Sign in

You're signed outSign in or to get full access.

TI

TEGNA INC (TGNA)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 revenue was $710.4M, down 3% YoY and at the midpoint of guidance; GAAP EPS was $0.48 and non-GAAP EPS was $0.50, with Adjusted EBITDA of $175.7M; management reaffirmed full-year guidance and guided Q3 revenue up 9–12% YoY .
  • Subscription (-7% YoY to $367.0M) and AMS (-5% YoY to $301.0M) softness was partially offset by stronger political ($31.6M vs $6.0M YoY); non-GAAP operating expenses were flat, reflecting initial cost transformation benefits .
  • Capital returns remained robust: $93M in Q2 ($72M buybacks; $21M dividends), with net leverage at 2.9x and cash of $446M; dividend raised 10% to $0.125/share (first paid July 1) .
  • Catalyst setup: guidance points to a strong H2 driven by political and Olympics; expanded sports distribution (WNBA Fever, NHL Kraken) and Premion local CTV momentum may add incremental tailwinds, while national ad demand remains mixed and retrans subs continue to trend down mid-single digits .

What Went Well and What Went Wrong

What Went Well

  • Achieved Q2 key guidance metrics and reaffirmed full-year outlook; Q3 revenue guided up 9–12% with expenses flat to down slightly, positioning for a strong political/Olympics-driven H2 .
  • Political advertising accelerated materially YoY ($31.6M vs $6.0M), with management expressing “high confidence that ad spending will be very healthy this election season,” citing battleground state footprint and energized fundraising .
  • Cost initiatives began to show: non-GAAP operating expenses were flat YoY; CFO highlighted $90–100M annualized savings targeted by exit-2025, with AI deployments expected to begin contributing in late 2025 .

What Went Wrong

  • Subscription revenue fell 7% YoY due to subscriber declines (partially offset by rate increases); retrans subs down mid-single digits with seasonal weakness in Q2 .
  • AMS declined 5% YoY on national softness; auto swung negative in Q2 (down double-digits) after 7 quarters of growth, though pacing improved in Q3 aided by Olympics .
  • Adjusted EBITDA down 10% YoY to $175.7M, reflecting lower subscription/AMS despite the political lift; national Premion revenue remained challenging, offsetting local CTV strength .

Financial Results

Summary vs prior quarters and prior year

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$725.9 $714.3 $710.4
GAAP Diluted EPS ($)$0.40 $1.06 $0.48
Non-GAAP Diluted EPS ($)$0.43 $0.45 $0.50
Adjusted EBITDA ($USD Millions)$177.1 $174.2 $175.7
Adjusted EBITDA Margin (%)24.4% 24.0% 24.7% (calc from $175.7/$710.4)
Operating Income (GAAP, $USD Millions)$143.7 $137.6 $141.9
Net Income Attributable to TEGNA ($USD Millions)$76.1 $189.6 $82.1

Revenue mix

Revenue Category ($USD Thousands)Q2 2023Q1 2024Q2 2024
Subscription$396,126 $375,324 $367,025
Advertising & Marketing Services$317,726 $298,692 $300,977
Political$5,991 $27,828 $31,643
Other$11,663 $12,408 $10,718
Total Revenues$731,506 $714,252 $710,363

KPIs and cash metrics

KPIQ1 2024Q2 2024
Net cash flow from operating activities ($USD Thousands)n/a$124,779 (quarter); $225,159 (YTD)
Adjusted Free Cash Flow ($USD Thousands)$113,105 $130,636 (quarter); $229,589 (YTD)
Cash & Cash Equivalents ($USD Thousands)$430,764 $445,729
Net Leverage Ratio (x)2.8x 2.9x
Interest Expense ($USD Thousands)$42,368 $41,748
Share Repurchases$82M Q1 $72M (5.1M shares) Q2
Dividends$20M Q1 $21M Q2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
2024/2025 Two-Year Adjusted FCF2024–2025$900M–$1.1B $900M–$1.1B Maintained
Net Leverage RatioFY 2024Below 3x YE Below 3x YE Maintained
Corporate ExpensesFY 2024$40–$45M $40–$45M Maintained
DepreciationFY 2024$56–$60M $56–$60M Maintained
AmortizationFY 2024$51–$55M (updated for Octillion) $51–$55M Maintained
Interest ExpenseFY 2024$170–$173M $170–$173M Maintained
Capital ExpendituresFY 2024$62–$67M $62–$67M Maintained
Effective Tax RateFY 202423.5–24.5% 22.5–23.5% Lowered
GAAP RevenueQ3 2024n/aUp 9–12% YoY New
Non-GAAP Operating ExpensesQ3 2024n/aFlat to down slightly YoY New
Regular Dividend per ShareOngoing$0.11375 (pre-May 2024) $0.125 (declared; paid July 1) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
AI/technology & cost transformationAnnounced transformation program; targeted efficiencies; capital allocation to support innovation $90–$100M annualized savings by exit-2025; non-GAAP opex flat; AI to yield results in late 2025 Execution progressing; benefits beginning
Macro/national vs local advertisingNational softness; local auto/services improving; sequential AMS improvement in Q4 National weaker; AMS -5% YoY; auto down double-digits in Q2; pacing improving in Q3 (Olympics) Mixed; Q3 uplift expected
Political cycle2024 expected robust cycle; strong battleground footprint Stronger than anticipated; presidential/Senate/House spend likely record; $31.6M Q2 political Accelerating
Sports distributionDeals with Kraken, Fever, Reign; Mavericks games in Dallas Expanded Kraken footprint (incl. Alaska); WNBA Fever in 12 markets; Olympics ratings boost Broadening reach
Retrans/subscribersRenewed agreements; majority variable reverse comp; visibility on subs Subs down mid-single digits; seasonality; net retrans “stable” under variable terms Stability despite attrition
Premion (CTV)Acquired Octillion; local momentum; national comp headwind Local Premion up double-digits; national challenging; total Premion up low single digits incl. political Local strength; national headwinds persist

