Meredith Reports Record Fiscal 2017 Revenue And Earnings

2017-07-27

“We delivered record revenue and profit in fiscal 2017 as we continue to aggressively execute our multi-platform growth strategies, including rapid expansion of our highly profitable digital activities,” said Meredith Chairman and CEO Stephen M. Lacy.  “Additionally, we delivered strong cash flow and higher profit margins.  This enabled us to continue successful execution of our Total Shareholder Return (TSR) strategy.”

Fiscal 2017 financial highlights, compared to the prior year, included:

Earnings per share were $4.16, compared to $0.75. Excluding special items in both periods, earnings per share grew to $4.00, an increase of more than 20 percent. (See Tables 1-5 for supplemental disclosures regarding non-GAAP financial measures.) Operating profit margin grew to 18 percent. Total Company revenues grew 4 percent to a record $1.7 billion, and total advertising revenues grew 2 percent to $934 million.

“We expanded our audience across media platforms and launched new products to strengthen our competitive position with Millennial consumers and advertisers wanting to reach them,” said Meredith President and COO Tom Harty. “We continued to deliver double-digit gains in digital advertising revenue, which offset print declines on a comparable basis.  Additionally, we generated a record $63 million of political advertising revenues and increased net retransmission contribution.”

Fiscal 2017 fourth quarter earnings per share were $0.95, compared to a loss of $2.03 per share in the prior-year period.  Excluding special items in both periods, earnings per share were $1.07, compared to $1.08 in the prior-year period.  Fourth quarter fiscal 2017 total Company revenues increased to $445 million.

FISCAL 2017 FULL-YEAR REVIEW

Meredith continued to aggressively execute a series of well-defined strategic initiatives in fiscal 2017 to generate growth in revenue and operating profit, and increase shareholder value over time.  These included:

Increasing Meredith’s powerful consumer connection – Consumer engagement expanded across Meredith’s media platforms, including magazine readership, digital and mobile traffic and sales of branded product at retail. Rapidly growing digital, mobile, video and social platforms – Total Company digital advertising revenues grew 20 percent. National Media Group digital advertising increased more than 20 percent and represented more than 30 percent of its total advertising. Local Media Group digital advertising rose more than 15 percent. Traffic across Meredith’s digital properties averaged 86 million unique visitors per month, an increase of 8 percent over the prior year. Generating record political advertising revenues – Meredith’s television stations generated $63 million of political advertising revenues, an increase of 43 percent compared to the fiscal 2015 election cycle. Expanding Meredith’s media portfolio: In its Local Media Group, Meredith acquired Peachtree TV (WPCH) in Atlanta, the nation’s 10th largest market. With WPCH, Meredith created its fifth owned-and-operated duopoly. To further strengthen its competitive position, Meredith added newscasts in Atlanta, Phoenix, Portland, Nashville, Greenville and Flint/Saginaw. In its National Media Group, Meredith launched The Magnolia Journal, an extension of Joanna and Chip Gaines’ popular Magnolia brand. It quickly became the strongest-selling newsstand title in Meredith’s recent history and is currently selling more than 900,000 copies of each issue. Successful renewal of key strategic agreements: In its Local Media Group, Meredith renewed its CBS affiliation agreements for its stations in Atlanta, Phoenix, Kansas City and Flint/Saginaw into fiscal 2021. It also extended its FOX agreements in Portland, Las Vegas, Greenville, Mobile and Springfield into fiscal 2019. In its National Media Group, Meredith renewed its licensing program with Walmart. This program features more than 3,000 SKUs of Better Homes & Gardens branded products at 5,000 Walmart stores and on walmart.com. In addition, Meredith launched several new brand licensing programs, including a very well-received EatingWell line of frozen entrées and a Shape line of apparel for women. Successful execution of its TSR strategy – Meredith generated TSR of 18 percent in Fiscal 2017. Meredith increased its dividend by 5.1 percent to $2.08 per share on an annualized basis, its 24th consecutive year of dividend growth. The dividend is currently yielding approximately 3.5 percent.

