Meredith's Fiscal 2013 First Quarter Earnings Per Share Grow 15 Percent
Local Media Group Delivers Record Revenue and Profit Performance
National Media Group Digital Advertising Revenues and Audience Both Double
DES MOINES, IA, Oct. 25, 2012 /PRNewswire/ -- Meredith Corporation (NYSE: MDP; www.meredith.com), the leading media and marketing company serving American women, today reported fiscal 2013 first quarter earnings per share increased 15 percent to $0.55, compared to $0.48 in the year-ago period. Revenues rose 8 percent to $354 million. Total Company advertising revenues increased 12 percent to $207 million.
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Meredith delivered strong results during the first quarter of fiscal 2013 compared to the prior-year period:
- Local Media Group revenues increased 26 percent and were a record high for a fiscal first quarter. Non-political advertising revenues increased 5 percent – the 12th-straight quarter of year-over-year growth. Net political advertising revenues were $12 million, the highest ever for a fiscal first quarter. Operating profit grew 150 percent to $28 million, and the EBITDA margin was 39 percent, both record highs for a fiscal first quarter.
- National Media Group revenues grew 3 percent. Advertising revenues increased 7 percent, driven by the recent acquisitions of the Allrecipes.com, EveryDay with Rachael Ray and FamilyFun brands. Absent the recent acquisitions, advertising revenues decreased 9 percent. Circulation revenues grew 13 percent, and were unchanged excluding the recent acquisitions.
- Total Company digital advertising revenues nearly doubled and reached a record quarterly high. National Media Group digital advertising revenues increased nearly 115 percent, while Local Media Group digital advertising revenues rose more than 15 percent.
- Consumer engagement strengthened across all of Meredith's media platforms. Meredith magazine readership is at an all-time high of 116 million, while Meredith's local television stations delivered another strong ratings book in July. Additionally, total traffic to Meredith websites rose 90 percent to more than 35 million average monthly unique visitors.
"We delivered a strong start to fiscal 2013 as our Local Media Group delivered record-setting revenue and profit performance," said Meredith Chairman and CEO Stephen M. Lacy. "We're also very pleased with the growth of our digital businesses across the Company, as well as the significant progress made at integrating our recent acquisitions. We expect these and other strategic initiatives to deliver increased cash flow and returns to our shareholders over time."
Lacy noted that Meredith implemented its Total Shareholder Return (TSR) strategy exactly one year ago on October 25, 2011. Key elements of Meredith's TSR strategy include: (1) A current annual dividend of $1.53 per share; (2) A $100 million share repurchase program; and (3) Ongoing strategic investments to scale the business and increase shareholder value over time.
Since implementation of the Company's TSR strategy, Meredith's stock price increased nearly 40 percent, and its dividend yielded approximately 6 percent. That equates to a total return of nearly 45 percent to shareholders.
OPERATING DETAIL
LOCAL MEDIA GROUP
Meredith's Local Media Group – which consists of local television affiliates in many fast-growing markets and a video content creation unit that produces national broadcast and custom programming – delivered record performance during the first quarter of fiscal 2013.
Fiscal 2013 first quarter Local Media Group operating profit more than doubled to $28 million, and total revenues grew 26 percent to $87 million. All of Meredith's markets recorded growth in revenues and operating profit.
Looking more closely at advertising performance in the first quarter of fiscal 2013:
- Non-political revenues rose 5 percent to $62 million, the 12th-straight quarter of year-over-year gains. Performance was particularly strong at Meredith's stations in Las Vegas, Nashville, Atlanta, Portland and Kansas City.
- Political advertising revenues were $12 million, led by the Las Vegas and Hartford stations.
- Meredith Local Media Group's two largest advertising categories – automotive (+12 percent) and professional services (+6 percent) again experienced solid growth. Automotive advertising has now increased in 10 of the last 11 quarters, including five straight.
