TEGNA Inc. Reports a 28 Percent Increase in 2015 Third Quarter Non-GAAP Earnings per Share from Continuing Operations and a 22 Percent Increase in Adjusted EBITDA

Highlights for the quarter include the following:

  • Earnings from continuing operations of $0.37 per diluted share on a non-GAAP basis, a 28 percent year-over-year increase driven by strong Digital Segment results
  • Overall company revenue growth of 19 percent, also driven by strong Digital Segment results and despite the absence of significant political spending in the same quarter last year
  • Digital Segment revenue increased 72 percent due to the acquisition of and substantially better results at Cars.com
  • Adjusted EBITDA totaled $267 million, a 22 percent year-over-year increase

MCLEAN, Va.--()--TEGNA Inc. (NYSE:TGNA) today reported non-GAAP earnings per diluted share from continuing operations of $0.37 for the third quarter of 2015 compared to $0.29 for the third quarter of 2014. The 27.6 percent increase was driven by strong results in the Digital Segment. Digital Segment results reflect the acquisition of and substantially higher organic growth at Cars.com. Solid Media Segment results were impacted by the absence of $40 million of political spending that benefited the third quarter in 2014.

Gracia Martore, president and chief executive officer, said, “We are pleased that TEGNA has capped off its first quarter following the close of our separation on such a strong footing, with company-wide revenue up nearly 20 percent. TEGNA Media revenue continued its strong trajectory despite the absence of approximately $40 million in political spending in the third quarter of 2014 - which speaks to strong growth in retransmission revenue, online revenue and core advertising during the quarter. In TEGNA Digital, revenue increased substantially to more than $350 million - an increase of 72 percent - as we continue to generate strong organic growth at Cars.com while shifting CareerBuilder’s focus toward higher-margin software as a service solutions. We expect that the momentum we’ve seen this past quarter puts us in a very strong position as we continue to execute TEGNA’s more focused strategy going forward. Beyond this, we expect to see even greater impact as the nation’s political races begin to heat up into 2016.”

The results for the third quarter of 2015 and the year-to-date periods include results for Cars.com, which we acquired on October 1, 2014. The prior year periods do not include results for Cars.com, impacting the year-over-year comparisons.

On the first day of our fiscal third quarter, we completed the spin-off of our publishing businesses. The publishing businesses are now reflected as Discontinued Operations in our Statements of Income.

On October 2, 2015, we announced the successful completion of the sale of our corporate headquarters for $270 million to Tamares, a private investment group with holdings in the United States and Europe. In addition, we completed our CBS affiliate and DISH renewals. The outcome of each negotiation was consistent with the long-term plan we presented at our investor day in June of this year.

CONTINUING OPERATIONS

Company-wide operating revenues in the third quarter totaled $807.1 million, an increase of 18.5 percent compared to $681.0 million in the third quarter of 2015. Revenue growth of 71.6 percent in the Digital Segment primarily reflected the acquisition of and strong organic growth at Cars.com. Media Segment revenues were 2.4 percent lower as double-digit growth in retransmission revenue and digital revenue was offset by the absence of political spending that benefited the third quarter in 2014.

Net income from continuing operations attributable to TEGNA in the third quarter of 2015 was $90.6 million which includes a $6.0 million special tax credit. On a non-GAAP basis, excluding the tax credit, net income from continuing operations was $84.6 million, an increase of 24.1 percent compared to the third quarter in 2014.

Operating income totaled $216.4 million and was 17.6 percent higher than $184.0 million in the third quarter last year due primarily to the substantial growth in profitability in the Digital Segment. On a pro forma basis, non-GAAP operating income was up 7.4 percent. Adjusted EBITDA (a non-GAAP term detailed in Table 4) totaled $266.6 million, an increase of 22.2 percent. On a pro forma basis, the increase was 4.5 percent. The Adjusted EBITDA margin in the third quarter was 33.0 percent, an increase of 100 basis points compared to the third quarter last year.

Special items in the third quarter of 2015 primarily included a spin-related tax credit of $6.0 million ($0.02 per share). Special items in the third quarter of 2014 included $20.5 million ($0.07 per share) of non-operating expenses reflecting primarily spin and transaction-related costs.

Operating expenses were $590.7 million in the quarter compared to $497.0 million in the third quarter of 2014, an increase of 18.9 percent primarily reflecting the acquisition of Cars.com. Pro forma non-GAAP operating expenses were 1.8 percent lower compared to the third quarter in 2014 reflecting lower corporate expenses and a decline in Digital Segment expenses.

Corporate expenses for the third quarter of 2015 were $12.9 million compared to $18.2 million in 2014. The decrease was driven by the resizing of the company’s footprint. In addition, third quarter 2015 corporate expenses included the benefit of $1.8 million related to the elimination of depreciation resulting from the sale of the company’s McLean, VA headquarters. As previously disclosed, the annual run rate for corporate expenses is expected to be in the range of $55 million to $60 million by mid-2016.

TEGNA MEDIA

Broadcasting Segment revenues totaled $406.4 million compared to $416.5 million in the third quarter of 2014. The 2.4 percent decline year-over-year reflects the absence of $33.9 million of net political spending which more than offset significant increases in retransmission revenue and online revenue as well as higher core advertising.

