If shareholders are the ultimate arbiter on how a publicly traded company performed in a fiscal quarter, than today’s activity on the NYSE for TEGNA shares is a sign that its Q4 2019 earnings aren’t to their liking.
TEGNA stock plunged as Tuesday’s Opening Bell rang on Wall Street, and couldn’t recover through the mid-afternoon, with TGNA off 5.9% to $16.30 at 3:18pm Eastern on heavy trading of 4.9 million shares. Average volume is 1.86 million shares.
The decline came as a loss of political revenue resulted in a year-over-year per-share earnings decline of 49%. Meanwhile, talk of Standard General and head Soo Kim‘s investment in the company was noticeably absent.
As President/CEO Dave Lougee sees it, TEGNA ended the year on a high note, driven by excellent performance across our business and strong momentum from our key growth drivers.”
That said, TEGNA’s financials are disproportionately impacted by cyclical political advertising, and this resulted in a decrease in net income from continuing operations to $160.82 million (74 cents per diluted share) to $83.96 million (38 cents). On a non-GAAP basis, income in Q4 2019 was $103 million (47 cents per share).
Operating income decreased to $176.72 million from $253.04 million.
Yes, a non-political year played a significant role in the apples-to-oranges comps.
But, general and administrative expenses rose to $102.96 million, from $86.13 million, taking a bit of lustre off of the 8% revenue jump TEGNA enjoyed ($693.96 million, jumping from $642.14 million in Q4 2018).
And, the revenue increase isn’t apples-to-apples either, as recent acquisitions are factored into the 2019 numbers.
With the question-and-answer session’s start on TEGNA’s earnings call, held Tuesday morning for financial analyst, first-quarter pacing was the first query presented to company executives.
“Strong subscription and political revenues” are on tap for Q1 with total GAAP revenue up in the low to mid 30s, or up mid-20s ex-political on a non-GAAP basis.
That said, non-GAAP expenses are also pacing in the mid-30s and in the high-20s excluding programming.
Ad pacing is seeing “sequential improvement from quarter to quarter,” and Automotive is up for the first time in a while, driven in part by TEGNA’s over-the-top advertising platform Premion. Media and telecom is up, along with home improvement. Travel and tourism has surged as a category for TEGNA. Medical/Dental/Optical is also up for TEGNA, as are banking/finance and entertainment.
Retail, however, is “slightly down,” Lougee says, in low-single-digits.
A JP Morgan analyst inquired about M&A opportunities. Lougee responded that TEGNA is “opportunistic on deals that make sense for our portfolio.” Small or large deals could be done, he hinted, with EBITDA maximization under the ownership cap being a paramount task for the company.