OPERATING GROUP DETAIL

LOCAL MEDIA GROUP

Meredith’s Local Media Group includes 17 television stations reaching 11 percent of households.  Meredith’s portfolio is concentrated in large, fast-growing markets, including seven stations in the nation’s Top 25 markets and 13 in the Top 50.  Meredith’s stations produce 700 hours of highly profitable local news and entertainment content each week.  Meredith expects to continue to grow its Local Media Group organically and through strategic acquisitions.

Fiscal 2017 Local Media Group operating profit grew 36 percent to $215 million and EBITDA increased 27 percent to $250 million, compared to the prior year.  Revenues increased 15 percent to $630 million.  All represented record highs. (See Tables 1-5 for supplemental disclosures regarding non-GAAP financial measures.)

Looking more closely at fiscal 2017 performance compared to the prior year:

Total advertising revenues grew 7 percent to a record $414 million, driven by strong demand for political advertising. Political advertising revenues were $63 million, with Meredith generating significant revenues from stations in the Las Vegas, St. Louis, Phoenix, Kansas City and Atlanta markets. Non-political advertising revenues were $352 million, compared to $374 million, due primarily to political advertising displacement, the Super Bowl moving to FOX from CBS and the Summer Olympic games on NBC. Digital advertising revenues grew more than 15 percent. Meredith relaunched all of the mobile news, weather and traffic apps across its station group, yielding record app opens and unique page views. Other revenues and operating expenses increased, primarily due to growth in retransmission revenues from cable and satellite television operators, partially offset by higher programming fees paid to affiliated networks.

Turning to ratings, Meredith delivered strong performance during the May rating period.  Meredith stations in 10 of its 12 markets ranked No. 1 or No. 2 in morning or late news, and Meredith stations in six of its markets were No. 1 or No. 2 from sign-on to sign-off.

Fiscal 2017 fourth quarter Local Media Group operating profit grew 9 percent to $46 million and EBITDA grew 6 percent to $55 million, compared to the prior-year period.  Revenues increased 8 percent to $152 million.

NATIONAL MEDIA GROUP

Meredith’s National Media Group reaches more than 110 million unduplicated American women every month, including more than 70 percent of U.S. Millennial women. Meredith is a leader in creating content across media platforms and life stages in key consumer interest areas such as food, home, parenting and lifestyle.  It also features robust brand licensing activities and innovative business-to-business marketing solutions provided by Meredith Xcelerated Marketing.  Meredith expects to continue to grow its National Media Group organically and through strategic acquisitions.

Fiscal 2017 National Media Group operating profit was $147 million, compared to a loss of $18 million in the prior year.  Excluding special items in both years, operating profit was $142 million, compared to $150 million.  Revenues were $1.1 billion.  (See Tables 1-5 for supplemental disclosures regarding non-GAAP financial measures.)

Looking more closely at fiscal 2017 performance compared to the prior year:

Total advertising revenues were $520 million, off 1 percent, but up slightly on a comparable basis, which excludes MORE and Siempre Mujer magazines. Digital advertising revenue grew more than 20 percent, and accounted for more than 30 percent of total National Media Group advertising revenues. Growth was led by highly profitable native, engagement-based video, and programmatic advertising, along with shopper marketing. Meredith’s share of total magazine advertising revenues increased to 13.3 percent from 12.0 percent, according to the most recent data from Publishers Information Bureau. The Better Homes & Gardens, Family Circle, Martha Stewart and Midwest Living brands were particularly strong, while the food, media and entertainment, household supplies and beauty advertising categories were growth leaders. Circulation revenues were $322 million, off 2 percent, but flat on a comparable basis. Expenses declined 16 percent, and were down 1 percent excluding special items in both periods as Meredith continued to pursue operational efficiencies.

