Financial Data and Key Metrics Changes - TEGNA achieved record total revenues, advertising and marketing services revenues, subscription revenue, net income, and adjusted EBITDA in Q1 2021, marking the strongest first quarter since becoming a pure-play broadcasting company [7][28]. - Total company revenue increased by 6% year-over-year, with a 41% increase compared to Q1 2019 [33]. - Adjusted EBITDA reached a record $231 million, representing a 32% margin for the quarter, and was up 9% year-over-year [47][48]. Business Line Data and Key Metrics Changes - Advertising and marketing services revenues rose by 9.4% year-over-year, driven by both traditional and digital advertising, including the growth of Premion [8][37]. - Subscription revenues increased by 16% year-over-year, supported by strong retransmission rates and improved subscriber trends [11][35]. - Premion is projected to close 2021 with revenues 45% to 50% higher than 2020, reflecting its continued growth [9]. Market Data and Key Metrics Changes - Subscriber trends improved, with a year-over-year decline of less than 5%, the best performance since 2019 [11][34]. - The automotive advertising category, TEGNA's largest, improved significantly, with low double-digit growth compared to last year [39]. - Non-political advertising categories are recovering, with strong audience metrics across both traditional and digital platforms [38]. Company Strategy and Development Direction - TEGNA is focused on leveraging streaming growth through Premion and expanding news and entertainment content across streaming platforms [13][15]. - The company has a disciplined M&A strategy, integrating acquisitions effectively and realizing synergies [29][57]. - TEGNA aims to continue paying down debt while returning value to shareholders through increased dividends and share repurchase programs [19][55]. Management Comments on Operating Environment and Future Outlook - Management expressed optimism for continued growth in Q2 and the remainder of the year, supported by strong advertising and subscription revenue trends [7][21]. - The company noted that the advertising environment is improving, particularly in larger markets, and expects further recovery as the economy reopens [85][86]. - Management highlighted the importance of local advertising and the unique position of Premion in the competitive OTT advertising market [90][91]. Other Important Information - TEGNA has made significant progress in diversity, equity, and inclusion initiatives, including a comprehensive journalism program [23][24]. - The company has a strong balance sheet, with total debt at $3.5 billion and a net leverage ratio of 3.82x [50][51]. - Free cash flow for Q1 2021 was a record $159 million, representing 22% of total revenue [53]. Q&A Session Summary Question: Can you discuss the drivers of Premion's growth? - Management indicated that local sales are the primary driver of Premion's growth, with increasing inventory and strong demand from local advertisers [70][71]. Question: How is the automotive advertising category performing? - Management noted that automotive advertising is performing well, particularly in large markets, despite supply chain issues affecting the industry [73][75]. Question: What is the outlook for cash taxes? - Management confirmed that the cash tax guidance remains unchanged, with specific figures to be provided later [76][78]. Question: How does TEGNA's core advertising environment compare to 2019? - Management stated that core advertising levels are slightly down compared to 2019, but larger markets are performing better than both last year and 2019 [85][86]. Question: What is the significance of the new NFL deals for TEGNA? - Management emphasized that having NFL content on broadcast for the next 11 years is a significant advantage for the industry, although streaming changes may impact local inventory [87][88]. Question: What is the competitive landscape for Premion? - Management acknowledged the competitive nature of the OTT advertising space but highlighted TEGNA's focus on local advertising as a differentiator [90][91].

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-6961 ___________________________ FORM 10-Q _______________________ TEGNA INC. (Exact name of registrant as specified in its charter) ___________________________ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification N ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) TEGNA is a major U.S. media company operating 64 television stations, with revenue driven by subscription, advertising, and political spending [Business Overview and Operating Structure](index=3&type=section&id=Business%20Overview%20and%20Operating%20Structure) The company operates 64 TV stations reaching 39% of U.S. households and has shifted to a pure-play broadcasting model - TEGNA operates 64 television stations and two radio stations in 51 U.S. markets, reaching approximately **39% of U.S. television households**[9](index=9&type=chunk) - The company has transformed into a pure-play broadcasting company through strategic acquisitions of over 40 stations and divestment of non-core assets[10](index=10&type=chunk) Revenue Composition (2019-2020 vs. 2018-2019) | Revenue Source | Combined Two Year Period 2019 - 2020 | Combined Two Year Period 2018 - 2019 | | :--- | :--- | :--- | | Advertising & Marketing Services | 46% | 52% | | Subscription | 44% | 41% | | Political | 9% | 6% | | Other | 1% | 1% | [Our Strategy](index=4&type=section&id=Our%20Strategy) The company's five-pillar strategy prioritizes operational excellence, M&A, innovation, balance sheet strength, and strong free cash flow - The company's five-pillar strategy includes: being a best-in-class operator, pursuing accretive M&A, driving organic innovation (e.g., Premion), maintaining a strong balance sheet, and strong free cash flow generation with optimized capital allocation[21](index=21&type=chunk)[23](index=23&type=chunk) - Subscription revenue growth is a key focus, with multi-year distribution agreements renewed in Q4 2020 representing approximately **35% of paid subscribers** at leading rates[22](index=22&type=chunk) - Premion, the company's OTT advertising service, continues strong growth, with revenue up **more than 40% in 2020 to over $145 million**[40](index=40&type=chunk) - The company is focused on de-levering following 2019 acquisitions, reducing its net leverage ratio from 4.92x at year-end 2019 to **3.95x at year-end 2020**[48](index=48&type=chunk)[49](index=49&type=chunk) [Competition and Regulatory Environment](index=8&type=section&id=Competition%20and%20Regulatory%20Environment) The company faces competition from diverse media platforms and is subject to significant FCC ownership and operational regulations - The company competes for advertising revenue with other broadcast stations, cable providers, and digital platforms like Google and Facebook[54](index=54&type=chunk)[55](index=55&type=chunk) - The business is subject to FCC regulations, including licensing, local and national broadcast ownership restrictions, and rules governing retransmission consent negotiations[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) - TEGNA's 64 television stations reach approximately **39.3% of U.S. television households** without the UHF discount, which is close to the national ownership cap of 39%[63](index=63&type=chunk) [Human Capital and Corporate Responsibility](index=11&type=section&id=Human%20Capital%20and%20Corporate%20Responsibility) The company focuses on diversity and inclusion, corporate sustainability reporting, and significant community and philanthropic engagement - As of December 31, 2020, TEGNA employed approximately 6,430 people, with a workforce that is **47% female and 25% people of color**[75](index=75&type=chunk) - In 2020, the company appointed its first Chief Diversity Officer and established a Diversity & Inclusion Working Group[79](index=79&type=chunk)[82](index=82&type=chunk) - TEGNA has adopted Sustainability Accounting Standards Board (SASB) standards and plans to conduct a climate-related financial disclosures (TCFD) gap analysis in 2021[94](index=94&type=chunk)[96](index=96&type=chunk) - In 2020, TEGNA stations helped raise **over $100 million for local causes**, including over $66 million for COVID-19 relief efforts[101](index=101&type=chunk)[102](index=102&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) Key risks include dependency on cyclical advertising demand, competition from alternative media, and the financial impact of COVID-19 - A significant portion of revenue (**40% in 2020**) comes from advertising, which is highly dependent on the U.S. economy[116](index=116&type=chunk) - The COVID-19 pandemic has had and may continue to have a dampening effect on non-political Advertising & Marketing Services (AMS) revenues[120](index=120&type=chunk)[123](index=123&type=chunk) - Subscription revenues, which represented approximately **44% of 2020 total revenues**, depend on retransmission consent agreements, with about 30% of subscribers up for renewal in 2021[129](index=129&type=chunk) - Goodwill and other intangible assets were approximately **$5.47 billion** as of December 31, 2020, representing about **80% of total assets** and are at risk of impairment[141](index=141&type=chunk) [Unresolved Staff Comments](index=25&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[142](index=142&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) The company's properties consist of offices, studios, and transmitter sites for its television stations - Properties required to support television stations include offices, studios, sales offices, and tower/transmitter sites[143](index=143&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is referenced in Note 12 of the Notes to consolidated financial statements - Refer to Note 12 of the Notes to consolidated financial statements for information on legal proceedings[145](index=145&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[146](index=146&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, and a $300 million share repurchase program was renewed in December 2020 - In December 2020, the Board of Directors authorized the renewal of the share repurchase program for up to **$300.0 million** of common stock over the next three years[148](index=148&type=chunk) - The company has paid a regular quarterly cash dividend of **$0.07 per share** since 2017, with total dividends paid of **$76.5 million in 2020**[149](index=149&type=chunk) [Selected Financial Data](index=25&type=section&id=Item%206.