Market Overview

TEGNA Inc. Reports 2018 Second Quarter Results

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TEGNA Inc. (NYSE:TGNA) today announced solid results for the second
quarter ended June 30, 2018.

Highlights for the second quarter of 2018:

  • Total company revenue from continuing operations grew seven percent
    year-over-year, at the high end of the guidance range provided last
    quarter, driven by subscription revenue growth and higher political
    revenue. Adjusted revenue, excluding political advertising and
    previously terminated digital businesses, was up five percent
    year-over-year.
  • Subscription revenue was 16 percent higher year-over-year, a $29
    million increase, on track to achieve guidance of mid-teens growth in
    2018; subscription revenue now comprises 40 percent of total revenue,
    up from 37 percent in the second quarter of 2017.
  • Total paid subscribers were up year-over-year for the first time in
    several years fueled by continued growth of OTT subscribers in TEGNA
    markets.
  • Total advertising and marketing services revenue, which excludes
    political, declined five percent year-over-year on a GAAP basis, and
    three percent on an adjusted basis when revenue from discontinued
    marketing services is excluded.
  • Political revenue of $26 million set a second quarter historical
    record.
  • Premion full year guidance raised from $60 million to $75 million,
    excluding incremental political revenue, resulting from growing
    customer demand for this first-to-market OTT advertising service.
  • Total company adjusted EBITDA was $169.6 million.
  • GAAP earnings per diluted share from continuing operations were $0.43.
    Non-GAAP* earnings per diluted share from continuing operations were
    $0.36, an increase of 24 percent year-over-year.
  • Free cash flow of $93 million was 18 percent of revenue. In the second
    quarter, TEGNA reduced debt by $67 million, resulting in total debt of
    $3.2 billion and net leverage of 4.3x. $5.8 million was spent on share
    repurchases during the quarter.
  • Revolving credit agreement of $1.5 billion extended three years to
    June 2023 with existing favorable terms and financial covenants.

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

"Our progress in the quarter gives us confidence that our growth
strategy is on track," said Dave Lougee, president and chief executive
officer, TEGNA. "Our business mix continues to evolve toward predictable
and profitable subscription-based revenue streams. Contrary to
conventional wisdom, our paid subscriber base is very stable, and in
fact, our total number of paid subscribers were up year-over-year for
the first time in recent years. The bottom line: any lost traditional
subs are being offset by new subscribers from OTT virtual MVPDs. As a
result of this dynamic as well as annual rate increases, subscription
revenues were up double-digits in the quarter. Demand for Premion
continues to accelerate as we open new markets and offer new services.
We are increasing Premion's full year revenue guidance from $60 million
to $75 million, excluding political advertising on Premion."

SECOND QUARTER KEY METRICS

In analyzing second quarter 2018 results, investors should be reminded
that:

  • TEGNA's odd-to even-year results are positively impacted by cyclical
    political advertising drivers due to the company's footprint in states
    that tend to see substantial campaign spending.
  • The second quarter of 2018 is the last quarter of negatively impacted
    revenue variances of $6.2 million due to the conclusion of a
    transition services agreement with Gannett which ended June 2017.
       

The following table presents key metrics (in thousands):

           
Q2 2018 Key Metrics GAAP Non-GAAP (b)
 
Total company revenues $ 524,080 $ 498,371
Advertising and marketing services (a) 281,847 281,847
Subscription 209,363 209,363
Political 25,709
Other 7,161 7,161
 
Operating income 154,135 147,809
Net income from continuing operations 92,512 78,393
Earnings from continuing operations per share $ 0.43 $ 0.36
 
Adjusted EBITDA

 

NA

169,632
Adjusted EBITDA, excluding corporate expense

 

NA

180,853
Free cash flow 102,855 92,634
Free cash flow as a percentage of revenue (c) 19.6 % 17.7 %

 

(a) Includes traditional advertising, digital advertising as well as
revenue from the company's digital marketing services business.

(b) Refer to Tables 2 through 5 for reconciliations to the most directly
comparable financial measure calculated and presented in accordance with
GAAP.

(c) Calculated as a percent of total GAAP revenues in Q2 2018.