Fiscal 2017 fourth quarter National Media Group operating profit was $34 million, compared to a loss of $109 million in the prior-year period.  Excluding special items in both periods, fiscal 2017 fourth quarter operating profit was $43 million compared to $52 million.  Total revenues were $293 million and advertising revenues were $135 million.

OTHER FINANCIAL INFORMATION

Cash flow from operations was $219 million.  Total debt was $698 million and the weighted average interest rate was 2.8 percent, with $350 million effectively fixed at low rates.  Meredith’s debt-to-EBITDA ratio for the trailing 12 months was 1.9 to 1 (as defined in Meredith’s credit agreements).  All metrics are as of June 30, 2017.

Meredith continues to focus on its successful TSR strategy.  Key elements include:

Ongoing dividend increases – Meredith raised its regular stock dividend by 5.1 percent to $2.08 on an annualized basis in January 2017. This marked the 24th straight year of dividend increases for Meredith, which has paid an annual dividend for 70 consecutive years. Strategic investments to scale the business and increase shareholder value – Meredith has invested approximately $1 billion to acquire leading broadcast, digital and print properties in the last several years. Share repurchases – Meredith’s ongoing share repurchase program has $68 million remaining under current authorizations as of June 30, 2017.

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.  All fiscal 2017 full year and fourth-quarter comparisons are against the comparable prior-year period unless otherwise stated.

OUTLOOK

Meredith expects full year fiscal 2018 earnings per share to range from $3.20 to $3.50.  Meredith will be cycling against a record $63 million (or $0.85 per share) in political advertising revenues recorded by its Local Media Group in fiscal 2017.

Looking more closely at the first quarter of fiscal 2018 compared to the prior-year quarter, Meredith expects:

Total Company revenues to be flat to up slightly. National Media Group revenues to be flat to up slightly. Local Media Group revenues to be flat to down slightly. Meredith expects fiscal 2018 first quarter earnings per share to range from $0.60 to $0.65. Meredith will be cycling against $16 million (or $0.22 per share) in political advertising revenues recorded in the prior-year period.

CONFERENCE CALL WEBCAST

Meredith will host a conference call on July 27, 2017, at 8:30 a.m. EDT to discuss fiscal 2017 and fourth quarter results.  A live webcast will be accessible to the public on the Company’s website, meredith.com, and a replay will be available for two weeks.  A transcript will be available within 48 hours of the call at meredith.com.

RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS

Management uses and presents GAAP and non-GAAP results to evaluate and communicate its performance.  Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are common supplemental measures 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.  Management does not use EBITDA as a measure of liquidity or funds available for management’s discretionary use because it includes certain contractual and non-discretionary expenditures.  Adjusted EBITDA is defined as EBITDA before special items.

Results excluding special items 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 further understanding Meredith’s current performance, performance trends and financial condition.  Reconciliations of non-GAAP to GAAP measures are attached to this press release and available at meredith.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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 release that are forward-looking include, but are not limited to, the Company’s revenue and earnings-per-share outlook for first quarter and full-year fiscal 2018.

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 or vendors; 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; meredith.com) has been committed to service journalism for 115 years.  Today, Meredith uses multiple distribution platforms — including broadcast television, print, digital, mobile and video — to provide consumers with content they desire and to deliver the messages of its advertising and marketing partners.

Meredith’s Local Media Group includes 17 television stations reaching 11 percent of U.S. households.  Meredith’s portfolio is concentrated in large, fast-growing markets, with seven stations in the nation’s Top 25 — including Atlanta, Phoenix, St. Louis and Portland — and 13 in Top 50 markets.  Meredith’s stations produce 700 hours of local news and entertainment content each week, and operate leading local digital destinations.

