2023. Previously announced share repurchase commitments
resulted in the repurchase of approximately 50 million shares
through the end of February 2024 (as of December 31, 2023, TEGNA
had repurchased a total of 45.9 million shares), which is
approximately 22 percent of shares outstanding prior to these
actions. TEGNA expects to return approximately $350 million of
capital to shareholders in 2024 through dividends and opportunistic
purchases from time to time on the open market at prevailing prices
or in negotiated transactions. This initiative is in addition to
the previously announced accelerated share repurchase (“ASR”)
program that completed in February 2024.
PROCEEDS FROM OWNERSHIP INTEREST IN BMI
On February 8, 2024, the sale of BMI (Broadcast Music, Inc.) to
a shareholder group led by New Mountain Capital, LLC closed. TEGNA
has received approximately $153 million in pre-tax cash proceeds
for its interest in the entity. Proceeds from the sale will be
included in the newly announced return of capital to shareholders
and/or the pursuit of bolt-on M&A as seen with Premion’s recent
acquisition of Octillion Media.
CEO COMMENT
“TEGNA is back on offense, operating from a position of
strength. Our new capital allocation framework positions us well to
execute our business strategy to drive shareholder value in a
continually evolving media landscape,” said Dave Lougee, president
and chief executive officer. “Our announcement today to return
40-to-60 percent of free cash flow to shareholders over the next
two years builds on our initial capital return commitment of nearly
$800 million over the last nine months. Based on our free cash flow
guidance and capital allocation framework, we expect to return
approximately $1.3 billion to shareholders since the merger
termination through 2025. Importantly, this new framework maintains
our flexibility to pursue organic investments, bolt-on M&A, and
prepare for long range debt maturities.
“Our successful extension of TEGNA’s affiliation agreements with
NBC and ABC, as well as completed renegotiation of retransmission
agreements for approximately 30 percent of our traditional
subscribers, provides visibility into TEGNA’s revenues and free
cash flow. 93 percent of our Big 4 network subscribers are now
under network agreements through late 2026 or longer. The majority
of these subscribers are tied to a variable payment model when it
comes to our reverse compensation payments, tying payments to
subscriber counts. Our high-margin, recurring revenues from
subscription and political advertising drive confidence in our
outlook, as demonstrated by our multi-year free cash flow guidance
announced today.
“We’re also building on our culture of innovation and
operational excellence in transforming our core business. We are
leveraging our scale and embracing new technologies to drive new
efficiencies across our company, providing further financial
flexibility. These efforts are well underway and will be expanded
in the coming months with benefits expected in the second half of
2024 and growing over time.
“TEGNA’s momentum continues to build following our comprehensive
capital allocation review, and we are pleased with our progress in
advancing our strategic and financial priorities. The recently
announced acquisition of Octillion Media will further reinforce
Premion’s industry-leading position through the integration of
Octillion’s cutting-edge technology and platform into Premion’s
business, and is expected to generate compelling returns for our
shareholders over time. Our recent strategic investment in 6AM City
will enhance the distribution of our local content and provide a
platform for further local content innovation. TEGNA’s receipt of
proceeds from the sale of BMI further strengthens our financial
flexibility. Looking ahead, TEGNA continues to be well positioned
to invest in accretive opportunities to expand and diversify our
business, while retaining our industry-leading balance sheet with
net leverage of less than 3.0x.
“We are pleased to have met or exceeded all of our full-year
2023 annual guidance metrics. In the fourth quarter, Advertising
and Marketing Services revenue continued to see sequential
improvement, driven by improving trends in automotive and services,
our two largest advertising categories. Automotive has steadily
recovered and is generating strong year-over-year growth for the
sixth consecutive quarter. We expect 2024 to be another strong year
driven by our portfolio of stations in key markets benefiting from
a presidential election cycle, the Summer Olympic Games, and this
month’s Super Bowl.
“All of our work is driven by TEGNA’s purpose of serving the
greater good of our communities. Our 2023 Impact Report outlines
our recent achievements and commitments across our sustainability
focus areas. We continued to make progress on further embedding
equity and inclusion as a cultural and business imperative at TEGNA
that enables us to authentically represent the experiences and
perspectives of all our audiences and fosters trust. Investing in
our people and their well-being, both professionally and
personally, is another strategic priority for us. We continue to
foster a workplace conducive to open dialogue, where support
resources are easily accessible, and avenues for professional
development are available.”