%20Selected%20Financial%20Data) This section has been excluded pursuant to Regulation S-K Item 301, as amended - Excluded pursuant to Regulation S-K Item 301, as amended[150](index=150&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant revenue growth in 2020, driven by political advertising and subscription fees, alongside analysis of operations and liquidity [Consolidated Results from Operations](index=27&type=section&id=Consolidated%20Results%20from%20Operations) Revenues and operating income grew significantly in 2020, driven by record political advertising and subscription growth Consolidated Results of Operations (in thousands) | | 2020 | 2019 | Change from 2019 | 2018 | Change from 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$2,937,780** | **$2,299,497** | **28%** | **$2,207,282** | **33%** | | Total Operating expenses | $2,066,798 | $1,740,479 | 19% | $1,508,806 | 37% | | **Operating income** | **$870,982** | **$559,018** | **56%** | **$698,476** | **25%** | | Income from continuing operations | $482,763 | $286,235 | 69% | $401,340 | 20% | | **EPS from continuing operations - diluted** | **$2.19** | **$1.31** | **67%** | **$1.85** | **18%** | Revenue by Category (in thousands) | | 2020 | 2019 | Change from 2019 | 2018 | Change from 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Subscription | $1,286,611 | $1,005,030 | 28% | $840,838 | 53% | | Advertising & Marketing Services | $1,174,774 | $1,226,607 | (4%) | $1,106,754 | 6% | | Political | $445,535 | $38,478 | *** | $233,613 | 91% | | Other | $30,860 | $29,382 | 5% | $26,077 | 18% | | **Total revenues** | **$2,937,780** | **$2,299,497** | **28%** | **$2,207,282** | **33%** | - Total revenues increased by **$638.3 million (28%)** in 2020 compared to 2019, with $296.7 million contributed by the 2019 acquisitions[165](index=165&type=chunk) [Operating results non-GAAP information](index=32&type=section&id=Operating%20results%20non-GAAP%20information) Management utilizes non-GAAP metrics like Adjusted EBITDA and Free Cash Flow to assess core operational performance - Management uses non-GAAP measures such as **Adjusted EBITDA and Free Cash Flow** to evaluate company performance, excluding the impact of 'special items' like M&A costs and restructuring expenses[192](index=192&type=chunk)[193](index=193&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net income attributable to TEGNA Inc. (GAAP) | $482,778 | $286,235 | 69% | | Adjustments (Taxes, Interest, D&A, etc.) | $541,515 | $421,277 | 29% | | **Adjusted EBITDA (non-GAAP)** | **$1,024,293** | **$707,512** | **45%** | Free Cash Flow Reconciliation (in thousands) | | 2020 | 2019 | | :--- | :--- | :--- | | Net Income attributable to TEGNA Inc. (GAAP) | $482,778 | $286,235 | | Plus/Less: Various non-cash and cash adjustments | $258,355 | $89,013 | | **Free cash flow (non-GAAP)** | **$741,133** | **$376,248** | [Financial Position, Liquidity and Capital Resources](index=37&type=section&id=Financial%20Position,%20Liquidity%20and%20Capital%20Resources) The company generated strong operating cash flow, maintained ample liquidity, and actively managed its debt profile in 2020 - Operating activities generated **$805.1 million in cash flow in 2020**, a significant increase from $297.5 million in 2019, driven by a $407.1 million increase in political revenue[217](index=217&type=chunk) - As of Dec 31, 2020, total principal debt was **$3.58 billion**, with **$1.13 billion of unused borrowing capacity** and a leverage ratio of 3.86x[211](index=211&type=chunk)[222](index=222&type=chunk) - In 2020, the company undertook several debt refinancing activities, including issuing **$1.0 billion of 4.625% senior notes** and **$550 million of 4.750% senior notes**[223](index=223&type=chunk)[224](index=224&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) Key accounting estimates involve goodwill, intangible assets, and pension liabilities, with some assets facing impairment risk - Goodwill of **$3.0 billion (43% of total assets)** is tested for impairment annually, with the 2020 test indicating fair value significantly exceeded carrying value[233](index=233&type=chunk)[238](index=238&type=chunk) - Indefinite-lived intangible assets of **$2.1 billion (31% of total assets)** are tested for impairment annually, with recently acquired licenses of **$67.2 million** at a heightened risk of future impairment[240](index=240&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) - Pension liabilities are subject to key assumptions, including the discount rate (**2.55% for 2020**) and the expected long-term rate of return on plan assets (**6.75% for 2020**)[248](index=248&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk exposure relates to interest rates on its $355 million of floating-rate debt - The main market risk is interest rate changes on floating-rate debt; a **50 basis point change** in interest rates would impact annual interest expense by **$1.8 million**[256](index=256&type=chunk) [Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements and detailed notes for the fiscal years 2018 through 2020 [Note 2 – Acquisitions](index=60&type=section&id=Note%202%20%E2%80%93%20Acquisitions) The company completed four strategic acquisitions in 2019, adding significant net assets to its portfolio Summary of 2019 Acquisitions (in thousands) | Acquisition | Seller | Closing Date | Net Assets Acquired | | :--- | :--- | :--- | :--- | | Nexstar Stations | Nexstar Media Group | Sep 19, 2019 | $769,943 | | Dispatch Stations | Dispatch Broadcast Group | Aug 8, 2019 | $560,473 | | Justice & Quest | Cooper Media | Jun 18, 2019 | $90,046 | | Gray Stations | Gray Television | Jan 2, 2019 | $109,920 | | **Total** | | | **$1,530,382** | [Note 6 – Long-term debt](index=67&type=section&id=Note%206%20%E2%80%93%20Long-term%20debt) Total long-term debt was reduced in 2020 through repayments and active management of credit facilities and unsecured notes Long-Term Debt Summary (in thousands) | | Dec. 31, 2020 | Dec. 31, 2019 | | :--- | :--- | :--- | | Borrowings under revolving credit facility | $355,000 | $903,000 | | Unsecured notes (various) | $3,227,000 | $3,165,000 | | Unsecured term loans | $0 | $125,000 | | **Total principal long-term debt** | **$3,582,000** | **$4,203,000** | [Note 12 – Other matters](index=80&type=section&id=Note%2012%20%E2%80%93%20Other%20matters) The company faces an antitrust class action lawsuit and has substantial future programming contract commitments - The company is a defendant in a consolidated class action lawsuit alleging antitrust violations related to local television advertising sales practices[436](index=436&type=chunk) Programming Contract Commitments (in thousands) | Year | Amount | | :--- | :--- | | 2021 | $810,069 | | 2022 | $847,218 | | 2023 | $536,785 | | 2024 | $1,981 | | 2025 | $404 | | **Total** | **$2,196,457** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=82&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[449](index=449&type=chunk) [Controls and Procedures](index=82&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2020 - Management concluded that disclosure controls and procedures were **effective** as of December 31, 2020[450](index=450&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2020[451](index=451&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[454](index=454&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 proxy statement - Information is incorporated by reference from the 2021 proxy statement[456](index=456&type=chunk) [Executive Compensation](index=83&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2021 proxy statement - Information is incorporated by reference from the 2021 proxy statement[457](index=457&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's 2021 proxy statement - Information is incorporated by reference from the 2021 proxy statement[458](index=458&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=83&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2021 proxy statement - Information is incorporated by reference from the 2021 proxy statement[459](index=459&type=chunk) [Principal Accountant Fees and Services](index=83&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2021 proxy statement - Information is incorporated by reference from the 2021 proxy statement[460](index=460&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=84&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section contains a list of all financial statements, schedules, and exhibits filed with the Form 10-K, including certifications from the CEO and CFO[462](index=462&type=chunk)[464](index=464&type=chunk) [Form 10-K Summary](index=93&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for this item - None[477](index=477&type=chunk)

TEGNA Inc. (NYSE:TGNA) Q4 2020 Earnings Conference Call March 1, 2021 9:00 AM ET Company Participants Dave Lougee - President and Chief Executive Officer Victoria Harker - Chief Financial Officer Doug Kuckelman - Head of Investor Relations Conference Call Participants Dan Kurnos - The Benchmark Company Steven Cahall - Wells Fargo Alexia Quadrani - JP Morgan Kyle Evans - Stephens Doug Arthur - Huber Research Vasily Karasyov - Cannibal Research Craig Huber - Huber Research Jim Goss - Barrington Research Opera ...