Meredith's connection with viewers also strengthened. Morning news ratings in Phoenix, Portland, OR, and Greenville, SC grew substantially in the July ratings book, and Portland's late news rating increased 45 percent. Meredith renewed The Better Show – its nationally-syndicated daily women's lifestyle program – for a sixth consecutive season. This fall The Better Show is airing in 150 markets across the country, including 9 of the nation's Top 10.
"We are focused on keeping the momentum going in non-political advertising revenues, along with maximizing our political advertising opportunity this election cycle," said Local Media Group President Paul Karpowicz. "Our mission is to deliver great content to viewers across broadcast, digital and mobile media platforms. At the same time, we will continue to monetize the strength of our audience thanks to local over-the-air television's unique ability to deliver unmatched results for our advertising clients."
NATIONAL MEDIA GROUP
Meredith's National Media Group includes leading national consumer media brands delivered over multiple media platforms, brand licensing activities, and business-to-business marketing products and services. Meredith's National Media brands offer advertising and marketing clients access to 100 million unduplicated American women – a reach that is unmatched in the industry.
Meredith continues to execute on a series of strategic initiatives including growing market share of magazine advertising; expanding Meredith's digital footprint; and maximizing revenues not dependent on advertising.
Fiscal 2013 first quarter National Media Group revenues grew 3 percent to $267 million. Operating expenses increased 7 percent, however declined 7 percent excluding the recent acquisitions. Operating profit was $29 million, compared to $36 million in the year-ago period.
Looking more closely at advertising performance in the first quarter of fiscal 2013:
- Total advertising revenues grew 7 percent compared to the year-ago period. Excluding recent acquisitions, total advertising revenues declined 9 percent.
- The retail, media and entertainment, and pets categories were strong in Meredith's titles. The prescription drug category – challenged due to fewer new drug launches – remained weak, as expected.
- Meredith's share of total magazine advertising revenues grew to 10.9 percent from 10.3 percent, according to the most recent data by Publishers Information Bureau. The average net revenue per magazine page also increased approximately 5 percent.
- Digital advertising revenues grew nearly 115 percent, boosted by the addition of Allrecipes.com, which is performing ahead of Meredith's initial expectations. Excluding recent acquisitions, digital advertising revenues grew nearly 30 percent.
"We continue to take strategic steps to gain market share and deepen our relationships with advertisers," said National Media Group President Tom Harty. "These include developing multi-platform programs to meet client needs, and creating innovative sales programs – such as the Meredith Sales Guarantee. At the same time, our digital properties are setting record highs for audience scale and advertising revenues."
The Meredith Sales Guarantee demonstrates quantitatively that advertising in Meredith magazines will increase retail sales. Currently, 13 consumer brands are participating in the program, and Meredith recently announced an extension of the program to serve pharmaceutical brands.
Circulation revenues grew 13 percent compared to the year-ago period, and were unchanged excluding the recent acquisitions. Meredith generated approximately 1 million digital orders for print magazine subscriptions during the first quarter, up more than 40 percent from what was generated in the year-ago period.
Meredith's connection to consumers strengthened as well. Readership for Meredith's magazines stands at a record 116 million, according to the most recent data from Mediamark Research and Intelligence. Digital traffic more than doubled to a fiscal first quarter record, driven primarily by the acquisition of Allrecipes.com – along with aggressive digital marketing initiatives, including use of search engine optimization, social media and e-newsletters.
Other revenues were $59 million, compared to $68 million in the year-ago period. This was due primarily to performance at Meredith Xcelerated Marketing which, as previously communicated, has experienced reductions in programs from certain clients. However, the pipeline for new business is strong. Notably, Meredith Xcelerated Marketing recently secured several new accounts – including Hallmark and Health Alliance – along with expansions of its significant business with Kraft and the National Educational Association.
OTHER FINANCIAL INFORMATION
On October 25, 2011, Meredith initiated its Total Shareholder Return strategy. Key elements include: (1) A current annual dividend of $1.53 per share; (2) A $100 million share repurchase program; and (3) Ongoing strategic investments to scale the business and increase shareholder value over time.