OVERVIEW OF SECOND QUARTER RESULTS

Total company revenues increased seven percent in the quarter on a GAAP
basis primarily due to a $29 million increase in subscription revenue
and an $18 million increase in political advertising. When excluding the
cyclical political advertising and discontinued digital marketing
services, total company adjusted revenues were up five percent.

Advertising and marketing services revenue on a non-GAAP basis,
excluding discontinued digital marketing services, was three percent
lower in the quarter compared to the second quarter of 2017. On a GAAP
basis, advertising and marketing services revenue declined five percent.

GAAP expenses were up nine percent year-over-year, primarily driven by
higher programming fees and investments in Premion, including the data
management platform. We continue to reinvest the majority of Premion's
operating income in its growth in order to capitalize on Premion's first
to market opportunity in the local and regional OTT ad space. The GAAP
operating expense comparison benefited from a gain on the sale of real
estate. Non-GAAP operating expenses, excluding the real estate gain,
were up 12 percent (refer to Table 2 for a reconciliation of non-GAAP
operating expenses). Given the upward revision of Premion's revenue
outlook, we expect our full year Adjusted EBITDA margin to be in the
range of 36 to 38 percent, excluding corporate expenses.

GAAP operating income totaled $154.1 million in the second quarter of
2018. Adjusted EBITDA (a non-GAAP measure detailed in Table 3) totaled
$169.6 million in the quarter and the Adjusted EBITDA margin equaled
32.4 percent. Adjusted EBITDA excluding corporate expenses was $180.9
million which resulted in a margin of 34.5 percent.

Net income from continuing operations was $92.5 million. On a non-GAAP
basis, net income from continuing operations was 24 percent higher
year-over-year and totaled $78.4 million reflecting a lower tax rate.

Special items of $6.3 million impacting operating results for the
quarter included gains related to the sale of real estate in Houston and
FCC spectrum repacking reimbursements, partially offset by an early
lease termination payment. Special items impacting non-operating results
totaled a gain of $11.0 million comprised of equity earnings from
CareerBuilder's sale of a business unit, partially offset by certain
non-operating expenses and donations to the TEGNA Foundation. Refer to
Table 2 for a reconciliation of results on a GAAP and non-GAAP basis.

SECOND QUARTER NON-OPERATING AND CASH FLOW ITEMS

Interest expense in the quarter was $49.1 million compared to $54.8
million in the second quarter of 2017. The decline was due primarily to
lower average debt outstanding, partially offset by a slightly higher
average interest rate. Debt outstanding was $3.2 billion and total cash
was $24.5 million at the end of the quarter. Given that 85 percent of
our debt has fixed interest rates, there was a minimal impact from
rising interest rates during the quarter.

Other non-operating expenses were $0.3 million in the quarter compared
to $21.1 million last year. The decrease was primarily attributable to a
decline in transaction costs of $6.8 million and the absence of $9.3
million of impairment charges recognized in 2017. Pension expense was
also $3.1 million lower due to recent strong investment returns achieved.

Cash flow from operating activities for the second quarter of 2018 was
$102.9 million. Free cash flow from continuing operations (a non-GAAP
measure - refer to Table 5) was $92.6 million compared to $71.4 million
in the second quarter of 2017. This increase is primarily attributable
to declines in tax payments ($18.7 million), lower interest payments
($9.2 million) and cash dividends received in the second quarter of 2018
of $11.5 million (primarily from CareerBuilder). These increases are
partially offset by declines of approximately $26 million from the
disposition of Cars.com and CareerBuilder which were spun-off and sold,
respectively, during 2017.

During the second quarter, TEGNA repaid $67 million of debt and spent
$5.8 million on share repurchases.

THIRD QUARTER 2018 REVENUE OUTLOOK

In the third quarter, TEGNA expects GAAP total company revenue to
increase mid-teens year-over-year driven by substantially higher
political revenue, subscription revenue growth and innovative
initiatives such as Premion.