Trusted Voices Delivering Results Investor Presentation March 2021 TEGNA Forward-Looking Statements Certain statements in this communication may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to a number of risks, trends and uncertainties that could cause actual results or company actions to differ materially from what is expressed or implied by these statements, including risks relating ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) TEGNA's unaudited condensed consolidated financial statements for Q3 2020 are presented, showing significant revenue and net income growth driven by political advertising and acquisitions, with notes detailing key financial impacts [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail financial statement preparation, COVID-19's impact on advertising, revenue breakdowns, 2019 acquisitions, goodwill impairment, debt structure, and legal proceedings - The COVID-19 pandemic negatively impacted Advertising & Marketing Services (AMS) revenue starting mid-March 2020, leading to company-wide **cost-saving measures** including furloughs and compensation reductions[21](index=21&type=chunk)[22](index=22&type=chunk) - In 2019, the company significantly expanded its portfolio through major acquisitions, including **11 stations from Nexstar for $770 million**, **two stations from Dispatch Broadcast Group for $561 million**, and **two stations from Gray Television for $110 million**[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company is a defendant in **consolidated class action antitrust lawsuits** regarding local television advertising sales practices, denying any violation and intending to defend itself vigorously[70](index=70&type=chunk)[71](index=71&type=chunk) Revenue by Source (in thousands) | Revenue Source | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | **Advertising & Marketing Services** | $298,605 | $297,333 | $822,841 | $851,304 | | **Subscription** | $316,677 | $240,735 | $972,954 | $718,472 | | **Political** | $116,494 | $8,131 | $181,425 | $14,064 | | **Other** | $6,613 | $5,658 | $22,985 | $21,702 | Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sept. 30, 2020 | Dec. 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $763,281 | $707,324 | | **Total assets** | $6,944,996 | $6,953,976 | | **Total current liabilities** | $399,344 | $361,158 | | **Long-term debt** | $3,906,196 | $4,179,245 | | **Total liabilities** | $5,130,807 | $5,363,599 | | **Total equity** | $1,799,536 | $1,590,377 | Consolidated Statements of Income Highlights (in thousands) | Metric | Q3 2020 | Q3 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $738,389 | $551,857 | 34% | | **Operating income** | $227,701 | $106,833 | 113% | | **Net income attributable to TEGNA Inc.** | $132,219 | $48,346 | 173% | | **Diluted EPS** | $0.60 | $0.22 | $1.08 | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sept. 30, 2020 | Nine Months Ended Sept. 30, 2019 | | :--- | :--- | :--- | | **Net cash flow from operating activities** | $515,751 | $214,585 | | **Net cash flow used for investing activities** | ($24,412) | ($1,523,027) | | **Net cash flow (used for) provided by financing activities** | ($356,157) | $1,181,774 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses TEGNA's financial performance, highlighting its transformation into a pure-play broadcaster with growing high-margin subscription and political revenues, which drove significant Q3 2020 revenue growth despite COVID-19 impacts [Company Overview & COVID-19 Impact](index=22&type=section&id=Company%20Overview%20%26%20COVID-19%20Impact) TEGNA operates 63 television stations across 51 U.S. markets, with its revenue mix shifting towards high-margin subscription and political revenues, while implementing cost-saving measures in response to COVID-19's impact on advertising - TEGNA is the **largest owner** of top four network affiliates in the top 25 U.S. markets, reaching approximately **39% of U.S. television households**[80](index=80&type=chunk) - The company's revenue mix shifted, with subscription and political revenues growing to **52% of total revenue** for the two years ending September 30, 2020, up from **46%** in the prior period[82](index=82&type=chunk)[83](index=83&type=chunk) - In response to COVID-19's impact on advertising, TEGNA implemented **cost-saving measures** including temporary furloughs, reduced executive and board compensation, and decreased non-critical discretionary spending[88](index=88&type=chunk) [Consolidated Results of Operations](index=24&type=section&id=Consolidated%20Results%20of%20Operations) Q3 2020 total revenues increased **34% to $738.3 million**, with operating income more than doubling, driven by 2019 acquisitions, political advertising, and subscription revenue growth, offsetting COVID-19's impact on AMS revenue - Q3 2020 revenue growth was driven by a **$73.3 million contribution from 2019 acquisitions**, a **$95.1 million increase in political advertising**, and a **$39.1 million increase in subscription revenue**, offsetting a **$21.7 million decline in AMS revenue**[98](index=98&type=chunk) - Corporate G&A expenses **decreased by $18.5 million** in Q3 2020, primarily due to the **absence of $20.0 million in acquisition-related costs** incurred in Q3 2019[106](index=106&type=chunk) GAAP Consolidated Results of Operations (in thousands) | Metric | Q3 2020 | Q3 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $738,389 | $551,857 | 34% | | **Total operating expenses** | $510,688 | $445,024 | 15% | | **Total operating income** | $227,701 | $106,833 | 113% | | **Net income attributable to TEGNA Inc.** | $132,219 | $48,346 | 173% | [Results from Operations - Non-GAAP Information](index=28&type=section&id=Results%20from%20Operations%20-%20Non-GAAP%20Information) This section presents non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow, excluding special items to reflect ongoing operational performance, with Q3 2020 Adjusted EBITDA increasing **65% to $259.0 million** and nine-month free cash flow growing **47% to $391.4 million** - Special items excluded from non-GAAP results for 2020 include **advisory fees for activism defense ($23.1 million)**, **M&A due diligence costs ($4.6 million)**, and **costs for early debt extinguishment ($21.7 million)**[128](index=128&type=chunk)[132](index=132&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 2020 | Q3 2019 | % Change | | :--- | :--- | :--- | :--- | | **Net income attributable to TEGNA Inc. (GAAP)** | $132,219 | $48,346 | 173% | | **Adjusted EBITDA (non-GAAP)** | $259,019 | $157,125 | 65% | Free Cash Flow Reconciliation (in thousands) | Metric | Nine Months 2020 | Nine Months 2019 | % Change | | :--- | :--- | :--- | :--- | | **Net income attributable to TEGNA Inc. (GAAP)** | $238,474 | $202,280 | 18% | | **Free cash flow (non-GAAP)** | $391,352 | $265,363 | 47% | [Liquidity, Capital Resources and Cash Flows](index=35&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Cash%20Flows) TEGNA maintained strong liquidity with **$164.6 million in cash** and **$1.31 billion in unused credit capacity** as of September 30, 2020, with operating cash flow more than doubling to **$515.8 million** due to political ad revenue - As of September 30, 2020, the company held **$164.6 million in cash** and **$1.31 billion of unused borrowing capacity** under its revolving credit facility[149](index=149&type=chunk) - The company's net leverage ratio was **4.5x** as of September 30, 2020, with an expectation to be **4.2x or less** by year-end 2020[144](index=144&type=chunk)[149](index=149&type=chunk) - Operating cash flow increased to **$515.8 million** for the first nine months of 2020, up from **$214.6 million** in the prior year, primarily due to a **$167.4 million increase in political revenue**[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's