FULL-YEAR AND FIRST QUARTER 2024 OUTLOOK
Full-Year 2024 Key Guidance
Metrics
2024/2025 Two-Year FCF
$900 million - 1.1 billion
Net Leverage Ratio
Below 3x at year end
Corporate Expenses
$40 - 45 million
Depreciation
$56 - 60 million
Amortization
$46 - 48 million
Interest Expense
$170 - 173 million
Capital Expenditures
$62 - 67 million
Effective Tax Rate
23.5 - 24.5%
First Quarter 2024 Key Guidance
Metrics
Reflects expectations relative to first
quarter 2023 results
Total Company GAAP Revenue
Down Low-to-Mid-Single Digit
percent
Total Non-GAAP Operating Expenses
Up Low-Single Digit percent
KEY STRATEGIC UPDATES
- TEGNA Amends and Extends Credit Facility Agreement – In
January, TEGNA closed on its new $750 million, five-year amended
credit agreement, the largest facility among its comparable peers,
securing additional capacity to support strategic objectives. There
are currently no drawings under this facility.
- TEGNA and NBC Renew Multi-Year Affiliation Agreement – In
January, TEGNA and NBC announced a comprehensive, multi-year deal
that renewed station affiliation agreements for 20 TEGNA markets
nationwide, including 10 of the top 25 markets for NBC. TEGNA is
the largest independent owner of NBC affiliates. The 20 markets
renewed cover more than 21 million households, nearly 17% of U.S.
TV households. (Press Release)
- Premion Acquires Next-Generation Demand-Side Platform Octillion
Media – In February, Premion announced the acquisition of Octillion
Media, a proven, purpose-built local Connected TV (CTV) platform,
to expand its capabilities in the growing CTV and over-the-top
marketplace to further enable product innovation, improve
operational efficiencies and drive accelerated growth in serving
local and regional advertisers. (Press Release)
- TEGNA Makes Strategic Investment in 6AM City – In February,
TEGNA closed on a strategic investment in 6AM City, a local media
brand that sends daily newsletters across 26 different markets. 6AM
City will be including news and weather from TEGNA stations in
their product, as well as promoting stations’ morning newscasts and
integrating headlines from Locked On. TEGNA content will be
included in two additional markets that 6AM City intends to
launch.
- TEGNA’s WFAA Teams-Up with Dallas Mavericks for 10 Games –
WFAA, TEGNA’s Dallas-Fort Worth ABC affiliate, has partnered with
the Dallas Mavericks to bring 10 additional games to the WFAA
broadcast schedule. Games will be available to three million
households and more than seven million people in North Texas
through WFAA’s free over-the-air broadcasts and through WFAA’s
broadcast distribution with cable, satellite, and streaming
services. (Press release)
- KUSA and KVUE Receive Prestigious Alfred I. duPont-Columbia
University Awards – The Alfred I. duPont-Columbia University Awards
honor excellence in broadcast, online and documentary journalism.
KUSA (Denver, Colo.) was honored for “BURNED,” a year-long project
to document the devastating 2021 Marshall Fire in Boulder County.
KVUE (Austin, Texas) was honored for “Accountability After Uvalde,”
which revealed the failures of law enforcement in the aftermath of
the mass shooting at Robb Elementary in Uvalde, Texas. (Press
release)
FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements within
the meaning of the “safe harbor” provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. When used in this
communication, the words “believes,” “estimates,” “plans,”
“expects,” “should,” “could,” “outlook,” and “anticipates” and
similar expressions as they relate to the Company or its financial
results are intended to identify forward-looking statements.
Forward-looking statements in this communication may include,
without limitation, statements regarding anticipated growth rates,
the Company’s capital allocation framework, and the Company's other
plans, objectives and expectations. Forward-looking statements are
based on a number of assumptions about future events and are
subject to various risks, uncertainties and other factors that may
cause actual results to differ materially from the views, beliefs,
projections and estimates expressed in such statements, many of
which are outside the Company’s control. These risks, uncertainties
and other factors include, but are not limited to, risks and
uncertainties related to: changes in the market price of the
Company's shares, general market conditions, constraints,
volatility, or disruptions in the capital markets; the possibility
that the Company's share repurchases, and the execution of the
capital allocation framework may not enhance long-term stockholder
value; the possibility that share repurchases could increase the
volatility of the price of the Company's common stock; legal
proceedings, judgments or settlements; the response of customers,
suppliers and business partners to the Company's plans, operations
and business as a stand-alone company; the Company's ability to
re-price or renew subscribers; potential regulatory actions;
changes in consumer behaviors and impacts on and modifications to
TEGNA's operations and business relating thereto; and economic,
competitive, governmental, technological and other factors and
risks that may affect the Company's operations or financial
results, which are discussed in our Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q. Any forward-looking statements in
this communication should be evaluated in light of these important
risk factors. The Company is not responsible for updating the
information contained in this communication beyond the published
date, or for changes made to this press release by wire services,
Internet service providers or other media.
