TEGNA Inc. ((TGNA)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for TEGNA Inc. presented a mixed sentiment, highlighting both achievements and challenges. On the positive side, the company reported growth in digital revenue and successful cost-cutting initiatives. However, it also faced revenue and EBITDA declines. TEGNA’s strong balance sheet and strategic focus on digital and sports rights offer promise, although broader market headwinds remain a concern.
Digital Revenue Growth
TEGNA reported a significant increase in digital advertising revenue, driven by initiatives in its digital product portfolio, web solutions, mobile, and streaming apps. This growth reflects the company’s strategic focus on expanding its digital footprint and adapting to changing consumer behaviors.
Cost-Cutting Initiatives
The company has successfully implemented operational cost-cutting measures, keeping non-GAAP expenses flat year-over-year. TEGNA is on track to achieve $90 million to $100 million in annualized core non-programming savings by the end of 2025, demonstrating its commitment to improving operational efficiency.
Securing Local Sports Rights
TEGNA has made strategic moves to secure local sports rights, including partnerships with NBA, WNBA, NHL, and MLB teams. Additionally, it has collaborated with NFL teams to air preseason games for free, enhancing its sports content offerings and audience reach.
Strong Balance Sheet and Cash Flow
With cash and cash equivalents totaling $717 million at the quarter’s end and a net leverage of 2.8x, TEGNA maintains a robust financial position. This strength positions the company well for potential mergers and acquisitions, providing flexibility to capitalize on growth opportunities.
Revenue Decline
TEGNA experienced a 5% year-over-year decline in total company revenue for the first quarter, primarily due to reduced political advertising revenue and macroeconomic headwinds. This decline underscores the challenges posed by external market conditions.
Challenges in Advertising Market
The advertising and marketing services revenue decreased by 3% year-over-year, reflecting a cautious approach from advertisers amid softening consumer confidence. This trend highlights the broader challenges in the advertising market.
Adjusted EBITDA Decline
Adjusted EBITDA for the first quarter fell by 22% year-over-year, impacted by lower political advertising and AMS revenues. This decline indicates the ongoing challenges in maintaining profitability amidst a shifting revenue landscape.
Forward-Looking Guidance
Looking ahead, TEGNA anticipates a revenue decline of 4% to 7% year-over-year in the second quarter, primarily due to the cyclical nature of political advertising and broader advertising environment challenges. Despite these hurdles, the company remains committed to its cost-cutting initiatives and aims to return 40% to 60% of adjusted free cash flow to shareholders over the 2024-2025 period.
In summary, TEGNA Inc.’s earnings call reflected a mixed performance with both positive strides in digital revenue growth and cost management, alongside challenges in revenue and EBITDA declines. The company’s strong financial position and strategic focus on digital and sports rights provide a promising outlook, although market headwinds continue to pose challenges.