The following table summarizes the year-over-year changes in select Broadcasting Segment revenue categories.

 
Broadcasting Revenue Detail
(Dollars in thousands)
Thirteen

weeks ended

Sep. 27, 2015

  Percentage change

from thirteen weeks

ended Sep. 28, 2014

Core (Local & National) $ 254,243 1 %
Political 6,061 (85 %)
Retransmission (a) 109,012 19 %
Digital 29,415 13 %
Other 7,714   (3 %)
Total $ 406,445   (2 %)
 
(a) Reverse compensation to networks is included as part of programming costs and therefore not included in this line.
 

Core advertising was up just over 1 percent in the quarter. Retransmission revenues totaled $109.0 million and were 18.6 percent higher compared to the third quarter in 2014 while digital revenues in the Media Segment were up 13.1 percent reflecting continued growth in digital marketing services revenue.

Media Segment operating expenses were $247.9 million, an increase of 3.9 percent compared to the third quarter of 2014 due, in part, to higher reverse network compensation. Operating income totaled $158.6 million while Adjusted EBITDA was $177.0 million.

Based on current trends, we expect to see growth in core advertising in the fourth quarter. However, the fourth quarter of 2014 benefited from a record $92 million of politically related advertising. As a result, we expect the percentage decline in total television revenues for the fourth quarter of 2015 to be in the mid to high-single digits due to the challenging year-over-year comparison.

DIGITAL

Digital Segment operating revenues of $351.1 million were significantly higher in the third quarter, up 71.6 percent driven by the acquisition of and continued strong organic growth at Cars.com. On a pro forma basis, Digital Segment revenues grew 5.3 percent reflecting a mid-twenties percent increase in revenue at Cars.com.

Revenue growth at Cars.com reflects continued growth across all sales channels. Direct sales, on a pro forma basis, were up 11.4 percent reflecting an increase in revenue per dealer driven by new product sales. National revenue, primarily display advertising sold to auto manufacturers, was 13.8 percent higher due, in part, to strong growth in mobile traffic. Affiliate revenue increased 52.7 percent driven by higher wholesale rates that Cars.com charges its affiliates.

CareerBuilder revenue in the third quarter would have been up in the low-single digits excluding the impact of the strategic decision to reduce sales of certain lower margin advertising and services products to focus on more lucrative, long-term recurring software deals as well as unfavorable exchange rates. As a result, revenue from Human Capital Software Solutions was up 24.1 percent in the quarter. CareerBuilder revenue was 3.7 percent lower on a constant currency basis.

Digital Segment non-GAAP pro forma operating expenses were 1.3 percent lower in the quarter and totaled $278.6 million. Pro forma Digital Segment operating income was 42.0 percent higher and totaled $72.4 million. Adjusted EBITDA on the same basis totaled $103.5 million, an increase of 25.6 percent compared to the third quarter of 2014.

NON-OPERATING ITEMS

Interest expense totaled $66.9 million in the quarter, slightly higher than the third quarter of 2014, and reflects slightly higher average debt outstanding partially offset by a lower average interest rate.

Other non-operating expense on a non-GAAP basis in the quarter totaled $3.1 million compared to $0.8 million in the third quarter of 2014.

Net cash flow from operating activities was $183.8 million in the quarter. Free cash flow (a non-GAAP measure) totaled $163.9 million. Long-term debt outstanding was $4.47 billion and total cash was $117.8 million at quarter end. During the third quarter, we repurchased approximately 4.9 million shares of our outstanding stock for $125.5 million.

* * * *

As previously announced, the company will hold an earnings conference call at 10:00 a.m. ET today. The call can be accessed via a live webcast through the company's Investors web site, investors.TEGNA.com, or listen-only conference lines. U.S. callers should dial 1-800-768-6544 and international callers should dial 1-785-830-7990 at least 10 minutes prior to the scheduled start of the call. The confirmation code for the conference call is 586188. To access the replay, dial 1-888-203-1112 in the U.S. International callers should use the number 1-719-457-0820. The confirmation code for the replay is 586188. Materials related to the call will be available through the Investor Relations section of the company's web site Tuesday morning.

About TEGNA

TEGNA Inc. (NYSE: TGNA), formerly Gannett Co., Inc., is comprised of a dynamic portfolio of media and digital businesses that provide content that matters and brands that deliver. TEGNA reaches more than 90 million Americans and delivers highly relevant, useful and smart content, when and how people need it, to make the best decisions possible. TEGNA Media includes 46 television stations (including those serviced by TEGNA) and is the largest independent station group of major network affiliates in the top 25 markets, reaching approximately one-third of all television households nationwide. TEGNA Digital is comprised of Cars.com, the leading online destination for automotive consumers, CareerBuilder, a global leader in human capital solutions, and other powerful brands such as Cofactor, Clipper and Sightline Media Group. 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

TEGNA Inc. and Subsidiaries

Unaudited, in thousands (except per share amounts)

Table No. 1      
Thirteen
weeks ended
Sep. 27, 2015
Thirteen
weeks ended
Sep. 28, 2014
% Increase
(Decrease)
Net operating revenues:
TEGNA Media $ 406,445 $ 416,509 (2.4 )
TEGNA Digital 351,072 204,560 71.6
TEGNA Other 49,569   59,916   (17.3 )
Total 807,086   680,985   18.5  
 