market risk exposure remains largely unchanged, with primary risk from interest rate fluctuations on variable-rate debt, though **96% of debt is fixed-rate**, limiting impact to approximately **$0.9 million** annually for a 50 basis point rate change - As of September 30, 2020, approximately **96%** of the company's total debt, or **$3.77 billion**, has a fixed interest rate[158](index=158&type=chunk) - A **50 basis point** change in the average interest rate for the remaining **$175 million** of floating-rate debt would result in an annual interest expense change of approximately **$0.9 million**[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2020, with a new ERP system implemented in Q3 2020 expected to enhance the overall control environment - The principal executive and financial officers concluded that the company's disclosure controls and procedures are **effective** as of September 30, 2020[159](index=159&type=chunk) - An **enterprise resource planning (ERP) system** was implemented in Q3 2020 as a systems improvement initiative, expected to **improve the overall control environment**[160](index=160&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) TEGNA is a defendant in **consolidated class action antitrust lawsuits** concerning local television advertising sales practices, denying any violation and vigorously defending itself after a motion to dismiss was denied - The company is a defendant in **consolidated antitrust class action lawsuits** (the "Advertising Cases") related to local television advertising sales practices[70](index=70&type=chunk)[71](index=71&type=chunk) - After TEGNA entered a consent decree with the DOJ in June 2019, plaintiffs amended their complaint to add TEGNA as a defendant, with a **motion to dismiss denied on November 6, 2020**[71](index=71&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor highlights the potential for COVID-19 resurgence to cause widespread business closures, materially impacting financial condition, especially non-political advertising revenues, and potentially affecting debt covenant compliance - A new risk factor addresses the potential for a **resurgence in COVID-19 infections** to force **widespread business closures**[164](index=164&type=chunk)[165](index=165&type=chunk) - Such a resurgence could **materially and adversely affect financial results**, especially **near-term AMS revenues**, and a sustained impact could **risk future compliance with debt covenants**[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's **$300 million share repurchase program** expired in September 2020 with no Q3 2020 repurchases, concluding with approximately **$279.1 million remaining** due to prior suspension after 2019 acquisitions - The company's **$300 million share repurchase program expired in September 2020**[168](index=168&type=chunk) - **No shares were repurchased in Q3 2020**, and approximately **$279.1 million remained** under the program upon expiration, due to suspension after 2019 acquisitions[168](index=168&type=chunk) [Item 3, 4, 5. Other Information](index=39&type=section&id=Item%203%2C%204%2C%205.%20Other%20Information) The company reported no defaults on senior securities, no mine safety disclosures, and no other information required under Item 5 for the reporting period - Item 3: **No defaults upon senior securities**[169](index=169&type=chunk) - Item 4: **No mine safety disclosures**[169](index=169&type=chunk) - Item 5: **No other information to report**[170](index=170&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Fifteenth Supplemental Indenture related to long-term debt and required CEO and CFO certifications under the Sarbanes-Oxley Act - A list of exhibits filed with the report is provided, including **corporate governance documents, debt indentures, and officer certifications**[171](index=171&type=chunk)

Financial Data and Key Metrics Changes - Total company revenue for Q3 2020 was $738 million, a 34% increase year-over-year, driven by record political advertising revenue of $116 million and a 14% increase in total revenue excluding political advertising [13][28] - Subscription revenue increased by 32% year-over-year to $317 million, reflecting the repricing of 50% of subscribers [15][29] - Adjusted EBITDA for the quarter was $259 million, representing a 65% year-over-year increase and a 35% margin [34] Business Line Data and Key Metrics Changes - Political advertising revenue reached a record $116 million, significantly contributing to the overall revenue growth [13] - Subscription revenue growth was attributed to both base business growth and synergies from recent acquisitions, with expectations for continued growth into next year [15][30] - Advertising and marketing services revenue was nearly $300 million, showing slight year-over-year growth, driven by a recovery in non-political advertising and the return of live sports [19][31] Market Data and Key Metrics Changes - The company capitalized on political spending in battleground states leading up to the elections, with $395 million booked year-to-date, significantly above prior records [14] - The advertising market showed improvement, particularly in categories like automotive and retail, while entertainment, travel, and tourism continued to struggle [32][64] Company Strategy and Development Direction - The company is focused on a five-pillar strategy and has executed a disciplined M&A strategy to strengthen its portfolio [13][25] - TEGNA is expanding its reach through over-the-top streaming services and has launched apps on platforms like Roku and Amazon Fire TV [10] - The company is committed to diversity and inclusion, having appointed a Chief Diversity Officer and signed the CEO Action for Diversity and Inclusion pledge [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the advertising market post-election and the potential for increased core demand [63] - The company anticipates continued improvement in subscription revenue growth, now expected to be in the high 20s percentage for the full year [40] - Management highlighted the resilience of the business model and the importance of strategic positioning during the pandemic [23][86] Other Important Information - The company reduced total expenses by $28 million from the original plan, contributing to the strong adjusted EBITDA results [21] - TEGNA has successfully managed its debt, reducing net debt by approximately $400 million year-to-date [22][36] Q&A Session Summary Question: What is the outlook for M&A in 2021 post-election? - Management indicated they have the balance sheet to be opportunistic in M&A but are currently prioritizing debt payback [47] Question: Can you provide details on connected TV revenue growth? - Management noted that while specific numbers are not available, they expect yields to improve as they expand their OTT applications [46] Question: What is the same station revenue growth for subscription and AMS? - Same station AMS was down in the high single digits, but there was a sequential improvement [54] Question: How is the advertising market performing post-election? - Management reported that advertising pacings are looking good, with improvements expected in December [64][79] Question: What percentage of political revenue was from Georgia? - Management did not provide specific numbers but acknowledged that Georgia's spending will be significant due to the upcoming senatorial runoffs [67] Question: How is the NFL impacting your affiliates? - Management expressed confidence that the majority of NFL content will remain on broadcast, which is beneficial for their ABC affiliates [65]