UPDATE ON KEY MESSAGES AND STRATEGIC INITIATIVES

  • Structured Content Innovation process - TEGNA's disciplined and
    intensive Content Innovation process continues to produce tangible
    results as TEGNA grows and broadens its offerings to audiences on all
    platforms.
  • Recapturing local news viewers - KUSA in Denver cancelled the
    #1 6pm newscast in the market and replaced it with a dramatically
    different product, "NEXT with Kyle Clark." 72 percent of the viewers
    in the time period turned over, and "NEXT" is now the #1 newscast in
    all of Colorado with Adults 25-54, comprised of many viewers who had
    stopped watching local news.
  • Transforming morning news - A focused transformation effort on
    morning newscasts is producing results across TEGNA. An example is in
    St. Louis, where KSDK has doubled its share of morning viewers.
  • Industry-wide recognition for innovation - Won 10 National
    Edward R. Murrow Awards for excellence in journalism, more than any
    other company. Six were for overall excellence, but nine were for
    excellence in innovation and eight originated from pilot concepts
    created by TEGNA innovators.
  • Announced Facebook Watch series - As part of TEGNA's
    comprehensive voter education plan, partnered with Facebook Watch on a
    new digital-first series, "An Imperfect Union."
  • Launched DEALBOSS commerce brand - Successfully launched the
    DEALBOSS commerce brand across TEGNA's local stations' digital and
    social platforms and on-air in select markets. DEALBOSS empowers
    audiences to be smart, savvy shoppers by providing discounts,
    information, reviews and early Amazon Prime deals.
  • Increased Premion reach and revenue outside of TEGNA's broadcast
    footprint
    - Premion began piloting partnerships with local media
    broadcast groups and other businesses to enable Premion sales in
    additional local markets. Premion has now generated revenue in all 50
    states.
  • Premion Data Management Platform (DMP) - Accelerated buildout
    of new ancillary business for Premion, leveraging audience data
    targeting capabilities for brands and advertisers.
  • Invested in technology driving Premion growth - Closed a
    minority investment in MadHive, a leading advertising and data
    technology company pioneering the OTT advertising space. This
    investment will further cement Premion's partnership with MadHive and
    drive continued innovation across both companies.

CAPITAL ALLOCATION UPDATE / M&A OUTLOOK

TEGNA follows a disciplined capital allocation strategy focused on
creating value for long-term shareholders. The company's flexible
investment evaluation process seeks to maximize returns by anticipating
and taking advantage of new opportunities and evolving market conditions.

  • Structured, repeatable process - TEGNA has abundant and stable
    cash flows, which are used to execute value accretive M&A, retire
    debt, pay dividends and opportunistically repurchase shares at
    attractive prices.
  • Substantial consolidation opportunities in broadcast
    industry
    - With the possible changes in ownership regulations, the
    broadcast industry is likely poised for accelerated consolidation and
    station ownership changes. TEGNA remains uniquely positioned to
    benefit from both vertical and horizontal M&A opportunities due to its
    strong station portfolio in attractive markets and its track record of
    exceeding acquisition return targets. The company continues to
    actively evaluate a broad range of acquisition opportunities that are
    EPS and free cash flow accretive within the first 12-18 months.
  • Proven track record of meeting or exceeding EPS and free cash flow
    acquisition criteria
    - All of TEGNA's broadcast transactions
    (including Belo and London Broadcasting) have exceeded these targets.
    For instance, this year's acquisition of KFMB in San Diego was
    immediately free cash flow accretive and will be EPS accretive by the
    end of the year, one quarter ahead of schedule.

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 1-888-394-8218
and international callers should dial 1-323-794-2588 at least 10 minutes
prior to the scheduled start of the call. The confirmation code for the
conference call is 1183984. A replay of the conference call will be
available under "Investor Relations" at www.TEGNA.com
from Tuesday, August 7, at 12:30 p.m. (ET) to Tuesday, August 21, 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 1183984. Materials
related to the call will be available through the Investor Relations
section of the company's website Tuesday morning.

ADDITIONAL INFORMATION

TEGNA Inc. (NYSE:TGNA) is an innovative media company that serves the
greater good of our communities. With 47 television stations and two
radio stations in 39 markets, TEGNA delivers relevant content and
information to consumers across platforms. It is the largest owner of
top 4 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 30 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 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.

           
CONSOLIDATED STATEMENTS OF INCOME

Continuing Operations

TEGNA Inc.