Consistent with its TSR strategy, Meredith repurchased 530,000 shares of Company stock in the first quarter of fiscal 2013. At September 30, 2012, $70 million remained under the current repurchase authorization.
Total debt was $405 million at September 30, 2012. Meredith's debt-to-EBITDA ratio was 1.6 to 1 for the 12 months ended September 30, 2012, and the weighted average interest rate was 3.3 percent at September 30, 2012. Meredith recently completed the extension of its two revolving credit facilities: A $150 million unsecured revolving line of credit facility for a new five-year term; and a $100 million asset-backed revolving bank facility for a new two-year term. Both were renewed at lower rates than the previous facilities.
Fiscal 2013 first quarter total Company expenses increased 7 percent compared to the prior-year quarter, however declined 4 percent excluding the recent acquisitions – reflecting ongoing cost-management initiatives. As a result, Meredith's operating profit margin increased more than a full percentage point.
Cash flow from operations increased in the first quarter of fiscal 2013 compared to the year-ago period, and totaled approximately $190 million for the 12 months ended September 30, 2012.
All earnings per share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached Condensed Consolidated Statements of Earnings.
OUTLOOK
Meredith expects fiscal 2013 second quarter earnings per share to range from $0.80 to $0.85. Looking more closely at the second quarter of fiscal 2013 compared to the year-ago period:
- Total company advertising revenues are expected to increase in the high teens.
- Local Media Group advertising revenues are expected to be up more than 20 percent. This includes expected political advertising revenues of between $18 million and $20 million. Non-political advertising revenues are expected to be flat to down slightly, reflecting strong political advertising revenues.
- National Media Group advertising revenues are expected to be up in the mid-teens including recent acquisitions, and down in the mid-single digits excluding recent acquisitions.
Meredith continues to expect fiscal 2013 earnings per share to range from $2.60 to $2.95.
A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the second quarter and full year fiscal 2013. These and other uncertainties are referenced below under "Safe Harbor" and in certain filings with the U.S. Securities and Exchange Commission.
CONFERENCE CALL WEBCAST
Meredith will host a conference call on October 25, 2012 at 11 a.m. EDT to discuss fiscal 2013 first quarter results. A live webcast will be accessible to the public on the Company's website, www.meredith.com, and a replay will be available for two weeks. A transcript will be available within 48 hours of the call at www.meredith.com.
RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS
Management uses and presents GAAP and non-GAAP results to evaluate and communicate the performance of the Company. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA is a common supplemental measure of performance used by investors and financial analysts. Management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends. Meredith does not use EBITDA as a measure of liquidity or funds available for management's discretionary use because they include certain contractual and non-discretionary expenditures.
Results excluding recent acquisitions (Allrecipes.com, EveryDay with Rachael Ray and FamilyFun) are supplemental non-GAAP financial measures. While these adjusted results are not a substitute for reported results under GAAP, management believes this information is useful as an aid in better understanding Meredith's current performance, performance trends and financial condition. Reconciliations of non-GAAP to GAAP measures are attached to this press release and will be made available at www.meredith.com.
SAFE HARBOR
This release contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management's current knowledge and estimates of factors affecting the Company and its operations. Statements in this announcement that are forward-looking include, but are not limited to, the statements regarding advertising revenues, along with the Company's revenue and earnings per share outlook for the second quarter and full year fiscal 2013.
Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; increases in interest rates; and the consequences of acquisitions and/or dispositions. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
ABOUT MEREDITH CORPORATION
Meredith Corporation (NYSE: MDP; www.meredith.com) is the leading media and marketing company serving American women. Meredith features multiple well-known national brands – including Better Homes and Gardens, Parents, Family Circle, Allrecipes.com, Ladies' Home Journal, Fitness, More, American Baby, EveryDay with Rachael Ray and FamilyFun – along with local television brands in fast-growing markets. Meredith is the industry leader in creating content in key consumer interest areas such as home, family, food, health and wellness and self-development. Meredith uses multiple distribution platforms – including print, television, digital, mobile, tablets, and video – to give consumers content they desire and to deliver the messages of its advertising and marketing partners.