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | Forward-Looking Statements Certain statements in this communication may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to a number of risks, trends and uncertainties that could cause actual results or company actions to differ materially from what is expressed or implied by these statements ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details TEGNA Inc.'s unaudited condensed consolidated financial statements and management's analysis for H1 2020 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents TEGNA Inc.'s unaudited condensed consolidated financial statements and notes for H1 2020 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents TEGNA Inc.'s financial position as of June 30, 2020, and December 31, 2019 Condensed Consolidated Balance Sheets (in thousands of dollars) | Metric | June 30, 2020 | Dec. 31, 2019 | | :------------------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $173,070 | $29,404 | | Accounts receivable, net | $485,211 | $581,765 | | Total current assets | $711,057 | $707,324 | | Net property and equipment | $480,961 | $485,721 | | Goodwill | $2,968,655 | $2,950,587 | | Total assets | $6,928,418 | $6,953,976 | | Total current liabilities | $316,538 | $361,158 | | Long-term debt | $4,098,076 | $4,179,245 | | Total liabilities | $5,238,738 | $5,363,599 | | Redeemable noncontrolling interest | $14,373 | — | | Total equity | $1,675,307 | $1,590,377 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) This section details TEGNA Inc.'s revenues, expenses, and net income for Q2 and H1 2020 and 2019 Consolidated Statements of Income (in thousands of dollars, except per share amounts) | Metric | Q2 2020 | Q2 2019 | Change (%) | 6M 2020 | 6M 2019 | Change (%) | | :--------------------------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Revenues | $577,627 | $536,932 | 8% | $1,261,816 | $1,053,685 | 20% | | Operating income | $75,097 | $142,812 | (47%) | $249,635 | $275,461 | (9%) | | Net Income | $19,573 | $79,955 | (76%) | $105,771 | $153,934 | (31%) | | Net income attributable to TEGNA Inc. | $19,947 | $79,955 | (75%) | $106,255 | $153,934 | (31%) | | Diluted EPS | $0.09 | $0.37 | (76%) | $0.48 | $0.71 | (32%) | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents TEGNA Inc.'s comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income (in thousands of dollars) | Metric | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | | :------------------------------------------ | :------ | :------ | :-------- | :-------- | | Net income | $19,573 | $79,955 | $105,771 | $153,934 | | Other comprehensive income, net of tax | $996 | $1,238 | $2,418 | $2,317 | | Comprehensive income attributable to TEGNA Inc. | $20,943 | $81,193 | $108,673 | $156,251 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines TEGNA Inc.'s cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands of dollars) | Metric | 6M 2020 | 6M 2019 | | :------------------------------------------ | :-------- | :-------- | | Net cash flow from operating activities | $313,542 | $116,851 | | Net cash flow used for investing activities | $(21,057) | $(197,705) | | Net cash flow used for financing activities | $(148,819) | $(25,740) | | Increase (decrease) in cash | $143,666 | $(106,594) | | Balance of cash, end of period | $173,070 | $29,268 | [Consolidated Statements of Equity and Redeemable Noncontrolling Interests](index=8&type=section&id=Consolidated%20Statements%20of%20Equity%20and%20Redeemable%20Noncontrolling%20Interests) This section details changes in TEGNA Inc.'s equity and noncontrolling interests for H1 2020 and FY 2019 Consolidated Statements of Equity and Redeemable Noncontrolling Interests (in thousands of dollars) | Metric | June 30, 2020 | Dec. 31, 2019 | | :------------------------------------------ | :------------ | :------------ | | Common stock | $324,419 | $324,419 | | Additional paid-in capital | $140,255 | $247,497 | | Retained earnings | $6,729,896 | $6,655,088 | | Accumulated other comprehensive loss | $(140,179) | $(142,597) | | Treasury stock | $(5,379,084) | $(5,494,030) | | Total equity | $1,675,307 | $1,590,377 | | Redeemable noncontrolling interest | $14,373 | — | - Sale of minority ownership interest in Premion for **$14.0 million** in March 2020 resulted in the recognition of a redeemable noncontrolling interest[16](index=16&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting TEGNA Inc.'s condensed consolidated financial statements [NOTE 1 – Accounting policies](index=12&type=section&id=NOTE%201%20%E2%80%93%20Accounting%20policies) This note outlines TEGNA Inc.'s significant accounting policies and the impact of the COVID-19 pandemic on its operations - The COVID-19 pandemic negatively impacted advertising and marketing services (AMS) revenue starting mid-March 2020, leading to cost-saving measures and an expected material adverse effect on near-term results[19](index=19&type=chunk)[20](index=20&type=chunk) - TEGNA operates one operating and reportable segment, primarily consisting of 63 television stations and two radio stations in 51 markets[22](index=22&type=chunk) Allowance for Doubtful Accounts (in thousands of dollars) | Date | Amount | | :--- | :----- | | June 30, 2020 | $8,808 | | December 31, 2019 | $3,723 | - Primary revenue sources include Advertising & Marketing Services (AMS), Subscription, Political advertising, and Other services[32](index=32&type=chunk) Revenue Breakdown (in thousands of dollars) | Revenue Category | Q2 2020 | Q2 2019 | Change (%) | 6M 2020 | 6M 2019 | Change (%) | | :----------------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Advertising & Marketing Services | $229,083 | $289,569 | (21%) | $524,236 | $553,971 | (5%) | | Subscription | $323,475 | $236,162 | 37% | $656,277 | $477,737 | 37% | | Political | $17,544 | $3,229 | *** | $64,931 | $5,933 | *** | | Other | $7,525 | $7,972 | (6%) | $16,372 | $16,044 | 2% | | Total revenues | $577,627 | $536,932 | 8% | $1,261,816 | $1,053,685 | 20% | [NOTE 2 – Acquisitions](index=14&type=section&id=NOTE%202%20%E2%80%93%20Acquisitions) This note details TEGNA Inc.'s strategic acquisitions completed in 2019 and their impact on intangible assets and goodwill - In 2019, TEGNA completed several strategic acquisitions, including 11 Nexstar stations (**$769.9 million**), Dispatch Broadcast Group's stations (**$560.5 million**), the remaining 85% interest in Justice Network and Quest (**$77.1 million**), and two Gray Television stations (**$109.9 million**)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) Summary of Assets Acquired and Liabilities Assumed in 2019 Acquisitions (in thousands of dollars) | Category | Total | | :-------------------------------- | :------------ | | Total assets acquired | $1,677,876 | | Total liabilities assumed | $147,494 | | Net assets acquired | $1,530,382 | | Cash paid for acquisitions | $1,515,024 | - During 2020, retransmission agreement intangible assets were reduced by **$21.3 million**, and goodwill increased by **$18.1 million** due to ongoing fair value analysis of 2019 acquisitions[40](index=40&type=chunk) - Expected amortization expense related to intangible assets for fiscal year 2020 is approximately **$68.0 million**[40](index=40&type=chunk) [NOTE 3 – Goodwill and other intangible assets](index=16&type=section&id=NOTE%203%20%E2%80%93%20Goodwill%20and%20other%20intangible%20assets) This note provides details on TEGNA Inc.'s goodwill and other intangible assets, including impairment assessments Goodwill and Intangible Assets (in thousands of dollars) | Asset Category | June 30, 2020 (Gross) | Dec. 31, 2019 (Gross) | | :------------------------------------ | :-------------------- | :-------------------- | | Goodwill | $2,968,655 | $2,950,587 | | FCC broadcast licenses | $2,104,167 | $2,090,732 | | Retransmission agreements (net) | $113,671 | $151,321 | | Network affiliation agreements (net) | $249,059 | $261,322 | | Other (net) | $51,243 | $58,239 | - A **$2.1 million** impairment charge was recognized in Q2 2020 