Management Commentary

  • “Results for the second quarter fell within our guidance range… As we look ahead to the back half of the year, it is shaping up to be another robust political cycle… ad spending will be very healthy this election season” — Dave Lougee, CEO .
  • “We expect third quarter total company revenue to be up 9% to 12%… and operating expenses… flat to down slightly” — Julie Heskett, CFO .
  • “Our Premion… serves the local marketplace… the local market will continue to adopt CTV advertising and Premion is well positioned” — Dave Lougee .
  • “We are directly targeting reductions… generating $90–$100 million in annualized savings as we exit 2025… AI across our stations will start to yield results in late 2025” — Julie Heskett .
  • “Our partnership with the Seattle Kraken… delivering more games to more people… we are seeing early momentum from advertisers and sponsors” — Brad Ramsey, SVP Media Operations .

Q&A Highlights

  • Political cadence vs 2020: management cited a comparable 2020 base of ~$395M excl. GA Senate runoff; H1’24 political ~8% below 2020 pace, with expectation to make up in H2 amid energized presidential cycle .
  • Olympics uplift: incremental AMS contribution historically ~3–5% in Q3; Summer Olympics tracking at high end (4–5%); some Olympics spend categorized as political .
  • Retrans/subs: net subs down mid-single digits, seasonal weakness in Q2; net retrans “stable” given variable structures in affiliation agreements .
  • Premion: local revenue up double-digits; national challenges produced flat nonpolitical Premion in Q2; total Premion up low single digits including political .
  • Auto advertising: down low double digits in Q2, especially Tier 1/2 national; improving in Q3 aided by Olympics, with core auto pacing flat to up slightly .
  • Over-the-air viewing: industry lacks precise measurement; management believes OTA viewing may be higher than reported, especially visible in Olympics ratings .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2’24 EPS and revenue was unavailable due to data access limits at the time of analysis. As a result, beats/misses vs consensus cannot be formally assessed in this report. The company reported results at the midpoint of internal guidance and reaffirmed full-year outlook .
  • Forward estimate context: management guided Q3 revenue up 9–12% YoY with expenses flat to down slightly; near-term estimate revisions may reflect stronger political/Olympics tailwinds and improving auto pacing, while national AMS and subscription trends remain headwinds .

Key Takeaways for Investors

  • Reaffirmed FY guidance with improved tax rate; Q3 guide up 9–12% sets up a strong H2 anchored by political and Olympics; watch pacing through DNC/post-DNC into Election Day .
  • Capital returns continue; ~$93M in Q2 and ~$350M targeted for 2024; dividend raised to $0.125; net leverage at 2.9x supports flexibility for bolt-ons and sports/CTV initiatives .
  • Premion local CTV strength and expanded sports rights (WNBA Fever, NHL Kraken) diversify revenue and may provide incremental inventory and sponsorship opportunities; national CTV remains a drag near-term .
  • Subscription headwinds likely persist (mid-single-digit subs declines), but variable reverse comp structures help stabilize net retrans; renewals (20% of traditional subs at YE’24; 45% in 2025) are key milestones .
  • Cost transformation is underway; initial non-GAAP opex flat YoY; $90–100M annualized savings targeted by exit-2025 with AI contributions from late 2025; monitor opex ex-programming trajectory .
  • Trading setup: near-term sentiment levered to political/Olympics execution and auto recovery; medium-term thesis hinges on CTV/sports distribution scale, cost transformation delivery, and durable FCF supporting buybacks/dividends .
  • Leadership transition to Mike Steib (ex-NBCU/Google/XO Group) brings digital/advertising expertise; potential to accelerate product innovation and monetization across local news and CTV .