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TEGNA (TGNA) Beats Earnings, Revenue Estimates in Q2

Virginia-based, publicly traded broadcast and digital media company, TEGNA Inc. TGNA reported impressive financial results in the second quarter of 2017, wherein both the bottom and top line beat the Zacks Consensus Estimate.

Net Income

Net income from continuing operations was $49.27 million or 23 cents per share compared with $66.99 million or 31 cents in the prior-year quarter. The company reported adjusted earnings of 29 cents per share, which surpassed the Zacks Consensus Estimate of 27 cents. The bottom line fell 42% on a year-over-year basis.

Revenue

Total revenue in the reported quarter was $489.37 millionoutperforming the Zacks Consensus Estimate of $488 million.

As a result of Cars.com spin-off and the company’s plans to sell its majority ownership in CareerBuilder, it has reclassified the historical financial results of the Digital Segment to discontinued operations. In the second quarter, TEGNA’s Digital Marketing Solutions business (known as G/O Digital) was realigned and reported together with the media business.

Discontinued digital marketing services revenues came in at $6.172 million compared to $13.751 million at the end of Jun 30, 2016. Media revenues came in at  $483.20 million versus $460.52 at the end of Jun 30, 2016.

Operating Metrics

In the quarter under review, operating expenses were $339.29 million, up 6.9% year over year. Operating income was $150.08 million, down 6% year over year. Quarterly adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $171.49 million compared with $190.57 million in the year-ago quarter.

Cash Flow

In the second quarter of 2017, TEGNA generated $98.4 million of cash from operations compared with $102.18 million in the prior-year quarter. Free cash flow in the reported quarter was $66.67 million compared with $78.58 million in the year-ago period.

Liquidity

TEGNA’s long-term debt outstanding was $3.3 billion and total cash was $65.7 million at the end of the second quarter of 2017. Dividends paid in the quarter totaled $30.1 million.

Third Quarter 2017 Guidance

Total company revenue is expected to decline in the third quarter of 2017 compared to the year-ago quarter. This is due to the absence of record Olympic revenue in 2016 and substantially lower political advertising than a year ago, as well as the conclusion of a transition services agreement for several digital marketing services and the absence of revenue from the sale of Cofactor last year.

TEGNA Inc. Price, Consensus and EPS Surprise

 

TEGNA Inc. Price, Consensus and EPS Surprise | TEGNA Inc. Quote

Recent Events

TEGNA offers a dynamic portfolio of media and digital businesses in the U.S.

TEGNA recently sold its 40.5% stake in web portal CareerBuilder, to an investor group led by Apollo Global Management and Ontario Teachers’ Pension Plan Board and expects to collect almost $250 million from this sale. The amount will be utilized to clear off existing debt. TEGNA also completed the spin-off of its auto-sales website Cars.com into two publicly traded companies: TEGNA and Cars.com. The decision is likely to generate more value for investors than the current stock price of the company. Both broadcast TV and digital platforms are rapidly evolving.

However, TEGNA operates in an intensely competitive broadcast radio and television industry, with major competitors like CBS Corp. CBS, Gray Television Inc. GTN and Entercom Communications Corp. ETM to name a few. Notably, the U.S. broadcast TV industry has long been grappling with declining advertising revenues and global economic volatility. Soft advertising market is a near-term headwind for the company.

We believe that these mixed ventures and business prospects have led to the company’s current Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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