Additionally, Meredith uses its many assets to create powerful custom marketing solutions for many of the nation's top brands and companies. Meredith Xcelerated Marketing has significantly added to its capabilities in recent years through the acquisition of cutting-edge companies in digital, mobile, social, healthcare, database, and international marketing.
A hallmark of Meredith's business model and financial profile is its ability to consistently generate substantial free cash flow by leveraging the strength of its multi-platform portfolio. Meredith is committed to increasing Total Shareholder Return through dividend payments, share repurchases and strategic business investments. Meredith has paid a dividend for 65 straight years and increased its dividend for 19 consecutive years. Meredith currently pays an annual dividend of $1.53 per share, resulting in a dividend yield of approximately 4 percent.
| Meredith Corporation and Subsidiaries |
|||
| Condensed Consolidated Statements of Earnings (Unaudited) |
|||
| Three months ended September 30, |
2012 |
2011 |
|
| (In thousands except per share data) |
|||
| Revenues |
|||
| Advertising |
$ 207,122 |
$ 184,317 |
|
| Circulation |
75,489 |
66,589 |
|
| All other |
71,546 |
77,003 |
|
| Total revenues |
354,157 |
327,909 |
|
| Operating expenses |
|||
| Production, distribution, and editorial |
140,611 |
136,885 |
|
| Selling, general, and administrative |
156,314 |
142,971 |
|
| Depreciation and amortization |
11,927 |
9,832 |
|
| Total operating expenses |
308,852 |
289,688 |
|
| Earnings from operations |
45,305 |
38,221 |
|
| Interest expense, net |
(3,686) |
(2,719) |
|
| Earnings before income taxes |
41,619 |
35,502 |
|
| Income taxes |
(16,764) |
(13,875) |
|
| Net earnings |
$ 24,855 |
$ 21,627 |
|
| Basic earnings per share |
$ 0.56 |
$ 0.48 |
|
| Basic average shares outstanding |
44,494 |
45,009 |
|
| Diluted earnings per share |
$ 0.55 |
$ 0.48 |
|
| Diluted average shares outstanding |
45,043 |
45,187 |
|
| Dividends paid per share |
$ 0.3825 |
$ 0.2550 |
|
| Meredith Corporation and Subsidiaries |
|||
| Segment Information (Unaudited) |
|||
| Three months ended September 30, |
2012 |
2011 |
|
| (In thousands) |
|||
| Revenues |
|||
| National media |
|||
| Advertising |
$ 132,664 |
$ 124,457 |
|
| Circulation |
75,489 |
66,589 |
|
| Other revenues |
58,817 |
67,566 |
|
| Total national media |
266,970 |
258,612 |
|
| Local media |
|||
| Non-political advertising |
62,246 |
59,277 |
|
| Political advertising |
12,212 |
583 |
|
| Other revenues |
12,729 |
9,437 |
|
| Total local media |
87,187 |
69,297 |
|
| Total revenues |
$ 354,157 |
$ 327,909 |
|
| Operating profit |
|||
| National media |
$ 29,424 |
$ 36,004 |
|
| Local media |
27,644 |
11,057 |
|
| Unallocated corporate |
(11,763) |
(8,840) |
|
| Income from operations |
$ 45,305 |
$ 38,221 |
|
| Depreciation and amortization |
|||
| National media |
$ 5,390 |
$ 3,361 |
|
| Local media |
6,102 |
5,989 |
|
| Unallocated corporate |
435 |
482 |
|
| Total depreciation and amortization |
$ 11,927 |
$ 9,832 |
|
| EBITDA1 |
|||
| National media |
$ 34,814 |
$ 39,365 |
|
| Local media |
33,746 |
17,046 |
|
| Unallocated corporate |
(11,328) |
(8,358) |
