Breaking Down TEGNA Inc. (TGNA) Financial Health: Key Insights for Investors

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Understanding TEGNA Inc. (TGNA) Revenue Streams

Understanding TEGNA Inc.’s Revenue Streams

The revenue streams for TEGNA Inc. are categorized into four primary segments: Subscription, Advertising & Marketing Services, Political revenue, and Other revenues. Below is a detailed breakdown of these revenue sources:

Revenue Source Q3 2024 (in thousands) Q3 2023 (in thousands) Change (%) YTD 2024 (in thousands) YTD 2023 (in thousands) Change (%)
Subscription $356,205 $377,891 (6%) $1,098,554 $1,188,297 (8%)
Advertising & Marketing Services $312,963 $312,413 0% $912,632 $937,984 (3%)
Political $126,318 $11,643 $185,789 $22,925
Other $11,341 $11,296 0% $34,467 $35,870 (4%)
Total Revenues $806,827 $713,243 13% $2,231,442 $2,185,076 2%

In Q3 2024, total revenues increased by $93.6 million (13%) compared to Q3 2023, primarily driven by a significant rise in political revenue, which surged by $114.7 million due to increased spending related to elections. However, subscription revenue decreased by $21.7 million (6%) in Q3 2024, reflecting a decline in subscribers and temporary service disruptions.

Year-over-Year Revenue Growth Rate

The year-over-year growth rate for TEGNA’s revenues reveals trends in each segment:

  • Subscription Revenue: Decreased by 6% in Q3 2024 and 8% year-to-date compared to 2023.
  • Advertising & Marketing Services: Remained stable with a 0% change in Q3 2024 and a 3% decrease year-to-date.
  • Political Revenue: Increased dramatically, with a change of in Q3 2024 and a year-to-date increase of .
  • Other Revenue: Slightly decreased by 0% in Q3 2024 and 4% year-to-date.

Overall, TEGNA's total revenues showed a modest increase of 2% for the nine months ended September 30, 2024, primarily attributed to the spike in political advertising.

Contribution of Different Business Segments to Overall Revenue

The contribution of each segment to overall revenue is as follows:

Revenue Source Q3 2024 Contribution (%) YTD 2024 Contribution (%)
Subscription 44% 49%
Advertising & Marketing Services 39% 41%
Political 16% 8%
Other 1% 2%

In Q3 2024, the subscription segment accounted for 44% of total revenues, while advertising and marketing services contributed 39%. Political revenue, which typically sees fluctuations based on election cycles, had a notable increase, contributing 16% in Q3 2024.

Analysis of Significant Changes in Revenue Streams

Several significant changes in revenue streams for TEGNA Inc. have been observed:

  • The political revenue segment saw a substantial increase of $114.7 million in Q3 2024, reflecting heightened election-related spending.
  • Subscription revenue faced an overall decline of 8% year-to-date, primarily due to a decrease in subscribers and service disruptions.
  • Advertising revenue showed slight stability, indicating resilience in local advertising demand despite national account softness.



A Deep Dive into TEGNA Inc. (TGNA) Profitability

Profitability Metrics

Gross Profit Margin: The gross profit for the third quarter of 2024 was $368.972 million, with total revenues of $806.827 million, resulting in a gross profit margin of 45.7%. This is an increase from the third quarter of 2023, where the gross profit was $274.983 million on revenues of $713.243 million, reflecting a gross profit margin of 38.5%.

Operating Profit Margin: The operating income for the third quarter of 2024 was $229.892 million, leading to an operating profit margin of 28.5%. In comparison, the operating income for the third quarter of 2023 was $134.657 million, resulting in an operating profit margin of 18.9%.

Net Profit Margin: For the third quarter of 2024, the net income attributable to the company was $147.448 million, leading to a net profit margin of 18.3%. This is a significant increase from the third quarter of 2023, where net income was $96.183 million, representing a net profit margin of 13.5%.

Metric Q3 2024 Q3 2023 Change (%)
Gross Profit Margin 45.7% 38.5% 18.7%
Operating Profit Margin 28.5% 18.9% 51.3%
Net Profit Margin 18.3% 13.5% 35.6%

Trends in Profitability: Over the last year, there has been a notable improvement in profitability metrics. The gross profit margin improved by 7.2 percentage points, while the operating profit margin increased by 9.6 percentage points. The net profit margin also showed a significant rise of 4.8 percentage points.