due to eliminating the Justice Network brand name and re-establishing the business under a new brand[43](index=43&type=chunk) - An interim impairment assessment for FCC licenses was performed due to expected negative effects of COVID-19 on AMS revenue, concluding no impairment as of June 30, 2020, but noting a sustained economic decline could lead to future charges[44](index=44&type=chunk)[45](index=45&type=chunk) [NOTE 4 – Investments and other assets](index=16&type=section&id=NOTE%204%20%E2%80%93%20Investments%20and%20other%20assets) This note details TEGNA Inc.'s investments and other long-term assets, including equity method investments Investments and Other Assets (in thousands of dollars) | Asset Category | June 30, 2020 | Dec. 31, 2019 | | :-------------------------- | :------------ | :------------ | | Cash value life insurance | $51,797 | $52,462 | | Equity method investments | $35,084 | $27,650 | | Other equity investments | $28,124 | $32,383 | | Deferred debt issuance costs | $11,180 | $10,921 | | Other long-term assets | $21,846 | $21,853 | | Total | $148,031 | $145,269 | - TEGNA's largest equity method investment is in CareerBuilder (approximately **17% ownership**), which contributed an **$18.6 million** pre-tax gain in Q1 2020 from the sale of its employment screening business[48](index=48&type=chunk) [NOTE 5 - Income taxes](index=17&type=section&id=NOTE%205%20-%20Income%20taxes) This note discusses the impact of the CARES Act on TEGNA Inc.'s income tax payments and deferrals - The CARES Act is expected to reduce 2020 tax payments by approximately **$7 million** due to immediate deductions for qualified improvement property and temporary relaxation of net interest deduction limitations[52](index=52&type=chunk) - Federal income tax payments due before July 15, 2020, were deferred to July 15, 2020, with an estimated **$33 million** to be paid in Q3[53](index=53&type=chunk) [NOTE 6 – Long-term debt](index=18&type=section&id=NOTE%206%20%E2%80%93%20Long-term%20debt) This note details TEGNA Inc.'s long-term debt, including new issuances, repayments, and credit facility amendments Long-term Debt (in thousands of dollars) | Debt Type | June 30, 2020 | Dec. 31, 2019 | | :------------------------------------------------- | :------------ | :------------ | | Total principal long-term debt | $4,125,000 | $4,203,000 | | Debt issuance costs | $(33,253) | $(26,873) | | Unamortized premiums and discounts, net | $6,329 | $3,118 | | Total long-term debt | $4,098,076 | $4,179,245 | - On January 9, 2020, TEGNA completed a private placement offering of **$1.0 billion** senior unsecured notes (**4.625% interest**, due March 2028)[55](index=55&type=chunk) - Proceeds from the new notes were used to repay **$310.0 million** of 2020 notes and **$650.0 million** of 2023 notes, incurring **$13.8 million** in early redemption fees[56](index=56&type=chunk) - The revolving credit facility was amended on June 11, 2020, to extend the initial step-down of the maximum permitted total leverage ratio until March 31, 2022[57](index=57&type=chunk) - As of June 30, 2020, TEGNA had **$173.1 million** in cash and cash equivalents and **$653.8 million** in unused borrowing capacity under its **$1.51 billion** revolving credit facility[57](index=57&type=chunk) [NOTE 7 – Retirement plans](index=19&type=section&id=NOTE%207%20%E2%80%93%20Retirement%20plans) This note outlines TEGNA Inc.'s net pension obligations and pension costs for the reported periods - Total net pension obligations were **$124.9 million** as of June 30, 2020[58](index=58&type=chunk) Pension Costs (in thousands of dollars) | Metric | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | | :------------------------------------------ | :------ | :------ | :-------- | :-------- | | (Gains from) expense for company-sponsored retirement plans | $(1,330) | $1,435 | $(2,662) | $2,135 | - No cash contributions were made to the TEGNA Retirement Plan (TRP) during the first six months of 2020[60](index=60&type=chunk) [NOTE 8 – Accumulated other comprehensive loss](index=20&type=section&id=NOTE%208%20%E2%80%93%20Accumulated%20other%20comprehensive%20loss) This note details TEGNA Inc.'s accumulated other comprehensive loss and reclassifications to the income statement Accumulated Other Comprehensive Loss (AOCL) (in thousands of dollars) | Metric | June 30, 2020 | Dec. 31, 2019 | | :------------------------------------------ | :------------ | :------------ | | Balance of AOCL | $(140,179) | $(142,597) | | Total other comprehensive income (6M) | $2,418 | $2,317 | - Reclassifications from AOCL to the Consolidated Statements of Income primarily relate to amortization of prior service costs and actuarial losses from pension and other post-retirement components[62](index=62&type=chunk) [NOTE 9 – Earnings per share](index=21&type=section&id=NOTE%209%20%E2%80%93%20Earnings%20per%20share) This note presents TEGNA Inc.'s basic and diluted earnings per share for the reported periods Earnings Per Share | Metric | Q2 2020 | Q2 2019 | 6M 2020 | 6M 2019 | | :------------------------------------------ | :------ | :------ | :-------- | :-------- | | Net income per share - basic | $0.09 | $0.37 | $0.48 | $0.71 | | Net income per share - diluted | $0.09 | $0.37 | $0.48 | $0.71 | [NOTE 10 – Fair value measurement](index=21&type=section&id=NOTE%2010%20%E2%80%93%20Fair%20value%20measurement) This note provides the fair value of TEGNA Inc.'s total debt as of June 30, 2020, and December 31, 2019 Fair Value of Total Debt (in billions of dollars) | Date | Fair Value | | :--- | :--------- | | June 30, 2020 | $4.02 | | December 31, 2019 | $4.32 | [NOTE 11 – Other matters](index=22&type=section&id=NOTE%2011%20%E2%80%93%20Other%20matters) This note covers legal proceedings, FCC spectrum repacking, and related party transactions - TEGNA settled a DOJ antitrust investigation in June 2019 without a finding of wrongdoing or liability, agreeing to prohibit sharing of certain confidential business information[67](index=67&type=chunk) - The company is a defendant in consolidated class action lawsuits (Advertising Cases) alleging antitrust and other claims related to local television advertising sales, which it denies and intends to vigorously defend[68](index=68&type=chunk)[69](index=69&type=chunk) - All 18 of TEGNA's repacked stations in the FCC Broadcast Spectrum Program have moved to their new channels; approximately **$40.6 million** in capital expenditures incurred and **$34.1 million** in FCC reimbursements received through June 30, 2020[71](index=71&type=chunk)[73](index=73&type=chunk) - Expenses incurred from a commercial agreement with MadHive, Inc. (a related party) were **$13.7 million** for Q2 2020[74](index=74&type=chunk) - In March 2020, TEGNA sold a minority ownership interest in Premion, LLC for **$14.0 million** to an affiliate of Gray Television, resulting in a redeemable noncontrolling interest[75](index=75&type=chunk)[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of TEGNA Inc.'s financial condition, operating results, and 2020 outlook [Company Overview](index=23&type=section&id=Company%20Overview) This section provides an overview of TEGNA Inc.'s business, operations, and strategic transformation - TEGNA operates 63 television stations and two radio stations in 51 U.S. markets, reaching approximately **39%** of U.S. television households[77](index=77&type=chunk) - Primary revenue sources are advertising & marketing services (AMS), subscription, political advertising, and other services[78](index=78&type=chunk) Revenue Mix (Two Years Ending June 30) | Revenue Category | 2020 | 2019 | | :----------------------- | :--- | :--- | | Advertising & Marketing Services | 48% | 53% | | Subscription | 44% | 40% | | Political | 7% | 6% | | Other | 1% | 1% | | Total revenues | 100% | 100% | - Subscription and political