New Media Investment Group Inc. (“New Media” or the “Company”,
NYSE:NEWM) today reported its financial results for the fourth
quarter and full year ended December 25, 2016.
Fourth Quarter 2016 Financial
Summary
- New Media declares a cash dividend of
$0.35 per common share for the fourth quarter of 2016
- Total revenues of $333.6 million were
flat to prior year, and decreased 0.6% on a same store basis
- Digital revenue of $32.4 million,
increased 9.6% to prior year on a same store basis
- Operating income of $27.0 million
- Net income of $14.5 million
- As Adjusted EBITDA of $49.7
million*
- Free cash flow of $38.8 million*
- Liquidity, consisting of cash on the
balance sheet and undrawn revolver, of $212.2 million
Full Year 2016 Financial
Summary
- Total revenues of $1,255.4 million,
which were up 5.0% to prior year and decreased 2.5% to prior year
on a same store basis
- Digital revenue of $123.9 million, an
increase of 9.2% on a same store basis
- Operating income of $61.4 million
- Net income of $31.6 million
- As Adjusted EBITDA of $155.8
million*
- Free cash flow of $113.4 million*
Fourth Quarter 2016 & Subsequent
Business Highlights
- Announced and closed the acquisition of
Harris Enterprises in the fourth quarter for $20.4 million, at the
midpoint of our stated acquisition range of 3.5x-4.5x LTM As
Adjusted EBITDA
- Propel Business Services (“Propel”),
our small and medium business solutions platform, achieved another
record quarter and year with $15.8 million and $53.0 million in
revenue respectively, a 66.9% increase for the quarter and a 69.1%
increase for the full year
- Completed an equity offering, raising
$134.9 million net proceeds, improving liquidity and better
positioning the company to execute on its acquisition strategy
- Announced and closed the acquisition of
the Ohio-based publishing division of the Wooster Republican
Printing Company in January 2017 for $21.2 million, within our
stated acquisition range of 3.5x-4.5x LTM As Adjusted EBITDA
- Implemented a cost reduction program in
early first quarter 2017 that is expected to reduce expenses over
$3 million in first quarter 2017, and over $27 million for full
year 2017
- Encouraging revenue trends and
initiatives that give New Media confidence heading into 2017:
- Propel revenue growth, off a larger
base, accelerated through the second half of 2016
- Fifty digital only sales
representatives to be hired to further improve our digital revenue
growth trends
- Implemented targeted circulation price
increase initiatives across the country that we believe will lead
to modest circulation revenue increases in 2017
- New Media’s events business seeing
growth acceleration across our top 25 markets, hosting 120 events
in 2016 and expecting 240 events in 2017. We believe this division
will generate approximately $15 million in revenues in 2017.
- BridgeTower Media, our business
publications platform, has grown to become a $75 million
division
Summary of Fourth
Quarter and Full Year 2016 Results
($ in million, except per share)
GAAP
Reporting
Q4 2016
FY 2016
Revenues $ 333.6 $ 1,255.4 Operating income $ 27.0 $ 61.4 Net
income $ 14.5 $ 31.6
Non-GAAP
Reporting*
Q4 2016
FY 2016
As Adjusted EBITDA $ 49.7 $ 155.8 Free cash flow $ 38.8 $ 113.4
*For definitions and reconciliations of Non-GAAP Reporting
measures, please refer to the Non-GAAP Financial Measures Note and
reconciliations below.
Michael E. Reed, New Media President and Chief Executive
Officer, commented, “During the quarter, we successfully closed our
previously-announced acquisitions of the Columbia Daily Tribune and
Rochester Business Journal, and announced and closed the
acquisition of Harris Enterprises for $20.4 million. The Harris
papers are a great complement to our footprint in Kansas and Iowa
and have been serving their communities with quality local news and
information for over a century. We were also pleased to recently
announce and close our first deal for 2017, the acquisition of the
publishing division of the Wooster Republican Printing Company for
$21.2 million. This Ohio based group is a great strategic fit with
our existing Ohio cluster. With this acquisition, we have now
completed over $735 million of transactions since inception,
completing eight transactions in 2016, the highest number of
acquisitions we have done in any single year. With over $200
million in liquidity, New Media is well positioned to take
advantage of more great acquisition opportunities at attractive
valuations in 2017.
“Along with much of the industry, New Media’s fourth quarter
results were impacted by increased headwinds across our traditional
print products as our brick and mortar retail customers experienced
a challenged holiday season, and some of our southeast properties
felt the impact of Hurricane Matthew. The further decline in
traditional print we experienced in the fourth quarter has only
reinforced the importance and speed with which we need to execute
our stated strategy to diversify our revenue streams away from
traditional print media. We continue to be very optimistic about
our ability to grow our new revenue streams and we are particularly
encouraged by our growth trends in Propel Business Services,
GateHouse Live, our events division, and BridgeTower Media, our
business publications division.