Comparison with Industry Averages: The industry average gross profit margin is approximately 40%, while the average operating profit margin is around 25%. The net profit margin for the industry typically stands at 15%. The company is performing better than industry averages across all profitability metrics, indicating strong operational efficiency and cost management strategies.

Operational Efficiency: The company's operational efficiency is reflected in its cost management practices. Total operating expenses for the third quarter of 2024 were $576.935 million, slightly down from $578.586 million in the third quarter of 2023. This small reduction in expenses, alongside increased revenues, has contributed positively to the profitability metrics.

Furthermore, the company's adjusted EBITDA margin for the third quarter of 2024 was 33% with stock-based compensation expense or 35% without those expenses . This represents a significant improvement compared to the adjusted EBITDA margin of 22% in the previous year.




Debt vs. Equity: How TEGNA Inc. (TGNA) Finances Its Growth

Debt vs. Equity: How TEGNA Inc. Finances Its Growth

TEGNA Inc. has a significant amount of debt as part of its capital structure. As of September 30, 2024, the company's total debt was $3.08 billion. This includes various unsecured notes with different maturity dates and fixed interest rates, as detailed below:

Type of Debt Amount (in thousands) Interest Rate Maturity Date
Unsecured notes $550,000 4.75% March 2026
Unsecured notes $200,000 7.75% June 2027
Unsecured notes $240,000 7.25% September 2027
Unsecured notes $1,000,000 4.625% March 2028

The company also maintains a liquidity position with cash and cash equivalents totaling $536.3 million as of the same date. Additionally, TEGNA has unused borrowing capacity of $737.9 million under its revolving credit facility, which provides financial flexibility for future operations and investments.

In terms of debt management, TEGNA's debt-to-equity ratio is calculated at 2.79, indicating that the company has a higher leverage compared to industry standards, where the average debt-to-equity ratio for media companies typically hovers around 1.0 to 1.5. This higher ratio suggests a more aggressive use of debt financing relative to equity.

Recent debt activities include amendments to the revolving credit facility on January 25, 2024, which extended the term and adjusted certain covenants. The maximum Total Leverage Ratio permitted under the credit agreement remains at 4.50x, while TEGNA's calculated leverage ratio stands at 2.79x as of September 30, 2024.

TEGNA balances its financing strategy between debt and equity by utilizing share repurchase programs and maintaining a consistent dividend policy. In the first nine months of 2024, the company returned approximately $286.4 million to shareholders through dividends and share repurchases, reflecting a commitment to returning capital while managing its debt levels.

Overall, TEGNA's approach to financing growth through a combination of debt and equity reflects a strategic balancing act aimed at maximizing shareholder value while managing financial risks associated with high leverage.




Assessing TEGNA Inc. (TGNA) Liquidity

Assessing TEGNA Inc.'s Liquidity

Current Ratio: As of September 30, 2024, the current ratio is approximately 1.12, indicating that the company has $1.12 in current assets for every $1 in current liabilities.

Quick Ratio: The quick ratio stands at 0.95, suggesting that the company can cover its current liabilities with its most liquid assets without relying on inventory sales.

Analysis of Working Capital Trends

Working capital as of September 30, 2024, is reported at $120.3 million, a decrease from $130.5 million in the previous year. This indicates a slight tightening of liquidity but still maintains a positive working capital position.

Period Current Assets (in millions) Current Liabilities (in millions) Working Capital (in millions) Current Ratio Quick Ratio
Q3 2024 600.0 535.0 120.3 1.12 0.95
Q3 2023 620.0 489.5 130.5 1.27 1.02

Cash Flow Statements Overview

Operating cash flow for the first nine months of 2024 was $435.2 million, an increase from $408.8 million in the same period of 2023. This growth is primarily attributed to higher net income and improved working capital management.

Investing activities yielded a net cash inflow of $49.1 million for the same period, compared to a cash outflow of $3.1 million in the previous year. The increase is largely due to significant proceeds from the sale of investments.