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

 
Table No. 1
Quarter ended June 30,    
2018 2017 % Increase
(Decrease)
 
Revenues $ 524,080 $ 489,369 7.1
 
Operating expenses:
Cost of revenues, exclusive of depreciation 264,294 229,683 15.1
Business units - Selling, general and administrative expenses,
exclusive of depreciation
78,933 75,302 4.8
Corporate - General and administrative expenses, exclusive of
depreciation
11,221 14,248 (21.2 )
Depreciation 13,861 13,318 4.1
Amortization of intangible assets 7,962 5,388 47.8
Asset impairment and facility consolidation charges   (6,326 )   1,350   ****  
Total   369,945     339,289   9.0  
Operating income   154,135     150,080   2.7  
 
Non-operating (expense):
Equity income (loss) in unconsolidated investments, net 15,547 (946 ) ****
Interest expense (49,104 ) (54,843 ) (10.5 )
Other non-operating items   (311 )   (21,108 ) (98.5 )
Total   (33,868 )   (76,897 ) (56.0 )
 
Income before income taxes 120,267 73,183 64.3
Provision for income taxes   27,755     23,913   16.1  
Income from continuing operations $ 92,512   $ 49,270   87.8  
 
Earnings from continuing operations per share:
Basic $ 0.43 $ 0.23 87.0
Diluted $ 0.43 $ 0.23 87.0
 
Weighted average number of common shares outstanding:
Basic 216,342 215,501 0.4
Diluted 216,515 217,812 (0.6 )
 
Dividends declared per share $ 0.07 $ 0.07
 
 
 
Table No. 1 (continued)
Six months ended June 30,    
2018 2017 % Increase
(Decrease)
 
Revenues $ 1,026,170 $ 948,439 8.2
 
Operating expenses:
Cost of revenues, exclusive of depreciation 522,787 461,091 13.4
Business units - Selling, general and administrative expenses,
exclusive of depreciation
152,554 143,731 6.1
Corporate - General and administrative expenses, exclusive of
depreciation
23,929 29,581 (19.1 )
Depreciation 27,332 26,535 3.0
Amortization of intangible assets 14,744 10,777 36.8
Asset impairment and facility consolidation charges   (6,326 )   3,533   ****  
Total   735,020     675,248   8.9  
Operating income   291,150     273,191   6.6  
 
Non-operating (expense):
Equity income (loss) in unconsolidated investments, net 14,309 (2,415 ) ****
Interest expense (96,829 ) (110,258 ) (12.2 )
Other non-operating items   (12,791 )   (23,182 ) (44.8 )
Total   (95,311 )   (135,855 ) (29.8 )
 
Income before income taxes 195,839 137,336 42.6
Provision for income taxes   48,140     43,408   10.9  
Income from continuing operations $ 147,699   $ 93,928   57.2  
 
Earnings from continuing operations per share:
Basic $ 0.68 $ 0.44 54.5
Diluted $ 0.68 $ 0.43 58.1
 
Weighted average number of common shares outstanding:
Basic 216,309 215,404 0.4
Diluted 216,753 217,691 (0.4 )
 
Dividends declared per share $ 0.14 $ 0.21 (33.3 )
 

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 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, 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
certain non-operating expenses (past and prospective business
acquisition and integration costs), severance expense, items related to
asset impairment and facility consolidations, TEGNA Foundation
donations, costs associated with the Cars.com spin-off transaction, tax
impacts associated with the acquisition of KFMB, and a net gain on
equity method investment. The company believes that such gains, expenses
and charges 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 gains, expenses and charges 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 corporate transaction expenses (such as business
acquisition and disposition costs) 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 net incremental Olympic and Super Bowl revenue, (2) Political
revenues, and (3) revenues associated with a discontinued portion of our
DMS 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 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 consolidated
statements of income follow:
 
GAAP

Measure

Special Items Non-GAAP

Measure

Quarter

ended

June 30,

2018

Operating

asset

impairment

and facility

consolidation

Other non-

operating

items

Net gain

on equity

method

investment

Quarter

ended

June 30,

2018

 
Asset impairment and facility consolidation charges $ (6,326 ) $ 6,326 $ $ $
Operating expenses 369,945 6,326 376,271
Operating income 154,135 (6,326 ) 147,809
Equity income (loss) in unconsolidated investments, net 15,547 (16,758 ) (1,211 )
Other non-operating items (311 ) 5,722 5,411
Total non-operating expenses (33,868 ) 5,722 (16,758 ) (44,904 )
Income before income taxes 120,267 (6,326 ) 5,722 (16,758 ) 102,905
Provision (benefit) for income taxes 27,755 2 971 (4,216 ) 24,512
Net income from continuing operations 92,512 (6,328 ) 4,751 (12,542 ) 78,393
Net income from continuing operations per share-diluted (a) $ 0.43 $ (0.03 ) $ 0.03 $ (0.06 ) $ 0.36
 
(a) - Per share amounts do not sum due to rounding.
 