Operating expenses:
Cost of sales and operating expenses, exclusive of depreciation 256,941 276,833 (7.2 )
Selling, general and administrative expenses, exclusive of depreciation 283,564 186,191 52.3
Depreciation 21,723 21,294 2.0
Amortization of intangible assets 28,501 11,433 ***
Facility consolidation   1,230   (100.0 )
Total 590,729   496,981   18.9  
Operating income 216,357   184,004   17.6  
 
Non-operating (expense) income:
Equity loss in unconsolidated investees, net (1,013 ) (981 ) 3.3
Interest expense (66,949 ) (65,791 ) 1.8
Other non-operating items (3,116 ) (15,326 ) (79.7 )
Total (71,078 ) (82,098 ) (13.4 )
 
Income before income taxes 145,279 101,906 42.6
Provision for income taxes 37,178   29,782   24.8  
Income from continuing operations 108,101 72,124 49.9
Net income attributable to noncontrolling interests

(17,487

)

(21,476 ) (18.6 )
Net income from continuing operations attributable to TEGNA Inc. $ 90,614   $ 50,648   78.9  
 
Earnings from continuing operations per share:
Basic $ 0.40 $ 0.22 81.8
Diluted $ 0.39 $ 0.22 77.3
 
Weighted average number of common shares outstanding:
Basic 224,530 225,761 (0.5 )
Diluted 230,078 232,097 (0.9 )
 
Dividends declared per share $ 0.14 $ 0.20 (30.0 )
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

TEGNA Inc. and Subsidiaries

Unaudited, in thousands (except per share amounts)

     
Table No. 1 (continued)
Thirty-nine

weeks ended

Sep. 27, 2015

Thirty-nine

weeks ended

Sep. 28, 2014

% Increase

(Decrease)

Net operating revenues:
TEGNA Media $ 1,219,911 $ 1,197,035 1.9
TEGNA Digital 1,025,770 587,060 74.7
TEGNA Other 155,556   185,332   (16.1 )
Total 2,401,237   1,969,427   21.9  
 
Operating expenses:
Cost of sales and operating expenses, exclusive of depreciation 792,950 816,436 (2.9 )
Selling, general and administrative expenses, exclusive of depreciation 852,853 559,642 52.4
Depreciation 71,360 61,141 16.7
Amortization of intangible assets 86,155 36,659 ***
Facility consolidation and asset impairment charges 23,190   25,802   (10.1 )
Total 1,826,508   1,499,680   21.8  
Operating income 574,729   469,747   22.3  
 
Non-operating (expense) income:
Equity income (loss) in unconsolidated investees, net (4,123 ) 156,792 ***
Interest expense (206,871 ) (199,284 ) 3.8
Other non-operating items (5,346 ) (39,762 ) (86.6 )
Total (216,340 ) (82,254 ) ***  
 
Income before income taxes 358,389 387,493 (7.5 )
Provision for income taxes 119,157   145,731   (18.2 )
Income from continuing operations 239,232 241,762 (1.0 )
Net income attributable to noncontrolling interests (47,700 ) (49,351 ) (3.3 )
Net income from continuing operations attributable to TEGNA Inc. $ 191,532   $ 192,411   (0.5 )
 
Earnings from continuing operations per share:
Basic $ 0.85 $ 0.85
Diluted $ 0.83 $ 0.83
 
Weighted average number of common shares outstanding:
Basic 226,053 226,374 (0.1 )
Diluted 231,310 232,157 (0.4 )
 
Dividends declared per share $ 0.54 $ 0.60 (10.0 )
 
 
BUSINESS SEGMENT INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

     
Table No. 2
Thirteen
weeks ended
Sep. 27, 2015
Thirteen
weeks ended
Sep. 28, 2014
% Increase

(Decrease)

Net operating revenues:
TEGNA Media $ 406,445 $ 416,509 (2.4 )
TEGNA Digital 351,072 204,560 71.6
TEGNA Other 49,569   59,916   (17.3 )
Total $ 807,086   $ 680,985   18.5  
 
Operating income (net of depreciation, amortization and facility consolidation charges):
TEGNA Media $ 158,595 $ 177,970 (10.9 )
TEGNA Digital 72,445 41,249 75.6
TEGNA Other (1,744 ) 1,230 ***
Corporate (a) (12,939 ) (18,219 ) (29.0 )
Unallocated costs   (18,226 ) (100.0 )
Total $ 216,357   $ 184,004   17.6  
 
Depreciation, amortization and facility consolidation charges:
TEGNA Media $ 18,406 $ 20,307 (9.4 )
TEGNA Digital 31,073 10,529 ***
TEGNA Other 205 253 (19.0 )
Corporate 540   2,868   (81.2 )
Total $ 50,224   $ 33,957   47.9  
 
Adjusted EBITDA (b):
TEGNA Media $ 177,001 $ 198,397 (10.8 )
TEGNA Digital 103,518 51,778 99.9
TEGNA Other (1,539 ) 1,483 ***
Corporate (12,399 ) (15,351 ) (19.2 )
Unallocated costs   (18,226 ) ***  
Total $ 266,581   $ 218,081   22.2  

(a) Corporate expenses for the third quarter of 2015 were $12.9 million, including the benefit of $1.8 million related to the elimination of depreciation resulting from the sale of the company’s McLean, VA headquarters. Following the sale, we will be leasing part of the facility back for a period of 18 months. While we are not paying any rent over this period, we will be imputing rent expense over this period as required by GAAP which will add $2.5 million to corporate expense for the quarter. As previously discussed, we expect that annual corporate expense will initially be $70 million, decreasing to between $55 million to $60 million which includes $7 million to $9 million of non-cash stock-based compensation expense. These reductions reflect the benefit of resizing the company’s footprint and elimination of the spin-related dis-synergies.