Readers are cautioned not to place undue reliance on
forward-looking statements made by or on behalf of the Company.
Each such statement speaks only as of the day it was made. The
Company undertakes no obligation to update or to revise any
forward-looking statements.
ADDITIONAL INFORMATION
TEGNA Inc. (NYSE: TGNA) is an innovative media company that
serves the greater good of our communities. Across platforms, TEGNA
tells empowering stories, conducts impactful investigations and
delivers innovative marketing solutions. With 64 television
stations in 51 U.S. markets, TEGNA is the largest owner of top 4
network affiliates in the top 25 markets among independent station
groups, reaching approximately 39 percent of all television
households nationwide. TEGNA also owns leading multicast networks
True Crime Network and Quest. TEGNA offers innovative solutions to
help businesses reach consumers across television, digital and
over-the-top (OTT) platforms, including Premion, TEGNA’s OTT
advertising service. For more information, visit www.TEGNA.com.
CONSOLIDATED STATEMENTS OF
INCOME
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 1
Quarter ended Dec. 31,
2023
2022
% Increase
(Decrease)
Revenues
$
725,854
$
917,130
(20.9
)
Operating expenses:
Cost of revenues
423,137
432,645
(2.2
)
Business units - Selling, general and
administrative expenses
117,266
114,394
2.5
Corporate - General and administrative
expenses
13,775
11,809
16.6
Depreciation
14,650
15,137
(3.2
)
Amortization of intangible assets
13,292
14,930
(11.0
)
Asset impairment and other
—
(1
)
***
Total
582,120
588,914
(1.2
)
Operating income
143,734
328,216
(56.2
)
Non-operating (expense) income:
Equity loss in unconsolidated investments,
net
(101
)
(248
)
(59.3
)
Interest expense
(43,783
)
(44,046
)
(0.6
)
Interest income
5,794
4,780
21.2
Other non-operating items, net
(3,276
)
(113
)
***
Total
(41,366
)
(39,627
)
4.4
Income before income taxes
102,368
288,589
(64.5
)
Provision for income taxes
26,372
69,775
(62.2
)
Net income
75,996
218,814
(65.3
)
Net loss (income) attributable to
redeemable noncontrolling interest
137
(213
)
***
Net income attributable to TEGNA
Inc.
$
76,133
$
218,601
(65.2
)
Earnings per share:
Basic
$
0.40
$
0.97
(58.8
)
Diluted
$
0.40
$
0.97
(58.8
)
Weighted average number of common
shares outstanding:
Basic shares
187,705
224,233
(16.3
)
Diluted shares
188,234
225,275
(16.4
)
*** Not meaningful
CONSOLIDATED STATEMENTS OF
INCOME
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 1 (continued)
Year ended Dec. 31,
2023
2022
% Increase
(Decrease)
Revenues
$
2,910,930
$
3,279,245
(11.2
)
Operating expenses:
Cost of revenues
1,718,857
1,693,221
1.5
Business units - Selling, general and
administrative expenses
412,000
414,530
(0.6
)
Corporate - General and administrative
expenses
65,933
60,108
9.7
Depreciation
59,769
61,195
(2.3
)
Amortization of intangible assets
53,467
59,882
(10.7
)
Asset impairment and other
3,359
(323
)
***
Merger termination fee
(136,000
)
—
***
Total
2,177,385
2,288,613
(4.9
)
Operating income
733,545
990,632
(26.0
)
Non-operating (expense) income:
Equity loss in unconsolidated investments,
net
(877
)
(4,473
)
(80.4
)
Interest expense
(172,904
)
(174,022
)
(0.6
)
Interest income
29,292
6,922
***
Other non-operating items, net
17,490
14,509
20.5
Total
(126,999
)
(157,064
)
(19.1
)
Income before income taxes
606,546
833,568
(27.2
)
Provision for income taxes
130,199
202,370
(35.7
)
Net income
476,347
631,198
(24.5
)
Net loss (income) attributable to
redeemable noncontrolling interest
377
(729
)
***
Net income attributable to TEGNA
Inc.
$
476,724
$
630,469
(24.4
)
Earnings per share:
Basic
$
2.29
$
2.82
(18.8
)
Diluted
$
2.28
$
2.81
(18.9
)
Weighted average number of common
shares outstanding:
Basic shares
207,594
223,652
(7.2
)
Diluted shares
207,947
224,486
(7.4
)
*** Not meaningful
USE OF NON-GAAP
INFORMATION
The company uses non-GAAP financial performance measures to
supplement the financial information presented on a GAAP basis.