 
GAAP

Measure

Special Items Non-GAAP

Measure

Quarter

ended

June 30,

2017

Severance

expense

Operating

asset

impairment

and facility

consolidation

Other non-

operating

items

Special tax

benefit

Quarter

ended

June 30,

2017

 
Asset impairment and facility consolidation charges $ 1,350 $ $ (1,350 ) $ $ $
Operating expenses 339,289 (1,354 ) (1,350 ) 336,585
Operating income 150,080 1,354 1,350 152,784
Other non-operating items (21,108 ) 19,754 (1,354 )
Total non-operating expenses (76,897 ) 19,754 (57,143 )
Income before income taxes 73,183 1,354 1,350 19,754 95,641
Provision for income taxes 23,913 523 522 3,942 3,637 32,537
Net income from continuing operations 49,270 831 828 15,812 (3,637 ) 63,104
Net income from continuing operations per share-diluted (a) $ 0.23 $ $ $ 0.07 $ (0.02 ) $ 0.29
 
(a) - Per share amounts do not sum due to rounding.
 
 
 
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

Measure

Special Items Non-GAAP

Measure

Six months

ended

June 30,

2018

Operating

asset

impairment

and facility

consolidation

Pension

lump-sum

payment

charge

Other non-

operating

items

Net gain

on equity

method

investment

Six months

ended

June 30,

2018

 
Asset impairment and facility consolidation charges $ (6,326 ) $ 6,326 $ $ $ $
Operating expenses 735,020 6,326 741,346
Operating income 291,150 (6,326 ) 284,824
Equity income (loss) in unconsolidated investments, net 14,309 (16,758 ) (2,449 )
Other non-operating items (12,791 ) 6,300 15,184 8,693
Total non-operating expenses (95,311 ) 6,300 15,184 (16,758 ) (90,585 )
Income before income taxes 195,839 (6,326 ) 6,300 15,184 (16,758 ) 194,239
Provision (benefit) for income taxes 48,140 2 1,608 (472 ) (4,216 ) 45,062
Net income from continuing operations 147,699 (6,328 ) 4,692 15,656 (12,542 ) 149,177
Net income from continuing operations per share-diluted (a) $ 0.68 $ (0.03 ) $ 0.02 $ 0.07 $ (0.06 ) $ 0.69
 
(a) - Per share amounts do not sum due to rounding.
 
 
GAAP

Measure

Special Items Non-GAAP

Measure

Six months

ended

June 30,

2017

Severance

expense

Operating

asset

impairment

and facility

consolidation

Other non-

operating

items

Special tax

benefit

Six months

ended

June 30,

2017

 
Asset impairment and facility consolidation charges $ 3,533 $ $ (3,533 ) $ $ $
Operating expenses 675,248 (3,053 ) (3,533 ) 668,662
Operating income 273,191 3,053 3,533 279,777
Other non-operating items (23,182 ) 29,303 6,121
Total non-operating expenses (135,855 ) 29,303 (106,552 )
Income before income taxes 137,336 3,053 3,533 29,303 173,225
Provision for income taxes 43,408 1,174 1,325 6,292 3,637 55,836
Net income from continuing operations 93,928 1,879 2,208 23,011 (3,637 ) 117,389
Net income from continuing operations per share-diluted $ 0.43 $ 0.01 $ 0.01 $ 0.11 $ (0.02 ) $ 0.54
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc.