Meredith’s National Media Group reaches more than 110 million unduplicated women every month, including more than 70 percent of U.S. Millennial women.  Meredith is the leader in creating and distributing content across platforms in key consumer interest areas such as food, home, parenting and lifestyle through well-known brands such as Better Homes & Gardens, Allrecipes, Parents and Shape.  Meredith also features robust brand licensing activities, including more than 3,000 SKUs of branded products at 5,000 Walmart stores across the U.S. and at walmart.com. Meredith Xcelerated Marketing is an award-winning, strategic and creative agency that provides fully integrated marketing solutions for many of the world’s top brands, including The Kraft Heinz Co., Benjamin Moore, Allergan, TGIFridays and WebMD.

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

Three Months

Twelve Months

Periods ended June 30,

2017

2016

2017

2016

(In thousands except per share data)

Revenues

Advertising

$

230,388

$

231,559

$

934,153

$

914,202

Circulation

90,164

93,454

321,959

328,599

All other

124,868

110,765

457,249

406,827

Total revenues

445,420

435,778

1,713,361

1,649,628

Operating expenses

Production, distribution, and editorial

154,224

150,890

602,985

611,872

Selling, general, and administrative

203,372

195,507

741,188

730,074

Depreciation and amortization

13,143

14,473

53,892

59,152

Impairment of goodwill and other long-lived assets

6,173

161,462

6,173

161,462

Merger termination fee net of merger-related costs

(43,541)

Total operating expenses

376,912

522,332

1,404,238

1,519,019

Income (loss) from operations

68,508

(86,554)

309,123

130,609

Interest expense, net

(4,780)

(4,720)

(18,789)

(20,402)

Earnings (loss) before income taxes

63,728

(91,274)

290,334

110,207

Income tax benefit (expense)

(20,359)

759

(101,406)

(76,270)

Net earnings (loss)

$

43,369

$

(90,515)

$

188,928

$

33,937

Basic earnings (loss) per share

$

0.97

$

(2.03)

$

4.23

$

0.76

Basic average shares outstanding

44,716

44,556

44,617

44,606

Diluted earnings (loss) per share

$

0.95

$

(2.03)

$

4.16

$

0.75

Diluted average shares outstanding

45,533

44,556

45,447

45,357

Dividends paid per share

$

0.5200

$

0.4950

$

2.0300

$

1.9050

Meredith Corporation and Subsidiaries

Segment Information (Unaudited)

Three Months

Twelve Months

Periods ended June 30,

2017

2016

2017

2016

(In thousands)

Revenues

National media

Advertising

$

135,095

$

136,750

$

520,134

$

527,051

Circulation

90,164

93,454

321,959

328,599

Other revenues

67,952

64,410

241,107

245,533

  Total national media

293,211

294,614

1,083,200

1,101,183

Local media

Non-political advertising

90,883

90,298

351,506

374,104

Political advertising

4,410

4,511

62,513

13,047

Other revenues

56,916

46,355

216,142

161,294

  Total local media

152,209

141,164

630,161

548,445

Total revenues

$

445,420

$

435,778

$

1,713,361

$

1,649,628

Operating profit (loss)

National media

$

34,359

$

(108,860)

$

146,541

$

(17,693)

Local media

46,319

42,563

214,920

158,481

Unallocated corporate

(12,170)

(20,257)

(52,338)

(10,179)

Income (loss) from operations

$

68,508

$

(86,554)

$

309,123

$

130,609

Depreciation and amortization

National media

$

4,191

$

4,637

$

17,555

$

18,698

Local media

8,524

9,313

34,818

38,332

Unallocated corporate

428

523

1,519

2,122

Total depreciation and amortization

$

13,143

$

14,473

$

53,892

$

59,152

EBITDA 1

National media

$

38,550

$

(104,223)

$

164,096

$

1,005

Local media

54,843

51,876

249,738

196,813

Unallocated corporate

(11,742)

(19,734)

(50,819)

(8,057)

Total EBITDA1

$

81,651

$

(72,081)

$

363,015

$

189,761

1 EBITDA is net earnings (loss) before interest, taxes, depreciation, and amortization.

Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

Assets

June 30, 2017

June 30, 2016

(In thousands)