|
| Total EBITDA1 |
$ 57,232 |
$ 48,053 |
|
| 1 EBITDA is net earnings before interest, taxes, depreciation, and amortization. |
|||
| Meredith Corporation and Subsidiaries |
|||
| Condensed Consolidated Balance Sheets (Unaudited) |
|||
| September 30, |
June 30, |
||
| Assets |
2012 |
2012 |
|
| (In thousands) |
|||
| Current assets |
|||
| Cash and cash equivalents |
$ 27,572 |
$ 25,820 |
|
| Accounts receivable, net |
222,824 |
215,526 |
|
| Inventories |
25,067 |
22,559 |
|
| Current portion of subscription acquisition costs |
80,440 |
75,446 |
|
| Current portion of broadcast rights |
8,785 |
3,408 |
|
| Other current assets |
19,095 |
16,677 |
|
| Total current assets |
383,783 |
359,436 |
|
| Property, plant, and equipment |
458,854 |
455,271 |
|
| Less accumulated depreciation |
(267,969) |
(260,967) |
|
| Net property, plant, and equipment |
190,885 |
194,304 |
|
| Subscription acquisition costs |
84,494 |
75,368 |
|
| Broadcast rights |
2,859 |
943 |
|
| Other assets |
67,221 |
66,858 |
|
| Intangible assets, net |
581,837 |
586,263 |
|
| Goodwill |
734,627 |
733,127 |
|
| Total assets |
$ 2,045,706 |
$ 2,016,299 |
|
| Liabilities and Shareholders' Equity |
|||
| Current liabilities |
|||
| Current portion of long-term debt |
$ 50,000 |
$ 105,000 |
|
| Current portion of long-term broadcast rights payable |
12,195 |
6,752 |
|
| Accounts payable |
50,943 |
72,911 |
|
| Accrued expenses and other liabilities |
114,180 |
117,071 |
|
| Current portion of unearned subscription revenues |
184,094 |
180,852 |
|
| Total current liabilities |
411,412 |
482,586 |
|
| Long-term debt |
355,000 |
275,000 |
|
| Long-term broadcast rights payable |
4,959 |
3,695 |
|
| Unearned subscription revenues |
149,806 |
141,408 |
|
| Deferred income taxes |
213,762 |
204,054 |
|
| Other noncurrent liabilities |
110,047 |
112,111 |
|
| Total liabilities |
1,244,986 |
1,218,854 |
|
| Shareholders' equity |
|||
| Common stock |
36,091 |
35,791 |
|
| Class B stock |
8,419 |
8,716 |
|
| Additional paid-in capital |
48,414 |
53,275 |
|
| Retained earnings |
730,547 |
722,778 |
|
| Accumulated other comprehensive loss |
(22,751) |
(23,115) |
|
| Total shareholders' equity |
800,720 |
797,445 |
|
| Total liabilities and shareholders' equity |
$ 2,045,706 |
$ 2,016,299 |
|
| Meredith Corporation and Subsidiaries |
|||
| Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||
| Three Months Ended September 30, |
2012 |
2011 |
|
| (In thousands) |
|||
| Net cash provided by operating activities |
$ 10,573 |
$ 3,626 |
|
| Cash flows from investing activities |
|||
| Acquisitions of businesses |
(3,291) |
(30,424) |
|
| Additions to property, plant, and equipment |
(5,678) |
(14,134) |
|
| Other |
- |
(3,543) |
|
| Net cash used in investing activities |
(8,969) |
(48,101) |
|
| Cash flows from financing activities |
|||
| Proceeds from issuance of long-term debt |
35,000 |
60,000 |
|
| Repayments of long-term debt |
(10,000) |
(5,000) |
|
| Purchases of Company stock |
(18,305) |
(8,966) |
|
| Dividends paid |
(17,086) |
(11,514) |
|
| Proceeds from common stock issued |
10,086 |
1,182 |
|
| Excess tax benefits from share-based payments |
1,216 |
- |
|
| Other |
(763) |
- |
|