These non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the related GAAP measures,
nor should they be considered superior to the related GAAP
measures, and should be read together with financial information
presented on a GAAP basis. Also, our non-GAAP measures may not be
comparable to similarly titled measures of other companies.
Management and the company’s Board of Directors use non-GAAP
financial measures for purposes of evaluating company performance.
Furthermore, the Leadership Development and Compensation Committee
of our Board of Directors uses non-GAAP measures such as Adjusted
EBITDA, non-GAAP net income, non-GAAP EPS and free cash flow to
evaluate management’s performance. The company, therefore, believes
that each of the non-GAAP measures presented provides useful
information to investors and other stakeholders by allowing them to
view our business through the eyes of management and our Board of
Directors, facilitating comparisons of results across historical
periods and focus on the underlying ongoing operating performance
of our business. The company also believes these non-GAAP measures
are frequently used by investors, securities analysts and other
interested parties in their evaluation of our business and other
companies in the broadcast industry.
The company discusses in this release non-GAAP financial
performance measures that exclude from its reported GAAP results
the impact of “special items” consisting of asset impairment and
other, M&A-related costs, Merger termination fee, retention
costs, gains on an available for sale investment and on an equity
investment that we sold a portion of and an impairment charge
recorded for another investment. In addition, we have excluded
certain income tax special items associated with a valuation
allowance on a deferred tax asset related to an equity method
investment and a tax benefit associated with previously disallowed
transaction costs.
The company believes that such expenses and gains are not
indicative of normal, ongoing operations. While these items should
not be disregarded in evaluation of our earnings performance, it is
useful to exclude such items when analyzing current results and
trends compared to other periods as these items can vary
significantly from period to period depending on specific
underlying transactions or events that may occur. Therefore, while
we may incur or recognize these types of expenses, charges and
gains in the future, the company believes that removing these items
for purposes of calculating the non-GAAP financial measures
provides investors with a more focused presentation of our ongoing
operating performance.
The company also discusses Adjusted EBITDA (with and without
stock-based compensation expenses), a non-GAAP financial
performance measure that it believes offers a useful view of the
overall operation of its businesses. The company defines Adjusted
EBITDA as net income attributable to TEGNA before (1) net (loss)
income attributable to redeemable noncontrolling interest, (2)
income taxes, (3) interest expense, (4) interest income, (5) equity
loss in unconsolidated investments, net, (6) other non-operating
items, net, (7) the Merger termination fee, (8) M&A-related
costs, (9) advisory fees related to activism defense, (10) asset
impairment and other, (11) employee retention costs, (12)
depreciation and (13) amortization of intangible assets. The
company believes these adjustments facilitate company-to-company
operating performance comparisons by removing potential differences
caused by variations unrelated to operating performance, such as
capital structures (interest expense), income taxes, and the age
and book appreciation of property and equipment (and related
depreciation expense). The most directly comparable GAAP financial
measure to Adjusted EBITDA is Net income attributable to TEGNA.
Users should consider the limitations of using Adjusted EBITDA,
including the fact that this measure does not provide a complete
measure of our operating performance. Adjusted EBITDA is not
intended to purport to be an alternate to net income as a measure
of operating performance or to cash flows from operating activities
as a measure of liquidity. In particular, Adjusted EBITDA is not
intended to be a measure of cash flow available for management’s
discretionary expenditures, as this measure does not consider
certain cash requirements, such as working capital needs, capital
expenditures, contractual commitments, interest payments, tax
payments and other debt service requirements.
This earnings release also discusses free cash flow, a non-GAAP
performance measure that the Board of Directors uses to review the
performance of the business. Free cash flow is reviewed by the
Board of Directors as a percentage of revenue over a trailing
two-year period (reflecting both an even and odd year reporting
period given the political cyclicality of the business). The most
directly comparable GAAP financial measure to free cash flow is Net
income attributable to TEGNA. Free cash flow is calculated as
Adjusted EBITDA (as defined above), further adjusted by adding back
(1) employee awards stock-based compensation, (2) Company stock
401(k) match contributions, (3) syndicated programming
amortization, (4) dividends received from equity method
investments, (5) reimbursements from spectrum repacking, (6)
proceeds from company-owned life insurance policies and (7)
interest income. This is further adjusted by deducting payments
made for (1) syndicated programming, (2) pension, (3) interest, (4)
taxes (net of refunds) and (5) purchases of property and equipment.
Like Adjusted EBITDA, free cash flow is not intended to be a
measure of cash flow available for management’s discretionary
use.
