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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
Revenue mix
KPIs and cash metrics
Guidance Changes
Earnings Call Themes & Trends
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 .