(b) "Adjusted EBITDA" is a non-GAAP measure used by management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. The definition of "Adjusted EBITDA" is provided in the section "Use of Non-GAAP Information" and Table No. 4 provides reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income.

 
BUSINESS SEGMENT INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

     
Table No. 2 (continued)
Thirty-nine

weeks ended
Sep. 27, 2015

Thirty-nine

weeks ended
Sep. 28, 2014

% Increase

(Decrease)

Net operating revenues:
TEGNA Media $ 1,219,911 $ 1,197,035 1.9
TEGNA Digital 1,025,770 587,060 74.7
TEGNA Other 155,556   185,332   (16.1 )
Total $ 2,401,237   $ 1,969,427   21.9  
 
Operating income (net of depreciation, amortization and facility consolidation and asset impairment charges):
TEGNA Media $ 513,557 $ 503,841 1.9
TEGNA Digital 175,462 89,003 97.1
TEGNA Other (11,000 ) (10,527 ) 4.5
Corporate (50,817 ) (53,340 ) (4.7 )
Unallocated costs (52,473 ) (59,230 ) (11.4 )
Total $ 574,729   $ 469,747   22.3  
 
Depreciation, amortization and facility consolidation and asset impairment charges:
TEGNA Media $ 61,492 $ 68,122 (9.7 )
TEGNA Digital 106,050 29,667 ***
TEGNA Other 6,718 17,134 (60.8 )
Corporate 6,445   8,679   (25.7 )
Total $ 180,705   $ 123,602   46.2  
 
Adjusted EBITDA (a):
TEGNA Media $ 562,688 $ 574,344 (2.0 )
TEGNA Digital 283,679 118,670 ***
TEGNA Other (3,982 ) 6,607 ***
Corporate (44,372 ) (44,661 ) (0.6 )
Unallocated costs (52,473 ) (59,230 ) (11.4 )
Total $ 745,540   $ 595,730   25.1  

(a) "Adjusted EBITDA" is a non-GAAP measure used by management to measure, analyze and compare the performance of its business segment operations at a more detailed level and in a meaningful and consistent manner. The definition of "Adjusted EBITDA" is provided in the section "Use of Non-GAAP Information" and Table No. 4 provides reconciliations to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income.

USE OF NON-GAAP INFORMATION

The company uses non-GAAP financial performance and liquidity measures to supplement the financial information presented on a GAAP basis. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read together with financial information presented on a GAAP basis.

The company discusses in this report non-GAAP financial performance measures that exclude from its reported GAAP results the impact of special items consisting of workforce restructuring charges, transformation items, non-cash asset impairment charges, certain gains and expenses recognized in non-operating categories and charges to its income tax provision. The company believes that such expenses, charges and gains are not indicative of normal, ongoing operations and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

The company also discusses Adjusted EBITDA, a non-GAAP financial performance measure that it believes offers a useful view of the overall operation of its businesses. Adjusted EBITDA is defined as net income from continuing operations attributable to Parent before (1) net income attributable to noncontrolling interests, (2) income taxes, (3) interest expense, (4) equity income (losses), (5) other non-operating items, (6) workforce restructuring, (7) other transformation items, (8) asset impairment charges, (9) depreciation and (10) amortization. When Adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure is Net income from continuing operations attributable to Parent. Management does not analyze non-operating items such as interest expense and income taxes on a segment level; therefore, the most directly comparable GAAP financial measure to Adjusted EBITDA when performance is discussed on a segment level is Operating income. This earnings report 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, plant and equipment” and increased by voluntary pension contributions, net of related tax benefit. 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.

Management uses non-GAAP financial performance measures for purposes of evaluating business unit and consolidated company performance. The company therefore believes that each of the non-GAAP measures presented provides useful information to investors by allowing them to view the company’s businesses through the eyes of management and the Board of Directors, facilitating comparison of results across historical periods and providing a focus on the underlying ongoing operating performance of its businesses. In addition, many of the company’s peer group companies present similar non-GAAP measures so the presentation of such measures facilitates industry comparisons. Tabular reconciliations for the non-GAAP financial measures are contained in Tables 3 through 8 attached to this news release.

NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars (except per share amounts)

           
Table No. 3
 

Reconciliations of certain line items impacted by special items to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income follow:

 
GAAP

Measure

  Non-GAAP

Measure

Thirteen

weeks ended

Sep. 27, 2015

Special tax
credit

Thirteen
weeks ended
Sep. 27, 2015
 
Income before income taxes $ 145,279 $ $ 145,279
Provision for income taxes 37,178 6,016 43,194
Net income from continuing operations attributable to TEGNA 90,614 (6,016 ) 84,598
Income from continuing operations per share - diluted $ 0.39 $ (0.02 ) $ 0.37
 
 
GAAP

Measure

Special Items Non-GAAP

Measure

Thirteen

weeks ended

Sep. 28, 2014

Workforce

restructuring

Other
transformation
costs

Non-
operating
items

Special tax
charge

Thirteen
weeks ended
Sep. 28, 2014
 
Cost of sales and operating expenses, exclusive of depreciation $ 276,833 $ (102 ) $ $ $ $ 276,731
Selling, general and administrative expenses, exclusive of depreciation 186,191 (18 ) 186,173
Facility consolidation charges 1,230 (1,230 )
Operating expenses 496,981 (120 ) (1,230 ) 495,631
Operating income 184,004 120 1,230 185,354
Equity income (loss) in unconsolidated investees, net (981 ) 5,987 5,006
Other non-operating items (15,326 ) 14,491 (835 )
Total non-operating (expense) income (82,098 ) 20,478 (61,620 )
Income before income taxes 101,906 120 1,230 20,478 123,734
Provision for income taxes 29,782 44 458 4,074 (279 ) 34,079
Net income from continuing operations attributable to TEGNA 50,648 76 772 16,404 279 68,179
Income from continuing operations per share - diluted $ 0.22 $ $ $ 0.07 $ $ 0.29
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars (except per share amounts)

             
Table No. 3 (continued)
GAAP

Measure

Special Items Non-GAAP Measure

Thirty-nine

weeks ended

Sep. 27, 2015

Workforce

restructuring

Other
transformation
items

Asset
Impairment
Charges

Non-
operating
items

Special tax
charge

Thirty-nine
weeks ended
Sep. 27, 2015

Cost of sales and operating expenses, exclusive of depreciation $ 792,950 $ (2,729 ) $ 12,709 $ $ $ $ 802,930
Selling, general and administrative expenses, exclusive of depreciation 852,853 (86 ) 852,767
Facility consolidation and asset impairment charges 23,190 (16,350 ) (6,840 )
Operating expenses 1,826,508 (2,815 ) (3,641 ) (6,840 ) 1,813,212
Operating income 574,729 2,815 3,641 6,840 588,025
Other non-operating items (5,346 ) 1,453 (3,893 )
Total non-operating expense (216,340 ) 1,453 (214,887 )
Income before income taxes 358,389 2,815 3,641 6,840 1,453 373,138
Provision for income taxes 119,157 725 1,354 2,544 (5,738 ) (805 ) 117,237
Net income from continuing operations attributable to TEGNA 191,532 2,090 2,287 4,296 7,191 805 208,201
Net income from continuing operations per share - diluted $ 0.83 $ 0.01 $ 0.01 $ 0.02 $ 0.03 $ $ 0.90
 
 
GAAP

Measure

Special Items Non-GAAP Measure

Thirty-nine

weeks ended

Sep. 28, 2014

Workforce

restructuring

Other
transformation
costs

Asset
impairment
charges

Non-
operating
items

Special tax
charge

Thirty-nine
weeks ended
Sep. 28, 2014

Cost of sales and operating expenses, exclusive of depreciation $ 816,436 $ (2,024 ) $ $ $ $ $ 814,412
Selling, general and administrative expenses, exclusive of depreciation 559,642 (357 ) 559,285
Amortization of intangible assets 36,659 (4,480 ) 32,179
Facility consolidation and asset impairment charges 25,802 (9,615 ) (16,187 )
Operating expenses 1,499,680 (2,381 ) (14,095 ) (16,187 ) 1,467,017
Operating income 469,747 2,381 14,095 16,187 502,410
Equity income in unconsolidated investees, net 156,792 (142,003 ) 14,789
Other non-operating items (39,762 ) 39,371 (391 )
Total non-operating expense (82,254 ) (102,632 ) (184,886 )
Income before income taxes 387,493 2,381 14,095 16,187 (102,632 ) 317,524
Provision for income taxes 145,731 885 4,413 1,328 (40,079 ) (19,283 ) 92,995
Net income from continuing operations attributable to TEGNA 192,411 1,496 9,682 14,859 (62,553 ) 19,283 175,178
Net income from continuing operations per share - diluted $ 0.83 $ 0.01 $ 0.04 $ 0.06 $ (0.27 ) $ 0.08 $ 0.75
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

           
Table No. 4
 

Reconciliations of Adjusted EBITDA to the most directly comparable financial measure calculated and presented in accordance with GAAP on the company's condensed consolidated statements of income follow:

 
Thirteen weeks ended Sep. 27, 2015:

TEGNA
Media

TEGNA
Digital

TEGNA
Other

Corporate

Consolidated

Total

 
Net income from continuing operations attributable to Parent (GAAP basis) $ 90,614
Net income attributable to noncontrolling interests 17,487
Provision for income taxes 37,178
Interest expense 66,949
Equity loss in unconsolidated investees, net 1,013
Other non-operating items 3,116  
Adjusted operating income (GAAP and non-GAAP basis) $ 158,595 $ 72,445 $ (1,744 ) $ (12,939 ) $ 216,357
Depreciation 12,915 8,063 205 540 21,723
Amortization 5,491   23,010       28,501  
Adjusted EBITDA (non-GAAP basis) $ 177,001   $ 103,518   $ (1,539 ) $ (12,399 ) $ 266,581  
 