This earnings release also presents our net leverage ratio which
includes Adjusted EBITDA (without stock-based compensation) as a
component of the computation. Our net leverage ratio is a financial
measure that is used by management to assess the borrowing capacity
of the company and management believes it is useful to investors
for the same reason. The company defines its Net Leverage Ratio as
(a) net debt (total debt less cash and cash equivalents) as of the
balance sheet date divided by (b) Average Annual Adjusted EBITDA
for the trailing two-year period.
The company is furnishing forward-looking guidance with respect
to free cash flow for the combined 2024-25 years, net leverage and
corporate expenses for fiscal year 2024 and non-GAAP operating
expenses for the first quarter of 2024. Our future GAAP financial
results will include the impact of special items such as retention
costs including stock-based compensation and cash payments. The
company believes that such expenses are not indicative of normal,
ongoing operations. While these items should not be disregarded in
evaluation of our earnings performance, it is useful to exclude
such items when analyzing current results and trends compared to
other periods. Therefore, while we may incur or recognize these
types of expenses in the future, the company believes that removing
these items for purposes of calculating the non-GAAP financial
measures provides investors with a more focused presentation of our
ongoing operating performance.
The Company is not able to reconcile these amounts to their
comparable GAAP financial measures without unreasonable efforts
because certain information necessary to calculate such measures on
a GAAP basis is unavailable, dependent on future events outside of
our control and cannot be predicted. An example of such information
is share-based compensation, which is impacted by future share
price movement in the Company’s stock price and also dependent on
future hiring and attrition. In addition, the Company believes such
reconciliations could imply a degree of precision that might be
confusing or misleading to investors. The actual effect of the
reconciling items that the Company may exclude from these non-GAAP
expense numbers, when determined, may be significant to the
calculation of the comparable GAAP measures.
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 2
Reconciliations of certain line items
impacted by special items to the most directly comparable financial
measure calculated and presented in accordance with GAAP on the
company's Consolidated Statements of Income follow:
Special Items
Quarter ended
Dec. 31, 2023
GAAP
measure
Retention costs - SBC
Retention costs - Cash
Special tax item
Non-GAAP measure
Cost of revenues
$
423,137
$
(948
)
$
—
$
—
$
422,189
Business units - Selling, general and
administrative expenses
117,266
(632
)
(1,692
)
—
114,942
Corporate - General and administrative
expenses
13,775
(632
)
(1,564
)
—
11,579
Operating expenses
582,120
(2,212
)
(3,256
)
—
576,652
Operating income
143,734
2,212
3,256
—
149,202
Other non-operating items, net
(3,276
)
—
—
—
(3,276
)
Total non-operating expenses
(41,366
)
—
—
—
(41,366
)
Income before income taxes
102,368
2,212
3,256
—
107,836
Provision for income taxes
26,372
263
438
(631
)
26,442
Net income attributable to TEGNA Inc.
76,133
1,949
2,818
631
81,531
Earnings per share-diluted (a)
$
0.40
$
0.01
$
0.01
$
—
$
0.43
(a) Per share amounts do not sum due to
rounding.
Special Items
Quarter ended
Dec. 31, 2022
GAAP
measure
M&A-related costs
Asset impairment and
other
Non-GAAP measure
Corporate - General and administrative
expenses
$
11,809
$
(2,370
)
$
—
$
9,439
Asset impairment and other
(1
)
—
1
—
Operating expenses
588,914
(2,370
)
1
586,545
Operating income
328,216
2,370
(1
)
330,585
Income before income taxes
288,589
2,370
(1
)
290,958
Provision for income taxes
69,775
148
—
69,923
Net income attributable to TEGNA Inc.
218,601
2,222
(1
)
220,822
Earnings per share-diluted
$
0.97
$
0.01
$
—
$
0.98
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars (except
per share amounts)
Table No. 2 (continued)
Special Items
Year ended
Dec. 31, 2023
GAAP
measure
M&A-related costs
Retention costs - SBC
Retention costs - Cash
Merger termination fee
Asset impairment and
other
Other non-operating
item
Special tax item
Non-GAAP measure
Cost of revenues
$
1,718,857
$
—
$
(1,699
)
$
—
$
—
$
—
$
—
$
—
$
1,717,158
Business units - Selling, general and
administrative expenses
412,000
—
(1,133
)
(2,331
)
—
—
—
—
408,536
Corporate - General and administrative
expenses
65,933
(19,848
)
(1,072
)
(2,117
)
—
—
—
—
42,896
Asset impairment and other
3,359
—
—
—
—
(3,359
)
—
—
—
Merger termination fee
(136,000
)
—
—
—
136,000
—
—
—
—
Operating expenses
2,177,385
(19,848
)
(3,904
)
(4,448
)
136,000
(3,359
)
—
—
2,281,826
Operating income
733,545
19,848
3,904
4,448
(136,000
)
3,359
—
—
629,104
Other non-operating items, net
17,490
—
—
—
—
—
(25,809
)
—
(8,319
)
Total non-operating expenses
(126,999
)
—
—
—
—
—
(25,809
)
—
(152,808
)
Income before income taxes
606,546
19,848
3,904
4,448
(136,000
)
3,359
(25,809
)
—
476,296
Provision for income taxes
130,199
4,552
500
590
(24,504
)
860
(6,604
)
7,328
112,921
Net income attributable to TEGNA Inc.