Current assets

Cash and cash equivalents

$

22,287

$

24,970

Accounts receivable, net

289,052

273,927

Inventories

21,890

20,678

Current portion of subscription acquisition costs

144,896

133,338

Current portion of broadcast rights

7,853

4,220

Other current assets

19,275

24,023

Total current assets

505,253

481,156

Property, plant, and equipment

549,536

530,052

Less accumulated depreciation

(359,670)

(339,099)

Net property, plant, and equipment

189,866

190,953

Subscription acquisition costs

79,740

95,960

Broadcast rights

21,807

4,565

Other assets

69,616

57,151

Intangible assets, net

955,883

913,877

Goodwill

907,458

883,129

Total assets

$

2,729,623

$

2,626,791

Liabilities and Shareholders’ Equity

Current liabilities

Current portion of long-term debt

$

62,500

$

75,000

Current portion of long-term broadcast rights payable

9,206

4,649

Accounts payable

66,598

82,107

Accrued expenses and other liabilities

116,907

116,777

Current portion of unearned subscription revenues

204,459

199,359

Total current liabilities

459,670

477,892

Long-term debt

635,737

618,506

Long-term broadcast rights payable

22,454

5,524

Unearned subscription revenues

106,506

128,534

Deferred income taxes

384,726

336,346

Other noncurrent liabilities

124,558

170,946

Total liabilities

1,733,651

1,737,748

Shareholders’ equity

Common stock

39,433

39,272

Class B stock

5,119

5,284

Additional paid-in capital

54,726

54,282

Retained earnings

915,703

818,706

Accumulated other comprehensive loss

(19,009)

(28,501)

Total shareholders’ equity

995,972

889,043

Total liabilities and shareholders’ equity

$

2,729,623

$

2,626,791

Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Years ended June 30,

2017

2016

(In thousands)

Net cash provided by operating activities

$

219,346

$

226,597

Cash flows from investing activities

Acquisitions of and investments in businesses

(84,400)

(8,186)

Additions to property, plant, and equipment

(34,785)

(25,035)

Proceeds from disposition of assets

1,500

1,767

Net cash used in investing activities

(117,685)

(31,454)

Cash flows from financing activities

Proceeds from issuance of long-term debt

380,000

167,500

Repayments of long-term debt

(374,375)

(267,500)

Dividends paid

(91,931)

(86,090)

Purchases of Company stock

(53,399)

(31,080)

Proceeds from common stock issued

38,061

20,879

Payment of acquisition related contingent consideration

(8,000)

(800)

Excess tax benefits from share-based payments

6,765

4,241

Other

(1,465)

(156)

Net cash used in financing activities

(104,344)

(193,006)

Net increase (decrease) in cash and cash equivalents

(2,683)

2,137

Cash and cash equivalents at beginning of year

24,970

22,833

Cash and cash equivalents at end of year

$

22,287

$

24,970

Table 1

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items – The following tables show results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Three months ended June 30, 2017

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands except per share data)

Operating profit

$

34,359

$

46,319

$

(12,170)

$

68,508

Special items

Write-down of contingent consideration payable

(390)

(390)

Severance and related benefit costs

3,052

1,233

4,285

Write-down of impaired assets

7,194

7,194

Reversal of previously accrued restructuring costs

(1,536)

(387)

(1,923)

Total special items

8,320

1,233

(387)

9,166

Operating profit excluding special items (non-GAAP)

$

42,679

$

47,552

$

(12,557)

$

77,674

Diluted earnings per share

$

0.95

Per share impact of special items

0.12

Earnings per share excluding special items (non-GAAP)

$

1.07

Twelve months ended June 30, 2017

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands except per share data)

Operating profit

$

146,541

$

214,920

$

(52,338)

$

309,123

Special items

Write-down of contingent consideration payable

(19,970)

(19,970)

Severance and related benefit costs

9,747

1,678

438

11,863

Write-down of impaired assets

7,194

1,678

8,872

Reversal of previously accrued restructuring costs

(1,536)

(387)

