TEGNA TGNA reported fourth-quarter 2019 non-GAAP earnings of 47 cents per share, which beat the Zacks Consensus Estimate by 9.3%. However, the figure declined 36.5% on a year-over-year basis.
Revenues were up 8.1% year over year to $694 million, which beat the consensus mark by 0.7%. The year-over-year growth was driven by solid contribution from recent acquisitions, continued growth in subscription revenues, revenues related to certain 2020 political advertising campaign spending and stronger advertising & marketing services revenues.
Excluding political advertising revenues, adjusted revenues increased 33.3% year over year.
Quarter in Detail
Advertising and Marketing services (56.1% of revenues) revenues were $375.3 million, up 35.4% on a year-over-year basis.
Subscription (42.8% of revenues) revenues were $286.6 million, up 31.2% year over year. The top line benefited from increased subscriber base due to new station acquisitions in mid-third quarter, as well as increase in rate.
TEGNA Inc. Price, Consensus and EPS Surprise
TEGNA Inc. price-consensus-eps-surprise-chart | TEGNA Inc. Quote
Political (3.6% of revenues) revenues were $24.4 million, down 82.5% year over year. Other revenues (1.1% of revenues) were $7.7 million, up 15% year over year.
TEGNA inked multi-year distribution agreements with Altice, Comcast CMCSA, Cox, and Spectrum repricing 50% its subscriber base in the fourth quarter.
Non-GAAP adjusted EBITDA declined 15.2% year over year to $240.7 million. Adjusted EBITDA margin was 36%, down from the year-ago quarter’s figure of 56.5%.
Non-GAAP operating expenses (74.5% of revenues) were $498.5 million, up 27.3% year over year primarily due to increased programming expenses.
Non-GAAP operating income slumped 22% year over year to $195.4 million. Operating margin was 29.2% compared with the year-ago quarter’s 49.9%.
Balance Sheet & Cash Flow
As of Dec 31, 2019, total cash was $29 million.
Total debt was $4.2 billion and net leverage was 4.9 times as of Dec 31.
Free cash flow at the end of the fourth quarter was $111 million.
For first-quarter 2020, TEGNA expects GAAP revenues to increase more than low-to-mid 30s range. Non-GAAP revenues (excluding political) are anticipated to grow more than mid-20s range.
Total non-GAAP operating expenses are anticipated to increase in the low-to-mid 30s range. Excluding programming, operating expenses are expected to grow more than high 20s range.
For 2020, TEGNA expects subscription revenues to increase more than mid-20% on a year-over-year basis. Political revenues are expected to be more than $300 million.
Total capital expenditures are anticipated to be $62-$66 million. Moreover, the company expects net leverage to reduce to 4x by the end of 2020
Zacks Rank and Other Stocks to Consider
Currently, TEGNA sports a Zacks Rank #1 (Strong Buy).
YETI Holdings YETI and Ralph Lauren RL are some other top-ranked stocks in the broader consumer discretionary sector with the same Zacks Rank as TEGNA. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for YETI and Ralph Lauren is pegged at 17.2% and 9.6%, respectively.
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