476,724
15,296
3,404
3,858
(111,496
)
2,499
(19,205
)
(7,328
)
363,752
Earnings per share-diluted (a)
$
2.28
$
0.07
$
0.02
$
0.02
$
(0.54
)
$
0.01
$
(0.09
)
$
(0.04
)
$
1.74
(a) Per share amounts do not sum due to
rounding.
Special Items
Year ended
Dec. 31, 2022
GAAP
measure
M&A-related costs
Asset impairment and
other
Other non-operating
items
Special tax items
Non-GAAP measure
Corporate - General and administrative
expenses
$
60,108
$
(20,517
)
$
—
$
—
$
—
$
39,591
Asset impairment and other
(323
)
—
323
—
—
—
Operating expenses
2,288,613
(20,517
)
323
—
—
2,268,419
Operating income
990,632
20,517
(323
)
—
—
1,010,826
Other non-operating items, net
14,509
—
—
(18,308
)
—
(3,799
)
Total non-operating expenses
(157,064
)
—
—
(18,308
)
—
(175,372
)
Income before income taxes
833,568
20,517
(323
)
(18,308
)
—
835,454
Provision for income taxes
202,370
233
(78
)
168
(4,529
)
198,164
Net income attributable to TEGNA Inc.
630,469
20,284
(245
)
(18,476
)
4,529
636,561
Earnings per share-diluted (a)
$
2.81
$
0.09
$
—
$
(0.08
)
$
0.02
$
2.83
(a) Per share amounts do not sum due to
rounding.
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 3
Reconciliations of Adjusted EBITDA to net
income presented in accordance with GAAP on the company's
Consolidated Statements of Income are presented below:
Quarter ended Dec. 31,
2023
2022
2021
Net income attributable to TEGNA Inc.
(GAAP basis)
$
76,133
$
218,601
$
129,431
(Less) Plus: Net (loss) income
attributable to redeemable noncontrolling interest
(137
)
213
381
Less: Interest income
(5,794
)
(4,780
)
(4
)
Plus: Provision for income taxes
26,372
69,775
32,011
Plus: Interest expense
43,783
44,046
46,079
Plus: Equity loss in unconsolidated
investments, net
101
248
3,997
Plus (Less): Other non-operating items,
net
3,276
113
(2,481
)
Operating income (GAAP basis)
143,734
328,216
209,414
Plus: M&A-related costs
—
2,370
3,738
Plus: Retention costs - Employee awards
stock-based compensation
2,212
—
—
Plus: Retention costs - Cash
3,256
—
—
(Less) Plus: Asset impairment and
other
—
(1
)
87
Adjusted operating income (non-GAAP
basis)
149,202
330,585
213,239
Plus: Depreciation
14,650
15,137
16,315
Plus: Amortization of intangible
assets
13,292
14,930
15,704
Adjusted EBITDA
$
177,144
$
360,652
$
245,258
Stock-based compensation:
Employee awards
6,882
6,856
8,378
Company stock 401(k) match
contributions
4,479
4,318
3,567
Adjusted EBITDA before stock-based
compensation costs
$
188,505
$
371,826
$
257,203
Year ended Dec. 31,
2023
2022
2021
Net income attributable to TEGNA Inc.
(GAAP basis)
$
476,724
$
630,469
$
476,955
(Less) Plus: Net (loss) income
attributable to redeemable noncontrolling interest
(377
)
729
1,242
Less: Interest income
(29,292
)
(6,922
)
(2
)
Less: Other non-operating items, net
(17,490
)
(14,509
)
(6,823
)
Plus: Provision for income taxes
130,199
202,370
135,481
Plus: Interest expense
172,904
174,022
185,650
Plus: Equity loss in unconsolidated
investments, net
877
4,473
9,713
Operating income (GAAP basis)
733,545
990,632
802,216
Plus: M&A-related costs
19,848
20,517
3,738
Plus: Advisory fees related to activism
defense
—
—
16,611
Plus: Retention costs - Employee awards
stock-based compensation
3,904
—
—
Plus: Retention costs - Cash
4,448
—
—
Plus (Less): Asset impairment and
other
3,359
(323
)
(2,307
)
Less: Merger termination fee
(136,000
)
—
—
Adjusted operating income (non-GAAP
basis)
629,104
1,010,826
820,258
Plus: Depreciation
59,769
61,195
64,841
Plus: Amortization of intangible
assets
53,467
59,882
63,011
Adjusted EBITDA
$
742,340
$
1,131,903
$
948,110
Stock-based compensation:
Employee awards
20,593
30,481
31,515
Company stock 401(k) match
contributions
18,629
18,661
17,142
Adjusted EBITDA before stock-based
compensation costs
$
781,562
$
1,181,045
$
996,767
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 4
Below is a detail of our primary sources
of revenue presented in accordance with GAAP on company’s
Consolidated Statements of Income. In addition, we show Adjusted
EBITDA and Adjusted EBITDA margins (see non-GAAP reconciliations at
Table No. 3).