(1,923)

Other

397

397

Total special items

(4,168)

3,356

51

(761)

Operating profit excluding special items (non-GAAP)

$

142,373

$

218,276

$

(52,287)

$

308,362

Diluted earnings per share

$

4.16

Per share impact of special items

Per share impact of the resolution of certain federal and state tax matters

(0.15)

Per share impact of special items of $761 ($468 after tax)

(0.01)

Total per share impact of special items

(0.16)

Earnings per share excluding special items (non-GAAP)

$

4.00

Table 2

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items – The following tables show results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Three months ended June 30, 2016

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands except per share data)

Operating profit (loss)

$

(108,860)

$

42,563

$

(20,257)

$

(86,554)

Special items

Write-down of impaired assets

155,823

5,639

161,462

Pension settlement charge

3,294

1,889

403

5,586

Severance and related benefit costs

2,032

360

2,392

Reversal of previously accrued restructuring costs

(643)

(1,021)

(1,664)

Total special items

160,506

1,228

6,042

167,776

Operating profit excluding special items (non-GAAP)

$

51,646

$

43,791

$

(14,215)

$

81,222

Diluted loss per share

$

(2.03)

Per share impact of special items

3.11

Earnings per share excluding special items (non-GAAP)

$

1.08

Twelve months ended June 30, 2016

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands except per share data)

Operating profit (loss)

$

(17,693)

$

158,481

$

(10,179)

$

130,609

Special items

Write-down of impaired assets

155,823

5,639

161,462

Merger termination fee net of merger-related costs

(43,541)

(43,541)

Severance and related benefit costs

9,301

492

9,793

Pension settlement charge

3,294

1,889

403

5,586

Reversal of previously accrued restructuring costs

(1,157)

(2,091)

(3,248)

Other

601

601

Total special items

167,862

290

(37,499)

130,653

Operating profit excluding special items (non-GAAP)

$

150,169

$

158,771

$

(47,678)

$

261,262

Diluted earnings per share

$

0.75

Per share impact of special items

2.55

Earnings per share excluding special items (non-GAAP)

$

3.30

Table 3

Meredith Corporation and Subsidiaries

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.

Adjusted EBITDA

Consolidated adjusted EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, amortization, and special items.

Segment adjusted EBITDA is a measure of segment earnings before depreciation, amortization, and special items.

Segment adjusted EBITDA margin is defined as segment adjusted EBITDA divided by segment revenues.

Three months ended June 30, 2017

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands)

Revenues

$

293,211

$

152,209

$

$

445,420

Net earnings

$

43,369

Net interest expense

4,780

Income taxes

20,359

Operating profit

$

34,359

$

46,319

$

(12,170)

68,508

Depreciation and amortization

4,191

8,524

428

13,143

EBITDA

38,550

54,843

(11,742)

81,651

Special items

Write-down of contingent consideration payable

(390)

(390)

Severance and related benefit costs

3,052

1,233

4,285

Write-down of impaired assets

7,194

7,194

Reversal of previously accrued restructuring costs

(1,536)

(387)

(1,923)

Total special items

8,320

1,233

(387)

9,166

Adjusted EBITDA

$

46,870

$

56,076

$

(12,129)

$

90,817

Segment EBITDA margin

13.1

%

36.0

%

Segment adjusted EBITDA margin

16.0

%

36.8

%

Table 3 continued

Twelve months ended June 30, 2017

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands)

Revenues

$

1,083,200

$

630,161

$

$

1,713,361

Net earnings

$

188,928

Net interest expense

18,789

Income taxes

101,406

Operating profit

$

146,541

$

214,920

$

(52,338)

309,123

Depreciation and amortization

17,555

34,818

1,519

53,892

EBITDA

164,096

249,738

(50,819)

363,015

Special items

Write-down of contingent consideration payable

(19,970)

(19,970)

Severance and related benefit costs

9,747

1,678

438

11,863

Write-down of impaired assets

7,194

1,678

8,872

Reversal of previously accrued restructuring costs

(1,536)

(387)

(1,923)

Other

397

397

Total special items

(4,168)

3,356

51

(761)

Adjusted EBITDA

$

159,928

$

253,094

$

(50,768)

$

362,254

Segment EBITDA margin

15.1

%

39.6

%

Segment adjusted EBITDA margin

14.8

%

40.2

%

Table 4

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA

Consolidated EBITDA, which is reconciled to net earnings (loss) in the following tables, is defined as net earnings (loss) before interest, taxes, depreciation, and amortization.