revenues are expected to account for more than **50%** of total revenues in 2020[80](index=80&type=chunk) - TEGNA has transformed into a pure-play broadcasting company, adding approximately **40 stations** and divesting non-core assets, with **$1.5 billion** in strategic acquisitions in 2019[81](index=81&type=chunk) [Recent Developments from COVID-19](index=24&type=section&id=Recent%20Developments%20from%20COVID-19) This section discusses COVID-19's impact on TEGNA Inc.'s revenue, operations, and cost-saving measures - The COVID-19 pandemic negatively impacted Advertising & Marketing Services (AMS) revenue starting mid-March 2020, with a **21% year-over-year decline** in Q2 2020[82](index=82&type=chunk)[83](index=83&type=chunk) - Advertising demand steadily improved over Q2 2020, with June AMS revenue decline **20 percentage points better than April**[83](index=83&type=chunk) - Cost-saving measures implemented include temporary one-week furloughs for most personnel, reduced executive and board compensation, and reduced non-critical discretionary spending[86](index=86&type=chunk)[87](index=87&type=chunk) - Broadcast business designated essential; **90-95%** of station employees are working remotely with new safety measures[85](index=85&type=chunk) - TEGNA experienced a significant increase in ratings and audiences across all platforms, ascending into the **top 50 digital properties** in the U.S. by total audience (Comscore, June 2020)[88](index=88&type=chunk) [Consolidated Results from Operations](index=25&type=section&id=Consolidated%20Results%20from%20Operations) This section analyzes TEGNA Inc.'s consolidated operating results, highlighting revenue, expenses, and acquisition impacts - The 2019 acquisitions significantly impact the year-over-year comparability of consolidated operating results[90](index=90&type=chunk) Consolidated Results of Operations (in thousands of dollars, except per share amounts) | Metric | Q2 2020 | Q2 2019 | Change (%) | 6M 2020 | 6M 2019 | Change (%) | | :--------------------------------- | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Revenues | $577,627 | $536,932 | 8% | $1,261,816 | $1,053,685 | 20% | | Total operating expenses | $502,530 | $394,120 | 28% | $1,012,181 | $778,224 | 30% | | Operating income | $75,097 | $142,812 | (47%) | $249,635 | $275,461 | (9%) | | Net income attributable to TEGNA Inc. | $19,947 | $79,955 | (75%) | $106,255 | $153,934 | (31%) | | Diluted EPS | $0.09 | $0.37 | (76%) | $0.48 | $0.71 | (32%) | - Total revenues increased by **$40.7 million (8%)** in Q2 2020 and **$208.1 million (20%)** in 6M 2020, primarily due to 2019 acquisitions and growth in subscription and political revenues[95](index=95&type=chunk)[96](index=96&type=chunk) - AMS revenue decreased by **$99.0 million** in Q2 2020 and **$119.7 million** in 6M 2020, primarily due to reduced advertising demand caused by COVID-19[95](index=95&type=chunk)[96](index=96&type=chunk) - Cost of revenues increased by **$70.1 million (25%)** in Q2 2020 and **$158.1 million (28%)** in 6M 2020, mainly due to 2019 acquisitions and increased programming costs linked to subscription revenue growth[97](index=97&type=chunk)[98](index=98&type=chunk) - Corporate general and administrative expenses increased by **$12.5 million (79%)** in Q2 2020 and **$19.5 million (64%)** in 6M 2020, driven by final payments for activism defense and M&A due diligence costs[102](index=102&type=chunk)[103](index=103&type=chunk) - Non-operating expenses increased by **$10.9 million (29%)** in Q2 2020 and **$42.3 million (57%)** in 6M 2020, primarily due to higher interest expense from increased debt, early debt extinguishment costs, and the absence of prior year gains[112](index=112&type=chunk)[113](index=113&type=chunk) - Income tax expense decreased by **$18.3 million (73%)** in Q2 2020 and **$19.9 million (42%)** in 6M 2020, mainly due to lower net income before tax[114](index=114&type=chunk) [Results from Operations - Non-GAAP Information](index=30&type=section&id=Results%20from%20Operations%20-%20Non-GAAP%20Information) This section reconciles TEGNA Inc.'s non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow to GAAP results - TEGNA uses non-GAAP measures (Adjusted EBITDA, non-GAAP net income, non-GAAP EPS, free cash flow) to supplement GAAP results, excluding 'special items' for a clearer view of ongoing operating performance[118](index=118&type=chunk)[120](index=120&type=chunk) - Special items for 2020 include spectrum repacking reimbursements (offset by brand impairment), advisory fees for activism defense, M&A due diligence costs, a gain on CareerBuilder investment, and early debt extinguishment costs[125](index=125&type=chunk) Adjusted EBITDA (Non-GAAP, in thousands of dollars) | Metric | Q2 2020 | Q2 2019 | Change (%) | 6M 2020 | 6M 2019 | Change (%) | | :------------------------------------------ | :------ | :------ | :--------- | :-------- | :-------- | :--------- | | Adjusted EBITDA | $124,388 | $168,522 | (26%) | $336,754 | $321,675 | 5% | | Adjusted EBITDA, excluding Corporate | $137,252 | $178,949 | (23%) | $359,105 | $342,926 | 5% | - Adjusted EBITDA margins decreased in Q2 and 6M 2020, primarily driven by declines in AMS revenue due to COVID-19[130](index=130&type=chunk) - Excluding 2019 acquisitions, Adjusted EBITDA was lower by **$67.7 million** in Q2 2020 and **$46.1 million** in 6M 2020[131](index=131&type=chunk)[132](index=132&type=chunk) Free Cash Flow (Non-GAAP, in thousands of dollars) | Metric | 6M 2020 | 6M 2019 | Change (%) | | :------------------------------------------ | :-------- | :-------- | :--------- | | Free cash flow | $238,265 | $160,695 | 48% | - Free cash flow increased significantly in 6M 2020 due to higher political revenue, deferred tax payments, and lower cash used for acquisitions[133](index=133&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [Liquidity, Capital Resources and Cash Flows](index=36&type=section&id=Liquidity,%20Capital%20Resources%20and%20Cash%20Flows) This section discusses TEGNA Inc.'s liquidity, capital resources, and cash flow management, including COVID-19 responses - In response to COVID-19, TEGNA halted discretionary repayment of short-term borrowings, amended its revolving credit facility to extend leverage ratio step-downs, implemented temporary furloughs, and reduced capital expenditures[135](index=135&type=chunk)[143](index=143&type=chunk) - The CARES Act is expected to provide approximately **$7 million** in lower 2020 tax payments and a **$20 million** deferral of employer social security payroll tax[136](index=136&type=chunk) - As of June 30, 2020, TEGNA's leverage ratio was **4.7x** (covenant calculation), well below the permitted **5.5x**, and the company was in compliance with all debt covenants[137](index=137&type=chunk) - Total debt was **$4.1 billion**, with **$173.1 million** in cash and cash equivalents and **$653.8 million** in unused borrowing capacity under the revolving credit facility as of June 30, 2020[141](index=141&type=chunk) - Approximately **78% ($3.22 billion)** of total principal debt has a fixed interest rate[141](index=141&type=chunk) - Operating cash flow for 6M 2020 was **$313.5 million**, driven by a **$59.0 million** increase in political revenue and **$55.3 million** in deferred tax payments[144](index=144&type=chunk) - Investing cash flow used for 6M 2020 was **$(21.1) million**, significantly lower than 2019 due to fewer acquisitions (**$15.8 million** spent in 2020 vs. **$185.9 million** in 2019)[145](index=145&type=chunk) - Financing cash flow used for 6M 2020 was **$(148.8) million**, primarily due to issuing **$1.0 billion** in unsecured notes and early redemption of **$960.0 million** in debt[146](index=146&type=chunk) [Fiscal Year 2020 Outlook](index=38&type=section&id=Fiscal%20Year%202020%20Outlook) This section provides