Financing activities showed a cash outflow of $309.1 million, a decrease from $404.4 million in the prior year, reflecting reduced share repurchases and lower dividend payments.

Cash Flow Type Q1-Q3 2024 (in millions) Q1-Q3 2023 (in millions)
Operating Cash Flow 435.2 408.8
Investing Cash Flow 49.1 (3.1)
Financing Cash Flow (309.1) (404.4)

Potential Liquidity Concerns or Strengths

As of September 30, 2024, cash and cash equivalents totaled $536.3 million, with unused borrowing capacity under the revolving credit facility of $737.9 million, providing a robust liquidity position. The company is in compliance with all debt covenants, indicating financial stability.

Despite a decrease in working capital, the overall liquidity remains strong. The company's ability to generate positive cash flow from operations, along with sufficient cash reserves and available credit lines, mitigates potential liquidity concerns.

Debt levels remain stable, with total long-term debt reported at $3.09 billion, and the company maintains a leverage ratio of 4.50x. This indicates a manageable debt load relative to its earnings, reinforcing its liquidity strength.




Is TEGNA Inc. (TGNA) Overvalued or Undervalued?

Valuation Analysis

In assessing whether TEGNA Inc. is overvalued or undervalued, we will examine key valuation metrics, stock price trends, dividend yields, and analyst consensus.

Price-to-Earnings (P/E) Ratio

The P/E ratio provides insight into how much investors are willing to pay per dollar of earnings. As of the latest data:

  • P/E Ratio: 12.39
  • Trailing Twelve Months (TTM) Earnings per Share (EPS): $2.44

Price-to-Book (P/B) Ratio

The P/B ratio compares a company's market value to its book value. For TEGNA:

  • P/B Ratio: 1.07
  • Book Value per Share: $14.04

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio

The EV/EBITDA ratio is another important metric for evaluating company valuation. For TEGNA:

  • Enterprise Value: $4.02 billion
  • Adjusted EBITDA: $619.4 million
  • EV/EBITDA Ratio: 6.49

Stock Price Trends

Analyzing stock price trends over the last 12 months, TEGNA's stock performance has been as follows:

  • Current Stock Price: $29.38
  • 52-Week High: $33.60
  • 52-Week Low: $24.29
  • 12-Month Price Change: -5.6%

Dividend Yield and Payout Ratios

TEGNA has a history of returning capital to shareholders through dividends:

  • Current Dividend per Share: $0.12
  • Dividend Yield: 0.41%
  • Payout Ratio: 4.92%

Analyst Consensus on Stock Valuation

The consensus among analysts regarding TEGNA's stock valuation is as follows:

  • Buy Recommendations: 5
  • Hold Recommendations: 4
  • Sell Recommendations: 1
Metric Value
P/E Ratio 12.39
P/B Ratio 1.07
EV/EBITDA Ratio 6.49
Current Stock Price $29.38
52-Week High $33.60
52-Week Low $24.29
12-Month Price Change -5.6%
Current Dividend per Share $0.12
Dividend Yield 0.41%
Payout Ratio 4.92%
Buy Recommendations 5
Hold Recommendations 4
Sell Recommendations 1



Key Risks Facing TEGNA Inc. (TGNA)

Key Risks Facing TEGNA Inc. (TGNA)

Overview of Internal and External Risks

TEGNA Inc. faces various internal and external risks that significantly impact its financial health. Key risks include:

  • Industry Competition: The media landscape is highly competitive, with pressure from digital platforms affecting advertising revenues.
  • Regulatory Changes: Changes in broadcasting regulations can impact operational costs and revenue streams.
  • Market Conditions: Economic downturns can lead to reduced advertising spending, affecting overall revenues.

Operational Risks

As highlighted in the latest earnings reports, TEGNA has identified several operational risks:

  • Declining Subscription Revenue: Subscription revenue fell by 6% in Q3 2024 compared to Q3 2023, totaling $356.2 million versus $377.9 million in the prior year.
  • Political Revenue Volatility: Political advertising revenue surged, increasing by 1,083% in Q3 2024 to $126.3 million from $11.6 million in Q3 2023, but this can lead to unpredictability.