Thirteen weeks ended Sep. 28, 2014:

TEGNA
Media

TEGNA
Digital

TEGNA
Other

Corporate

Unallocated
Costs

Consolidated

Total

 
Net income from continuing operations attributable to Parent (GAAP basis) $ 50,648
Net income attributable to noncontrolling interests 21,476
Provision for income taxes 29,782
Interest expense 65,791
Equity loss in unconsolidated investees, net 981
Other non-operating items 15,326
Operating income (GAAP basis) $ 177,970 $ 41,249 $ 1,230 $ (18,219 ) $ (18,226 ) $ 184,004
Workforce restructuring 120 120
Other transformation costs 1,230           1,230
Adjusted operating income (non-GAAP basis) 179,320 41,249 1,230 (18,219 ) (18,226 ) 185,354
Depreciation 12,629 5,544 253 2,868 21,294
Amortization 6,448   4,985         11,433
Adjusted EBITDA (non-GAAP basis) $ 198,397   $ 51,778   $ 1,483   $ (15,351 ) $ (18,226 ) $ 218,081
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

           
Table No. 4 (continued)
 
Thirty-nine weeks ended Sep. 27, 2015:

TEGNA
Media

TEGNA
Digital

TEGNA
Other

Corporate

Unallocated
Costs

Consolidated

Total

 
Net income from continuing operations attributable to Parent (GAAP basis) $ 191,532
Net income attributable to noncontrolling interests 47,700
Provision for income taxes 119,157
Interest expense 206,871
Equity loss in unconsolidated investees, net 4,123
Other non-operating items 5,346  
Operating income (GAAP basis) $ 513,557 $ 175,462 $ (11,000 ) $ (50,817 ) $ (52,473 ) $ 574,729
Workforce restructuring 348 2,167 300 2,815
Other transformation items (7,636 ) 11,107 170 3,641
Asset impairment charges   900   5,940       6,840  
Adjusted operating income (non-GAAP basis) 506,269 189,636 (4,590 ) (50,817 ) (52,473 ) 588,025
Depreciation 39,455 24,852 608 6,445 71,360
Amortization 16,964   69,191         86,155  
Adjusted EBITDA (non-GAAP basis) $ 562,688   $ 283,679   $ (3,982 ) $ (44,372 ) $ (52,473 ) $ 745,540  
 
Thirty-nine weeks ended Sep. 28, 2014:

TEGNA
Media

TEGNA
Digital

TEGNA
Other

Corporate

Unallocated
Costs

Consolidated

Total

 
Net income from continuing operations attributable to Parent (GAAP basis) $ 192,411
Net income attributable to noncontrolling interests 49,351
Provision for income taxes 145,731
Interest expense 199,284
Equity income in unconsolidated investees, net (156,792 )
Other non-operating items 39,762  
Operating income (GAAP basis) $ 503,841 $ 89,003 $ (10,527 ) $ (53,340 ) $ (59,230 ) $ 469,747
Workforce restructuring 2,381 2,381
Other transformation costs 14,095 14,095
Asset impairment charges     16,187       16,187  
Adjusted operating income (non-GAAP basis) 520,317 89,003 5,660 (53,340 ) (59,230 ) 502,410
Depreciation 35,953 15,764 745 8,679 61,141
Adjusted amortization (non-GAAP basis) 18,074   13,903   202       32,179  
Adjusted EBITDA (non-GAAP basis) $ 574,344   $ 118,670   $ 6,607   $ (44,661 ) $ (59,230 ) $ 595,730  
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

   
Table No. 5
 

"Free cash flow" is a non-GAAP liquidity measure used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow should not be relied upon to the exclusion of GAAP financial measures.

 
 
Thirteen
weeks ended
Sep. 27, 2015
Thirty-nine
weeks ended
Sep. 27, 2015
 
Net cash flow from operating activities $ 183,825 $ 479,233
Purchase of property, plant and equipment (19,876 ) (74,897 )
Voluntary pension employer contribution 100,000
Tax benefit for voluntary pension employer contribution   (37,200 )
Free cash flow $ 163,949   $ 467,136  
 
 
TAX RATE CALCULATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

       
Table No. 6
 
The calculations of the company's effective tax rate on a GAAP and non-GAAP basis are below:
 
GAAP Non-GAAP
Thirteen
weeks ended
Sep. 27, 2015
Thirteen
weeks ended
Sep. 28, 2014
Thirteen
weeks ended
Sep. 27, 2015
Thirteen
weeks ended
Sep. 28, 2014
 
Income before taxes (per Table 3) $ 145,279 $ 101,906 $ 145,279 $ 123,734
Noncontrolling interests (per Table 1) (17,487 ) (21,476 ) (17,487 ) (21,476 )
Income before taxes attributable to Parent $ 127,792   $ 80,430   $ 127,792   $ 102,258  
 
Provision for income taxes (per Table 3) $ 37,178 $ 29,782 $ 43,194 $ 34,079
 
Effective tax rate 29.1 % 37.0 % 33.8 % 33.3 %
 
 
 