| Net cash provided by financing activities |
148 |
35,702 |
|
| Net increase (decrease) in cash and cash equivalents |
1,752 |
(8,773) |
|
| Cash and cash equivalents at beginning of period |
25,820 |
27,721 |
|
| Cash and cash equivalents at end of period |
$ 27,572 |
$ 18,948 |
|
| Meredith Corporation and Subsidiaries |
Table 1 |
|||
| Supplemental Disclosures Regarding Non-GAAP Financial Measures |
||||
| EBITDA |
||||
| Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization. |
||||
| Segment EBITDA is a measure of segment earnings before depreciation and amortization. |
||||
| Segment EBITDA margin is defined as segment EBITDA divided by segment revenues. |
||||
| Three months ended September 30, 2012 |
||||
| National Media |
Local Media |
Unallocated Corporate |
Total |
|
| (In thousands) |
||||
| Revenues |
$ 266,970 |
$ 87,187 |
$ - |
$ 354,157 |
| Operating profit |
$ 29,424 |
$ 27,644 |
$ (11,763) |
$ 45,305 |
| Depreciation and amortization |
5,390 |
6,102 |
435 |
11,927 |
| EBITDA |
$ 34,814 |
$ 33,746 |
$ (11,328) |
57,232 |
| Less: |
||||
| Depreciation and amortization |
(11,927) |
|||
| Net interest expense |
(3,686) |
|||
| Income taxes |
(16,764) |
|||
| Net earnings |
$ 24,855 |
|||
| Segment EBITDA margin |
13.0% |
38.7% |
||
| Three months ended September 30, 2011 |
||||
| National Media |
Local Media |
Unallocated Corporate |
Total |
|
| (In thousands) |
||||
| Revenues |
$ 258,612 |
$ 69,297 |
$ - |
$ 327,909 |
| Operating profit |
$ 36,004 |
$ 11,057 |
$ (8,840) |
$ 38,221 |
| Depreciation and amortization |
3,361 |
5,989 |
482 |
9,832 |
| EBITDA |
$ 39,365 |
$ 17,046 |
$ (8,358) |
48,053 |
| Less: |
||||
| Depreciation and amortization |
(9,832) |
|||
| Net interest expense |
(2,719) |
|||
| Income taxes |
(13,875) |
|||
| Net earnings |
$ 21,627 |
|||
| Segment EBITDA margin |
15.2% |
24.6% |
||
| Meredith Corporation and Subsidiaries |
Table 2 |
||||
| Supplemental Disclosures Regarding Non-GAAP Financial Measures |
|||||
| Three months ended September 30, |
2012 |
2011 |
Change |
||
| National Media Advertising Revenues |
|||||
| Excluding recent acquisitions 1 |
$ 113,240 |
$ 124,457 |
(9)% |
||
| Recent acquisitions 1 |
19,424 |
- |
|||
| Total |
$ 132,664 |
$ 124,457 |
7 % |
||
| National Media Circulation Revenues |
|||||
| Excluding recent acquisitions 1 |
$ 66,449 |
$ 66,589 |
(0)% |
||
| Recent acquisitions 1 |
9,040 |
- |
|||
| Total |
$ 75,489 |
$ 66,589 |
13 % |
||
| National Media Digital Advertising Revenues |
|||||
| Excluding recent acquisitions 1 |
$ 10,003 |
$ 7,766 |
29 % |
||
| Recent acquisitions 1 |
6,556 |
- |
|||
| Total |
$ 16,559 |
$ 7,766 |
113 % |
||
| National Media Operating Expenses |
|||||
| Excluding recent acquisitions 1 |
$ 207,921 |
$ 222,608 |
(7)% |
||
| Recent acquisitions 1 |
29,625 |
- |
|||
| Total |
$ 237,546 |
$ 222,608 |
7 % |
||
| Total Company Operating Expenses |
|||||
| Excluding recent acquisitions 1 |
$ 279,227 |
$ 289,688 |
(4)% |
||
| Recent acquisitions 1 |
29,625 |
- |
|||
| Total |
$ 308,852 |
$ 289,688 |
7 % |
||
| 1 Recent acquisitions represent EveryDay with Rachael Ray, FamilyFun, and Allrecipes.com |
|||||
SOURCE Meredith Corporation
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