Quarter ended Dec. 31,
2023
2022
% Increase
(Decrease)
2021
% Increase
(Decrease)
Subscription
$
339,266
$
372,301
(8.9
)
$
335,943
1.0
Advertising and Marketing Services
351,919
352,927
(0.3
)
400,125
(12.0
)
Political
22,875
179,383
(87.2
)
26,554
(13.9
)
Other
11,794
12,519
(5.8
)
12,025
(1.9
)
Total revenues
$
725,854
$
917,130
(20.9
)
$
774,647
(6.3
)
Adjusted EBITDA
$
177,144
$
360,652
(50.9
)
$
245,258
(27.8
)
Adjusted EBITDA Margin
24.4
%
39.3
%
31.7
%
Year ended Dec. 31,
2023
2022
% Increase
(Decrease)
2021
% Increase
(Decrease)
Subscription
$
1,527,563
$
1,530,402
(0.2
)
$
1,466,433
4.2
Advertising and Marketing Services
1,289,903
1,363,417
(5.4
)
1,428,082
(9.7
)
Political
45,800
341,110
(86.6
)
60,573
(24.4
)
Other
47,664
44,316
7.6
36,005
32.4
Total revenues
$
2,910,930
$
3,279,245
(11.2
)
$
2,991,093
(2.7
)
Adjusted EBITDA
$
742,340
$
1,131,903
(34.4
)
$
948,110
(21.7
)
Adjusted EBITDA Margin
25.5
%
34.5
%
31.7
%
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 5
Reconciliations of free cash flow to net
income presented in accordance with GAAP on the company's
Consolidated Statements of Income are presented below:
Quarter ended Dec. 31,
2023
2022
% Increase (Decrease)
Net income attributable to TEGNA Inc.
(GAAP basis)
$
76,133
$
218,601
(65.2
)
Plus: Provision for income taxes
26,372
69,775
(62.2
)
Plus: Interest expense
43,783
44,046
(0.6
)
Plus: M&A-related costs
—
2,370
***
Plus: Depreciation
14,650
15,137
(3.2
)
Plus: Amortization of intangible
assets
13,292
14,930
(11.0
)
Plus: Employee awards stock-based
compensation
9,094
6,856
32.6
Plus: Company stock 401(k) match
contributions
4,479
4,317
3.8
Plus: Syndicated programming
amortization
7,745
13,981
(44.6
)
Plus: Cash dividend from equity
investments for return on capital
300
200
50.0
Plus: Other non-operating items, net
3,276
113
***
Plus: Equity loss in unconsolidated
investments, net
101
248
(59.3
)
Plus: Reimbursement from company-owned
life insurance policies
459
473
(3.0
)
Plus: Retention costs - cash portion
3,256
—
***
Plus: Cash reimbursements from spectrum
repacking
—
1
***
(Less) Plus: Net (loss) income
attributable to redeemable noncontrolling interest
(137
)
213
***
Less: Asset impairment and other
—
(1
)
***
Less: Income tax payments
(24,937
)
(46,889
)
(46.8
)
Less: Syndicated programming payments
(12,329
)
(14,670
)
(16.0
)
Less: Pension contributions
(956
)
(2,816
)
(66.1
)
Less: Interest payments
(9,208
)
(9,240
)
(0.3
)
Less: Purchases of property and
equipment
(25,393
)
(15,806
)
60.7
Free cash flow (non-GAAP basis)
$
129,980
$
301,839
(56.9
)
*** Not meaningful
Starting in the fourth quarter of 2023,
TEGNA began presenting interest income as a separate line item on
its Statements of Income as a result of its increasing size. Prior
to this, interest income was included in Other non-operating items,
net. Prior year amounts have been reclassified to conform to the
new presentation. Interest income is included in free cash flow
while Other non-operating items, net is not, consistent with past
presentations.