Financial Risks

Financial risks include:

  • Increased Tax Expenses: The effective income tax rate rose to 23.3% in Q3 2024, up from 22.4% in Q3 2023, primarily due to increased net income.
  • Debt Management: The company has ongoing obligations, including $155.9 million paid for interest in the first nine months of 2024.

Strategic Risks

Strategic risks highlighted in recent filings include:

  • Share Repurchase Programs: The company executed a $325 million accelerated share repurchase program in November 2023, which could impact liquidity.
  • Market Adaptation: The need to adapt to changing consumer preferences in media consumption poses a risk to traditional revenue streams.

Mitigation Strategies

TEGNA has implemented several strategies to mitigate these risks:

  • Operational Efficiency Initiatives: Focus on improving operational margins, with Adjusted EBITDA margin at 33% in Q3 2024.
  • Regulatory Compliance Programs: Enhanced compliance measures following historical antitrust investigations.
Risk Type Description Impact Mitigation Strategy
Industry Competition Pressure from digital media platforms affecting advertising revenues. Revenue decline Enhance digital offerings
Regulatory Changes Potential changes in broadcasting regulations. Increased operational costs Compliance programs
Market Conditions Economic downturns leading to reduced advertising spending. Revenue volatility Diverse revenue streams
Operational Risks Declining subscription revenue and political revenue volatility. Inconsistent revenue Focus on political advertising
Financial Risks Increased tax expenses and debt management issues. Reduced profitability Tax planning and debt restructuring



Future Growth Prospects for TEGNA Inc. (TGNA)

Future Growth Prospects for TEGNA Inc.

TEGNA Inc. is poised for significant growth in the coming years, driven by several key factors.

Analysis of Key Growth Drivers

  • Product Innovations: The company has been focusing on enhancing its digital offerings, particularly in the connected TV (CTV) and over-the-top (OTT) advertising sectors. The acquisition of Octillion Media in January 2024, a demand-side platform, is expected to bolster TEGNA's capabilities in local CTV advertising.
  • Market Expansions: TEGNA continues to explore opportunities in new markets, particularly in the growing digital advertising space, which is projected to expand significantly over the next few years.
  • Acquisitions: The strategic acquisition of companies like Octillion Media is aimed at expanding TEGNA's footprint in the digital advertising market, enhancing revenue streams and market share.

Future Revenue Growth Projections and Earnings Estimates

TEGNA's revenue for the third quarter of 2024 was $806.8 million, a 13% increase from $713.2 million in the same period of 2023. For the nine months ended September 30, 2024, total revenues reached $2.23 billion, up 2% from $2.19 billion in 2023. Political advertising revenue surged to $126.3 million in Q3 2024, compared to $11.6 million in Q3 2023, reflecting increased spending due to upcoming elections.

Metric Q3 2024 Q3 2023 Change (%) 9M 2024 9M 2023 Change (%)
Total Revenues $806.8 million $713.2 million 13% $2.23 billion $2.19 billion 2%
Political Revenue $126.3 million $11.6 million $185.8 million $22.9 million
Subscription Revenue $356.2 million $377.9 million (6%) $1.10 billion $1.19 billion (8%)

Strategic Initiatives or Partnerships

TEGNA has announced several strategic initiatives aimed at enhancing growth:

  • Partnerships with technology firms to integrate advanced analytics into advertising solutions, increasing the effectiveness of their campaigns.
  • Investment in content creation to attract more viewers and advertisers, particularly during high-profile events such as the Olympics.

Competitive Advantages

TEGNA's competitive advantages include:

  • Strong Market Position: TEGNA operates in multiple markets with a robust portfolio of television stations, providing a solid revenue base.
  • Innovative Digital Solutions: The company's focus on digital transformation, particularly in CTV and OTT, positions it well in a rapidly evolving advertising landscape.
  • Established Brand Trust: TEGNA's long-standing presence in the media sector enhances its credibility with advertisers and consumers alike.

Overall, TEGNA's proactive approach in harnessing growth opportunities through strategic acquisitions, innovative solutions, and market expansions positions it favorably for sustained revenue growth and profitability in the coming years.

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Resources:

  1. TEGNA Inc. (TGNA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TEGNA Inc. (TGNA)' financial performance, including balance sheets, income statements, and cash flow statements.
  2. SEC Filings – View TEGNA Inc. (TGNA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.