TEGNA (NYSE: TGNA) reported Q1 EPS of $0.39, $0.01 better than the analyst estimate of $0.38. Revenue for the quarter came in at $684.19 million versus the consensus estimate of $679.32 million.

FIRST QUARTER HIGHLIGHTS:

• Total company revenue was $684 million in the first quarter, up 32 percent year-over-year and in-line with prior guidance and the figure provided in our preliminary first quarter results released last month. This increase was driven by acquisitions and continued growth in subscription revenue and political advertising spending, which TEGNA continues to expect to account for more than half of our revenues on a ‘19/’20 basis.
• Excluding political advertising, first quarter revenue grew 24 percent compared to last year, in line with guidance of mid-twenties percent.
• First quarter subscription revenue of $333 million was up 38 percent due to rate increases and acquisitions, reflecting the 50 percent of subscribers repriced as a result of renewals completed in the fourth quarter of 2019.
• Net income attributable to TEGNA was $86 million in the first quarter, up 17 percent due to strong Adjusted EBITDA, partially offset by higher intangible amortization expense and interest expense related to acquisitions in 2019. Non-GAAP net income attributable to TEGNA was $93 million, up 49 percent.
• GAAP earnings per diluted share were $0.39 in the first quarter and non-GAAP earnings per diluted share were $0.43.
• Total company Adjusted EBITDA for the first quarter was $212 million, up 39 percent year-over-year, reflecting new station contributions including synergies and strong performance of existing stations including ongoing cost containment efforts. Additionally, growth in the quarter benefited from approximately $47 million of high-margin political advertising dollars.
• Free cash flow for the first quarter was $142 million, up 30 percent year-over-year. The Company ended the quarter with total debt of $4.1 billion and net leverage of 4.7x.

CEO COMMENT

“TEGNA continues to execute on its five-pillar strategy to create value for shareholders, and our management team remains focused on managing through the current crisis—protecting our employees, supporting our customers and serving our communities. Since the onset of COVID-19, I am proud of our employees who have utilized safe and creative approaches to production during this pandemic. Our audience numbers are up significantly on all platforms whether linear TV or digital products. This audience growth reflects the critical role local broadcast plays in the communities we serve, further strengthening our value to clients in the months to come. We are proud of the performance of all of our colleagues across the country in providing a critical local link to news and information during this crisis,” said Dave Lougee, President and Chief Executive Officer.

“For consumers, business owners and American workers, COVID-19 has led to confusion and anxiety. Our local stations are reassuring our audiences with "Facts Not Fear", both a brand and a philosophy for all TEGNA journalists. Local news is the most trusted source of all, and our colleagues have risen to the challenge.

“Since the beginning of this crisis, we have moved quickly and prudently to reduce all non-essential costs and discretionary capital expenditures to protect the long-term health of our business. The strong foundation we have built over the past several years provides us the ability to respond in a thoughtful and timely manner. During that time, we have strengthened and diversified our revenue streams, as well as reinforced our balance sheet to increase liquidity and flexibility to manage through this period of volatility.

“Near-term macro dynamics clearly remain uncertain, but our first quarter results reflect continued momentum in subscription and political revenue streams. This allows us to better weather the current downturn in non-political advertising, while we continue to invest in the future and execute on our strategy for TEGNA shareholders over the long-term.”

COVID-19 FINANCIAL IMPACTS

Despite a strong start to the year, the wide variety of mitigating control measures put in place by federal and state governments in response to COVID-19, including, mandatory quarantines, closures of non-essential businesses and all other places of social interaction, "shelter in place" orders and travel restrictions, began negatively impacting our non-political advertising revenue stream in mid-March and we expect this trend to continue until such measures are relaxed. These impacts are expected to be material to our results of operations in the near term. The duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors (many of which are outside of management’s control). However, based on currently known information about COVID-19 trends, we generally expect the second quarter of 2020 to be the most significantly impacted this year, with sequential improvement throughout the remainder of the fiscal year.

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