GAAP Non-GAAP
Thirty-nine
weeks ended
Sep. 27, 2015
Thirty-nine
weeks ended
Sep. 28, 2014
Thirty-nine
weeks ended
Sep. 27, 2015
Thirty-nine
weeks ended
Sep. 28, 2014
 
Income before taxes (per Table 3) $ 358,389 $ 387,493 $ 373,138 $ 317,524
Noncontrolling interests (per Table 1) (47,700 ) (49,351 ) (47,700 ) (49,351 )
Income before taxes attributable to Parent $ 310,689   $ 338,142   $ 325,438   $ 268,173  
 
Provision for income taxes (per Table 3) $ 119,157 $ 145,731 117,237 $ 92,995
 
Effective tax rate 38.4 % 43.1 % 36.0 % 34.7 %
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

           
Table No. 7
 
A reconciliation of the company's operating data on an as reported basis to a pro forma basis is below:
 
TEGNA

GAAP

Cont Ops

Pro Forma

Adjustment for

Separation (1)

Pro Forma

TEGNA

Cont Ops

Special Items (2) Acquisition and

Disposition

Pro Forma

Adjustments (3)

TEGNA

Pro Forma

Non GAAP

 
Thirteen weeks ended Mar. 30, 2014
Operating Revenue $ 619,887 $ 3,261 $ 623,148 $ $ 123,522 $ 746,670
Operating Expenses 486,767   (1,439 ) 485,328   (9,756 ) 114,764   590,336
Operating Income 133,120   4,700   137,820   9,756   8,758   156,334
Depreciation 19,863 89 19,952 2,958 22,910
Amortization 14,231   372   14,603   (4,480 ) 18,799   28,922
Adjusted EBITDA $ 167,214   $ 5,161   $ 172,375   $ 5,276   $ 30,515   $ 208,166
 
Thirteen weeks ended Jun. 29, 2014
Operating Revenue $ 668,555 $ 3,389 $ 671,944 $ $ 125,456 $ 797,400
Operating Expenses 515,932   (1,502 ) 514,430   (21,557 ) 116,128   609,001
Operating Income 152,623   4,891   157,514   21,557   9,328   188,399
Depreciation 19,984 89 20,073 2,861 22,934
Amortization 10,995   372   11,367     18,799   30,166
Adjusted EBITDA $ 183,602   $ 5,352   $ 188,954   $ 21,557   $ 30,988   $ 241,499
 
Thirteen weeks ended Sept. 28, 2014
Operating Revenue $ 680,985 $ 3,480 $ 684,465 $ $ 118,402 $ 802,867
Operating Expenses 496,981   (1,775 ) 495,206   (1,350 ) 107,497   601,353
Operating Income 184,004   5,255   189,259   1,350   10,905   201,514
Depreciation 21,294 (82 ) 21,212 2,780 23,992
Amortization 11,433     11,433     18,164   29,597
Adjusted EBITDA $ 216,731   $ 5,173   $ 221,904   $ 1,350   $ 31,849   $ 255,103
 
Thirteen weeks ended Dec. 28, 2014
Operating Revenue $ 904,886 $ 531 $ 905,417 $ $ (7,487 ) $ 897,930
Operating Expenses 674,317   (675 ) 673,642   (39,807 ) (5,805 ) 628,030
Operating Income 230,569   1,206   231,775   39,807   (1,682 ) 269,900
Depreciation 25,699 (55 ) 25,644 28 25,672
Amortization 29,312     29,312       29,312
Adjusted EBITDA $ 285,580   $ 1,151   $ 286,731   $ 39,807   $ (1,654 ) $ 324,884
 
 

NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

           
Table No. 7 (continued)
 
TEGNA

GAAP

Cont Ops

Pro Forma

Adjustment for

Separation (1)

Pro Forma

TEGNA

Cont Ops

Special Items (2) Acquisition and

Disposition

Pro Forma

Adjustments (3)

TEGNA

Pro Forma

Non GAAP

 
Thirteen weeks ended Mar. 29, 2015
Operating Revenue $ 778,015 $ $ 778,015 $ $ $ 778,015
Operating Expenses 607,411   (925 ) 606,486   676     607,162
Operating Income 170,604   925   171,529   (676 )   170,853
Depreciation 24,487 24,487 24,487
Amortization 28,688     28,688       28,688
Adjusted EBITDA $ 223,779   $ 925   $ 224,704   $ (676 ) $   $ 224,028
 
Thirteen weeks ended Jun. 28, 2015
Operating Revenue $ 816,136 $ $ 816,136 $ $ $ 816,136
Operating Expenses 628,368   (1,815 )

 

$ 626,553   (13,973 )   612,580
Operating Income 187,768   1,815  

 

189,583   13,973     203,556
Depreciation 25,150

 

25,150 25,150
Amortization 28,966    

 

28,966       28,966
Adjusted EBITDA $ 241,884   $ 1,815   $ 243,699   $ 13,973   $   $ 257,672

(1) Represents adjustments related to office space leasing and information technology arrangements between TEGNA and new Gannett under transition service agreements.

(2) Special items include workforce restructuring, other transformation costs and asset impairment charges.

(3) The pro forma adjustments include the acquisitions of Cars.com and London Broadcasting Company and disposal of Gannett Healthcare Group as if these transactions had occurred at the beginning of 2014.

