TEGNA(US:TGNA)2024-02-29 20:55Financial Data and Key Metrics Changes - Non-GAAP operating expenses for the quarter were $577 million, down 2% compared to Q4 2022, and down 4% when excluding programming costs, driven by lower variable costs of sales for digital revenue and operational expense management improvements [1] - Total revenue for Q4 2023 was down 21%, primarily due to the absence of cyclical political revenue from the midterm elections in 2022 and a temporary service disruption [77] - Full year 2023 total revenue finished at $2.9 billion, down 11% year-over-year due to the cyclical reduction of political ad revenue [77] - Adjusted EBITDA for Q4 was $177 million, producing a 24% margin, while full year adjusted EBITDA was $742 million, producing a 26% margin [51] Business Line Data and Key Metrics Changes - Subscription revenue for full year 2023 was over $1.5 billion, in line with the prior year, driven by rate increases but offset by subscriber declines and service disruptions [78] - Advertising trends in Q4 showed sequential improvement, particularly in automotive and services, which are the two largest ad categories [34] - Premion's local revenue growth remained strong, finishing up double digits for the full year, while overall Premion revenue was down year-over-year due to the loss of a large national account [50][81] Market Data and Key Metrics Changes - The company expects to generate free cash flow in the range of $900 million to $1.1 billion during the period of 2024-2025, reflecting confidence in the visibility and durability of cash flows [27][82] - The company has network affiliate agreements covering almost all Big 4 subscribers through late 2026, enhancing visibility into revenues and future cash flow [62] Company Strategy and Development Direction - The company is focused on returning capital to shareholders, driving efficiencies, and evaluating growth opportunities following the merger termination [25] - A new comprehensive capital allocation framework has been announced, expecting to return 40% to 60% of free cash flow over the next two years in the form of buybacks and dividends [74] - The acquisition of Octillion Media is expected to enhance Premion's capabilities in local streaming advertising, driving product innovation and operational efficiencies [68][81] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 will be a strong year driven by key events such as the presidential election cycle, the Summer Olympic Games, and the Super Bowl [2] - The company anticipates that advertising and marketing services will remain flat throughout the year, with local advertising trends remaining strong despite some softness on the national side [54] - Management expressed confidence in the operational efficiencies and cost reduction initiatives expected to yield benefits in the latter half of 2024 and continue through 2025 [52][64] Other Important Information - The company has committed to nearly $800 million of share repurchases and increased dividends by 20% following the merger termination [32][73] - The company ended the year with total debt of $3.1 billion and cash of $361 million, with net leverage at 2.8x, well below the 3x guidance [102] Q&A Session Summary Question: What are the expectations for advertising trends in 2024? - Management indicated that while there is some softness on the national side, local advertising trends remain strong, and they expect overall advertising to be flat throughout the year [54] Question: Can you elaborate on the acquisition of Octillion Media? - The acquisition is expected to enhance Premion's capabilities, allowing for better operational control, greater innovation, and improved EBITDA margins [112] Question: How does the company view the impact of political advertising in 2024? - Management noted that their stations play a fundamental role in political marketing strategies, with a significant presence in battleground states [66][124]