TEGNA Inc.'s updated financial outlook for fiscal year 2020 - TEGNA suspended its full-year 2020 guidance in April due to COVID-19 uncertainty but provided an updated outlook on August 10, 2020[147](index=147&type=chunk)[148](index=148&type=chunk) Fiscal Year 2020 Outlook | Metric | Outlook | | :------------------------------------------ | :-------------------------------- | | Political advertising revenue | At least $370 million | | Subscription revenue growth | Mid-twenties percentage-wise | | Capital expenditures | $45 - $50 million (including $20 - $24 million non-recurring) | | Interest expense | $210 - $215 million | | Net leverage ratio | 4.5x or less by year end | | Effective tax rate | 23.5% to 24.5% | [Certain Factors Affecting Forward-Looking Statements](index=39&type=section&id=Certain%20Factors%20Affecting%20Forward-Looking%20Statements) This section highlights risks and uncertainties affecting TEGNA Inc.'s forward-looking statements, especially COVID-19 impacts - Forward-looking statements are subject to risks and uncertainties, particularly the adverse impacts of the COVID-19 pandemic on revenues and operations[148](index=148&type=chunk) - Investors should not solely rely on forward-looking statements for investment decisions, and the company disclaims any duty to update them unless required by law[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details TEGNA Inc.'s market risk exposures, primarily focusing on interest rate risk for its debt portfolio - Market risk exposures have not materially changed since December 31, 2019[150](index=150&type=chunk) - Approximately **$3.22 billion (78%)** of total principal debt has a fixed interest rate, while **$910 million** has floating interest rates[151](index=151&type=chunk) - A **50 basis points** increase or decrease in the average interest rate for floating obligations would result in a change in annual interest expense of approximately **$4.5 million**[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of TEGNA Inc.'s disclosure controls and procedures as of June 30, 2020 - Disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2020[152](index=152&type=chunk) - No material changes in internal controls over financial reporting occurred during the fiscal quarter[153](index=153&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 for details on TEGNA Inc.'s legal proceedings, including antitrust matters - Information regarding legal proceedings is provided in Note 11 to the condensed consolidated financial statements[155](index=155&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section identifies the COVID-19 pandemic as a new primary risk factor for TEGNA Inc.'s financial condition and operations - The COVID-19 pandemic is a new risk factor that could materially adversely affect TEGNA's financial condition, results of operations, and cash flows[157](index=157&type=chunk) - The impact of COVID-19 depends on the pandemic's duration, its effect on advertising demand, the pace of governmental reopening, and the success of economic stimulus measures[158](index=158&type=chunk) - A sustained adverse impact from COVID-19 could affect compliance with credit facility covenants and increase the risk of undetected cybersecurity attacks due to remote work[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details TEGNA Inc.'s suspended share repurchase program and remaining authorization as of June 30, 2020 - A **$300.0 million** share repurchase program was authorized in September 2017, with approximately **$279.1 million** remaining as of June 30, 2020[160](index=160&type=chunk) - No shares were repurchased during the second quarter of 2020[160](index=160&type=chunk) - The share repurchase program has been suspended as a result of the 2019 acquisitions[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported for the period - No mine safety disclosures were reported[161](index=161&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - No other information was reported[162](index=162&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents and certifications - Exhibits include the Third Restated Certificate of Incorporation, By-laws, Thirteenth Amendment to the Amended and Restated Competitive Advance and Revolving Credit Agreement, various Executive Officer and Director Award Agreements, and Rule 13a-14(a) and Section 1350 Certifications of the CEO and CFO[163](index=163&type=chunk) [SIGNATURE](index=42&type=section&id=SIGNATURE) The report was signed on August 10, 2020, by Clifton A. McClelland III, TEGNA Inc.'s Principal Accounting Officer - The report was signed on August 10, 2020, by Clifton A. McClelland III, Senior Vice President and Controller, as Principal Accounting Officer[167](index=167&type=chunk)[168](index=168&type=chunk)

Financial Data and Key Metrics Changes - Total company revenue increased by 8% year-over-year, driven by acquisitions and growth in subscription revenues and political advertising spending [37] - Subscription revenue grew by 37% year-over-year, reflecting growth from both the base business and newly-acquired stations [38] - Advertising and marketing services revenue decreased by 21% compared to last year, primarily due to non-political advertising cancellations related to COVID-19 [40] Business Line Data and Key Metrics Changes - Subscription revenues are expected to grow in the mid-20s percent range for the full year, reflecting the resiliency of these contractual revenues [55] - Political advertising revenue is projected to be at least $370 million for the full year, supported by an expanded competitive footprint in presidential, US Senate, and US House races [55] - Non-political advertising trends have not yet returned to pre-COVID levels, but there has been a sequential improvement since April [18][40] Market Data and Key Metrics Changes - Digital platforms saw significant increases in consumption, with 76 million unduplicated multi-platform visitors in June, the second highest month behind March [13] - The company has a strong presence in key battleground states, which is expected to enhance political advertising revenue [26][27] Company Strategy and Development Direction - The company continues to execute on its five-pillar strategy, focusing on subscription and political revenues to yield durable cash flows [25][31] - TEGNA is taking proactive steps to address systemic racism and improve diversity within its workforce and content [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of advertising revenues as live sports return and political advertising demand increases [15][16] - The company has implemented cost containment measures and achieved significant savings during the pandemic, which will benefit future cash flows [23][45] Other Important Information - The company generated $96 million of free cash flow in the second quarter, representing 17% of total revenue [51] - TEGNA has maintained a strong balance sheet with $173 million in cash on hand and reduced net leverage to 4.76 times [50] Q&A Session Summary Question: Insights on political advertising guidance - Management provided confidence in the political advertising revenue forecast due to increased fundraising and competitive races emerging in key states [64][66] Question: Trends in connected TV and Premion - Management noted that connected TV and OTT services are benefiting from increased viewership, which is advantageous for Premion [63] Question: Non-political advertising market trends - Management highlighted improvements in certain advertising categories, with significant recovery seen from April to June [82] Question: Subscription declines and retransmission negotiations - Management indicated that subscription declines have not significantly impacted retransmission negotiations, maintaining the value proposition of strong Big Four affiliates [136]