 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc. and Subsidiaries

Unaudited, in thousands of dollars

           
Table No. 8
 
The company's operating data on a pro forma basis is below:
 
TEGNA

Media

TEGNA

Digital

TEGNA

Other

Corporate Unallocated (a) TEGNA

Pro Forma

Non GAAP

 
Thirteen weeks ended Mar. 30, 2014
Operating Revenue $ 394,480 $ 305,726 $ 46,464 $ $ $ 746,670
Operating Expense 227,507   280,886   51,600   17,367   12,976   590,336
Operating Income 166,973   24,840   (5,136 ) (17,367 ) (12,976 ) 156,334
Depreciation 12,430 7,077 370 3,033 22,910
Amortization 5,742   23,079   101       28,922
Adjusted EBITDA $ 185,145   $ 54,996   $ (4,665 ) $ (14,334 ) $ (12,976 ) $ 208,166
 
Thirteen weeks ended Jun. 29, 2014
Operating Revenue $ 410,764 $ 323,153 $ 63,483 $ $ $ 797,400
Operating Expense 234,069   287,172   57,836   17,754   12,170   609,001
Operating Income 176,695   35,981   5,647   (17,754 ) (12,170 ) 188,399
Depreciation 12,360 7,426 245 2,903 22,934
Amortization 5,884   24,181   101       30,166
Adjusted EBITDA $ 194,939   $ 67,588   $ 5,993   $ (14,851 ) $ (12,170 ) $ 241,499
 
Thirteen weeks ended Sept. 28, 2014
Operating Revenue $ 416,590 $ 333,488 $ 52,789 $ $ $ 802,867
Operating Expense 237,109   282,412   52,608   18,219   11,005   601,353
Operating Income 179,481   51,076   181   (18,219 ) (11,005 ) 201,514
Depreciation 12,684 8,187 253 2,868 23,992
Amortization 6,448   23,149         29,597
Adjusted EBITDA $ 198,613   $ 82,412   $ 434   $ (15,351 ) $ (11,005 ) $ 255,103
 
Thirteen weeks ended Dec. 28, 2014
Operating Revenue $ 494,831 $ 347,746 $ 55,353 $ $ $ 897,930
Operating Expense 246,344   281,957   53,308   17,801   28,620   628,030
Operating Income 248,487   65,789   2,045   (17,801 ) (28,620 ) 269,900
Depreciation 15,860 7,587 202 2,023 25,672
Amortization 6,163   23,149         29,312
Adjusted EBITDA $ 270,510   $ 96,525   $ 2,247   $ (15,778 ) $ (28,620 ) $ 324,884
 

(a) Unallocated expenses represent certain expenses that historically were allocated to the former Publishing Segment but that could not be allocated to discontinued operations because they were not clearly and specifically identifiable to the spun-off businesses, the accounting criteria for reclassification to discontinued operations.

 
 
Table No. 8 (continued)
TEGNA

Media

TEGNA

Digital

TEGNA

Other

Corporate Unallocated (a) TEGNA

Pro Forma

Non GAAP

 
Thirteen weeks ended Mar. 29, 2015
Operating Revenue $ 396,417 $ 335,075 $ 46,523 $ $ $ 778,015
Operating Expense 229,531   283,687   52,280   18,860   22,804   607,162
Operating Income 166,886   51,388   (5,757 ) (18,860 ) (22,804 ) 170,853
Depreciation 13,296 8,262 208 2,721 24,487
Amortization 5,598   23,090         28,688
Adjusted EBITDA $ 185,780   $ 82,740   $ (5,549 ) $ (16,139 ) $ (22,804 ) $ 224,028
 
Thirteen weeks ended Jun. 28, 2015
Operating Revenue $ 417,049 $ 339,622 $ 59,465 $ $ $ 816,136
Operating Expense 236,262   273,820   56,636   19,018   26,844   612,580
Operating Income 180,787   65,802   2,829   (19,018 ) (26,844 ) 203,556
Depreciation 13,244 8,527 195 3,184 25,150
Amortization 5,876   23,090         28,966
Adjusted EBITDA $ 199,907   $ 97,419   $ 3,024   $ (15,834 ) $ (26,844 ) $ 257,672
 

(a) Unallocated expenses represent certain expenses that historically were allocated to the former Publishing Segment but that could not be allocated to discontinued operations because they were not clearly and specifically identifiable to the spun-off businesses, the accounting criteria for reclassification to discontinued operations.

 

Contacts

TEGNA Inc.
For investor inquiries:
Jeffrey Heinz, 703-854-6917
Vice President, Investor Relations
jheinz@TEGNA.com
or
For media inquiries:
Jeremy Gaines, 703-854-6049
Vice President, Corporate Communications
jmgaines@TEGNA.com

Release Summary

TEGNA reported overall company revenue growth of 19 percent in the third quarter, driven by strong Digital segment results.

Contacts

TEGNA Inc.
For investor inquiries:
Jeffrey Heinz, 703-854-6917
Vice President, Investor Relations
jheinz@TEGNA.com
or
For media inquiries:
Jeremy Gaines, 703-854-6049
Vice President, Corporate Communications
jmgaines@TEGNA.com