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars
Table No. 5 (continued)
Two-year period ended Dec. 31,
2023
Net income attributable to TEGNA Inc.
(GAAP basis)
$
1,107,193
Plus: Provision for income taxes
332,569
Plus: Interest expense
346,926
Plus: M&A-related costs
40,365
Plus: Depreciation
120,964
Plus: Amortization of intangible
assets
113,349
Plus: Employee awards stock-based
compensation
54,978
Plus: Company stock 401(k) match
contributions
37,290
Plus: Syndicated programming
amortization
121,866
Plus: Cash dividend from equity
investments for return on capital
500
Plus: Asset impairment and other
3,036
Plus: Net income attributable to
redeemable noncontrolling interest
352
Plus: Reimbursement from Company-owned
life insurance policies
1,879
Plus: Retention costs - cash portion
4,448
Plus: Equity loss in unconsolidated
investments, net
5,350
Plus: Cash reimbursements from spectrum
repacking
323
Less: Other non-operating items, net
(31,999
)
Less: Merger termination fees
(136,000
)
Less: Syndicated programming payments
(121,582
)
Less: Income tax payments, net of
refunds
(297,233
)
Less: Pension contributions
(9,621
)
Less: Interest payments
(333,665
)
Less: Purchases of property and
equipment
(106,027
)
Free cash flow (non-GAAP basis)
$
1,255,261
Revenue
$
6,190,175
Free cash flow as a % of revenue
20.3
%
Starting in the fourth quarter of 2023,
TEGNA began presenting interest income as a separate line item on
its Statements of Income as a result of its increasing size. Prior
to this, interest income was included in Other non-operating items,
net. Prior year amounts have been reclassified to conform to the
new presentation. Interest income is included in free cash flow
while Other non-operating items, net is not, consistent with past
presentations.
NON-GAAP FINANCIAL INFORMATION TEGNA Inc. Unaudited, in
thousands of dollars
Table No. 6 Below is a reconciliation of non-GAAP operating
expenses to GAAP operating expenses on the company's Consolidated
Statements of Income:
Quarter ended Dec. 31,
2023
2022
Operating expenses (GAAP basis)
$
582,120
$
588,914
Less: Special items 1
(5,468
)
(2,369
)
Operating expenses (non-GAAP basis)
576,652
586,545
Less: Programming expenses
(241,236
)
(237,992
)
Operating expenses, less Programming
(non-GAAP basis)
$
335,416
$
348,553
Year ended Dec. 31,
2023
2022
Operating expenses (GAAP basis)
$
2,177,385
$
2,288,613
Less: Special items 2
104,441
(20,194
)
Operating expenses (non-GAAP basis)
2,281,826
2,268,419
Less: Programming expenses
(995,292
)
(952,225
)
Operating expenses, less Programming
(non-GAAP basis)
$
1,286,534
$
1,316,194
1 Q4 2023 special items include retention
costs (see Table 2). Q4 2022 special items include M&A-related
costs and reimbursements from the FCC for required spectrum
repacking (see Table 2).
2 Full year 2023 special items include
Merger termination fee, M&A-related costs, a programming asset
impairment, and retention costs. Full year 2022 special items
include M&A-related costs and reimbursements from the FCC for
required spectrum repacking (see Table 2).
NON-GAAP FINANCIAL INFORMATION
TEGNA Inc.
Unaudited, in thousands of dollars, except
for the Net Leverage Ratio
Table No. 7
The following table reconciles long-term
debt, net of current portion to Net Debt.
December 31, 2023
Long-term debt, net of current portion
$
3,090,000
Plus: Current portion of long-term
debt
—
Less: Cash and cash equivalents
(361,036
)
Net debt (numerator)
$
2,728,964
The following table shows the calculation
of the average annual Adjusted EBITDA before stock-based
compensation over the trailing two-year period ("T2Y").
Adjusted EBITDA before stock-based
compensation:
Year ended December 31, 20221
$
1,181,045
Plus: Year ended December 31, 20231
781,562
Combined T2Y
$
1,962,607
Divided by
2
T2Y Adjusted EBITDA (denominator)
$
981,304
The following table shows the calculation
of the Net Leverage Ratio.
December 31, 2023
Net debt (numerator)
$
2,728,964
T2Y Adjusted EBITDA (denominator)
$
981,304
Net Leverage Ratio
2.8x
1 A non-GAAP measure detailed in Table
3.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228025129/en/
For media inquiries, contact: Anne Bentley Vice President, Chief
Communications Officer 703-873-6366 abentley@TEGNA.com
For investor inquiries, contact: Julie Heskett Senior Vice
President, Chief Financial Officer 703-873-6747
investorrelations@TEGNA.com
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