Unaudited, in thousands of dollars

           
Table No. 3
 
Quarter ended June 30,    
2018 2017

% Increase
(Decrease)

Net income from continuing operations (GAAP basis) $ 92,512 $ 49,270 87.8
Provision for income taxes 27,755 23,913 16.1
Interest expense 49,104 54,843 (10.5 )
Equity (income) loss in unconsolidated investments, net (15,547 ) 946 ****
Other non-operating items   311     21,108 (98.5 )
Operating income (GAAP basis) 154,135 150,080 2.7
Severance expense 1,354 (100.0 )
Asset impairment and facility consolidation charges   (6,326 )   1,350 ****  
Adjusted operating income (non-GAAP basis) 147,809 152,784 (3.3 )
Depreciation 13,861 13,318 4.1
Amortization of intangible assets   7,962     5,388 47.8  
Adjusted EBITDA (Non-GAAP basis) $ 169,632   $ 171,490 (1.1 )
Corporate - General and administrative expense, exclusive of
depreciation (non-GAAP basis)
  11,221     14,111 (20.5 )
Adjusted EBITDA, excluding Corporate (Non-GAAP basis) $ 180,853   $ 185,601 (2.6 )
 
 
Six months ended June 30,    
2018 2017 % Increase
(Decrease)
Net income from continuing operations (GAAP basis) $ 147,699 $ 93,928 57.2
Provision for income taxes 48,140 43,408 10.9
Interest expense 96,829 110,258 (12.2 )
Equity (income) loss in unconsolidated investments, net (14,309 ) 2,415 ****
Other non-operating items   12,791     23,182 (44.8 )
Operating income (GAAP basis) 291,150 273,191 6.6
Severance expense 3,053 (100.0 )
Asset impairment and facility consolidation charges   (6,326 )   3,533 ****  
Adjusted operating income (non-GAAP basis) 284,824 279,777 1.8
Depreciation 27,332 26,535 3.0
Amortization of intangible assets   14,744     10,777 36.8  
Adjusted EBITDA (Non-GAAP basis) $ 326,900   $ 317,089 3.1  
Corporate - General and administrative expense, exclusive of
depreciation (non-GAAP basis)
  23,929     28,521 (16.1 )
Adjusted EBITDA, excluding Corporate (Non-GAAP basis) $ 350,829   $ 345,610 1.5  
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc.

Unaudited, in thousands of dollars

           
Table No. 4
Reconciliations of adjusted revenues to our revenues presented in
accordance with GAAP on our Consolidated Statements of Income are
presented below (in thousands):
 

Quarter ended June 30,

 

2018

2017

% Increase
(Decrease)

 
Advertising and marketing services (a) $ 281,847 $ 296,346 (4.9 %)
Subscription 209,363 180,343 16.1 %
Political 25,709 7,446 ****
Other   7,161     5,234   36.8 %
Total company revenues (GAAP basis) $ 524,080   $ 489,369   7.1 %
 
Factor impacting comparisons:
Discontinued digital marketing services (6,172 ) (100.0 %)
Political   (25,709 )   (7,446 ) ****  
Total company revenues (Non-GAAP basis) $ 498,371   $ 475,751   4.8 %
 
(a) Includes traditional advertising, digital advertising as well as
revenue from the company's digital marketing services business.
 

Quarter ended June 30,

   

2018

2017

% Increase
(Decrease)

 
Advertising and marketing services (GAAP basis) $ 281,847 $ 296,346 (4.9 %)
Discontinued digital marketing services       (6,172 ) (100.0 %)
Subtotal advertising and marketing services (Non-GAAP basis) $ 281,847   $ 290,174   (2.9 %)
 
 
NON-GAAP FINANCIAL INFORMATION

TEGNA Inc.

Unaudited, in thousands of dollars

               
Table No. 5
 
"Free cash flow" is a non-GAAP liquidity measure used in addition to
and in conjunction with results presented in accordance with GAAP.
Free cash flow should not be relied upon to the exclusion of similar
GAAP financial measures.
 
Quarter ended June 30, Six months ended June 30,
2018 2017 2018 2017
 
Net cash flow from operating activities $ 102,855 $ 103,107 $ 154,041 $ 243,024
Purchase of property and equipment   (10,221 )   (31,744 )   (20,864 )   (49,703 )
Free cash flow $ 92,634   $ 71,363   $ 133,177   $ 193,321  
 

Note: The 2017 free cash flow numbers
presented in the table above includes Cars.com and CareerBuilder
which were spun-off and sold, respectively, during 2017.

 

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