Segment EBITDA is a measure of segment earnings (loss) before depreciation and amortization.

Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.

Adjusted EBITDA

Consolidated adjusted EBITDA, which is reconciled to net earnings (loss) in the following tables, is defined as net earnings (loss) before interest, taxes, depreciation, amortization, and special items.

Segment adjusted EBITDA is a measure of segment earnings (loss) before depreciation, amortization, and special items.

Segment adjusted EBITDA margin is defined as segment adjusted EBITDA divided by segment revenues.

Three months ended June 30, 2016

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands)

Revenues

$

294,614

$

141,164

$

$

435,778

Net loss

$

(90,515)

Net interest expense

4,720

Income taxes

(759)

Operating profit (loss)

$

(108,860)

$

42,563

$

(20,257)

(86,554)

Depreciation and amortization

4,637

9,313

523

14,473

EBITDA

(104,223)

51,876

(19,734)

(72,081)

Special items

Write-down of impaired assets

155,823

5,639

161,462

Pension settlement charge

3,294

1,889

403

5,586

Severance and related benefit costs

2,032

360

2,392

Reversal of previously accrued restructuring costs

(643)

(1,021)

(1,664)

Total special items

160,506

1,228

6,042

167,776

Adjusted EBITDA

$

56,283

$

53,104

$

(13,692)

$

95,695

Segment EBITDA margin

(35.4)

%

36.7

%

Segment adjusted EBITDA margin

19.1

%

37.6

%

Table 4 continued

Twelve months ended June 30, 2016

National

Media

Local

Media

UnallocatedCorporate

Total

(In thousands)

Revenues

$

1,101,183

$

548,445

$

$

1,649,628

Net earnings

$

33,937

Net interest expense

20,402

Income taxes

76,270

Operating profit (loss)

$

(17,693)

$

158,481

$

(10,179)

130,609

Depreciation and amortization

18,698

38,332

2,122

59,152

EBITDA

1,005

196,813

(8,057)

189,761

Special items

Write-down of impaired assets

155,823

5,639

161,462

Merger termination fee net of merger-related costs

(43,541)

(43,541)

Severance and related benefit costs

9,301

492

9,793

Pension settlement charge

3,294

1,889

403

5,586

Reversal of previously accrued restructuring costs

(1,157)

(2,091)

(3,248)

Other

601

601

Total special items

167,862

290

(37,499)

130,653

Adjusted EBITDA

$

168,867

$

197,103

$

(45,556)

$

320,414

Segment EBITDA margin

0.1

%

35.9

%

Segment adjusted EBITDA margin

15.3

%

35.9

%

Table 5

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items – The following table shows national media operating expenses excluding special items and as reported with the difference being the special items. National media operating expenses excluding special items is a non-GAAP measure. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Year ended June 30,

2017

2016

Change

(In thousands)

National media operating expenses

$

936,659

$

1,118,876

(16)%

Special items

Write-down of contingent consideration payable

19,970

Severance and related benefit costs

(9,747)

(9,301)

Write-down of impaired assets

(7,194)

(155,823)

Pension settlement charge

(3,294)

Reversal of previously accrued restructuring costs

1,536

1,157

Other

(397)

(601)

Total special items

4,168

(167,862)

Operating expenses excluding special items (non-GAAP)

$

940,827

$

951,014

(1)%

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SOURCE Meredith Corporation

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