“Propel continues to be a strong growth driver for us, finishing
the quarter with $15.8 million in revenue, and the year with $53.0
million, a 69.1% increase over fiscal year 2015. We were thrilled
to see revenue growth accelerate in this division, and off a larger
base, through the second half of 2016, setting us up for meaningful
growth in 2017. In an effort to further bolster our Propel and
digital sales growth, we announced in the fourth quarter our plans
to double our digital only staff by hiring over fifty new sales
representatives within our markets in 2017. These additional sales
representatives are intended to help scale our platform, increase
the penetration of Propel in our local markets, and contribute to
offsetting our traditional print advertising topline revenue
declines by the end of the year.
“Another strong growth area for us is our events division,
GateHouse Live, which held 120 events in 2016 and is expected to
double the number of events in 2017. GateHouse Live specializes in
delivering world-class events for the media industry and the
communities they serve. We only started this division in 2015 and
we have seen significant growth in the number of events we are
hosting, with a high demand from our communities for more. One of
the most popular events is our ‘Best of Preps’, which celebrates
the top athletes in the community and will be hosted in over 20
markets this year. We expect GateHouse Live to generate
approximately $15 million in revenue this year, doubling 2016
revenue.
“We are very encouraged to be able to continue to execute on our
strategy of acquiring strong local media assets, within our
valuation range, and supporting internal investment to create
organic growth for our assets. We also expect to continue to return
a substantial portion of our cash flow to shareholders in the form
of a quarterly dividend. With the growth we continue to see from
circulation revenue, Propel, GateHouse Live, and BridgeTower Media,
combined with our strong pipeline for acquisitions, we are
confident in our ability to deliver solid returns for shareholders
in 2017.”
Fourth Quarter 2016 Financial
Results
New Media recorded total revenues of $333.6 million for the
quarter, flat to the prior year, and a decrease of 0.6% on a same
store basis. This was the sixth consecutive quarter of improving
same store trends. Traditional Print Advertising decreased 7.7% on
a same store basis, which reflects the challenges the brick and
mortar retail sector is currently facing, leading major retailers
to decrease their volume of print ads and inserts, as well as
closing stores across the country.
Digital continues to be a strong revenue category and increased
9.6% on a same store basis to $32.4 million. Propel generated $15.8
million in revenue, an increase of 66.9% to the prior year and now
comprises 48.7% of total digital revenue.
Circulation revenue increased 2.8% on a same store basis, driven
by targeted promotions and systematic price increases to result in
incremental revenue. Commercial Print, Distribution and Events
revenue increased 22.0% to the prior year, on a same store basis.
Our fast growing Events business is a major contributor to the
strong growth.
The company continues to find ways to operate more efficiently
and to reduce expenses where possible, in order to offset the
declining traditional print revenues. The company recently
implemented a plan intended to achieve over $27 million of cost
reductions that will be recognized in 2017. We will also continue
to realize synergies from our latest acquisitions to drive lower
expenses for the total Company while simultaneously investing in
our growth initiatives, which we believe will lead to improved
revenue trends.
Operating income was $27.0 million and Net income was $14.5
million.
As Adjusted EBITDA and free cash flow were $49.7 million and
$38.8 million, respectively.
Fourth Quarter 2016
Dividend
New Media’s Board of Directors declared a fourth quarter 2016
cash dividend of $0.35 per share of common stock. The dividend is
payable on March 16, 2017 to shareholders of record as of the close
of business on March 8, 2017.
The declaration and payment of any dividends are at the sole
discretion of the Board of Directors, which may decide to change
the Company’s dividend policy at any time.
Full Year 2016 Financial
Results
New Media recorded revenues of $1,255.4 million in 2016, which
represents an increase of 5.0% when compared to the prior year, and
a decrease of 2.5% on a same store basis.
Total Print Advertising decreased 9.3% from fiscal 2015 on a
same store basis to $600.0 million. Digital revenue continued to be
strong with revenue of $123.9 million for the year, increasing 9.2%
on a same store basis. Propel contributed $53.0 million to Digital
revenue, an increase of 69.1% to the prior year. Circulation
revenue, our largest individual revenue category, saw revenue of
$421.5 million in 2016 and importantly increased 2.5% to the prior
year on a same store basis.
Operating income ended the year at $61.4 million and Net income
at $31.6 million.
As Adjusted EBITDA and free cash flow were $155.8 million and
$113.4 million for the year, respectively.
New Media’s 2016 dividends will not be treated as taxable
dividends, as they are returns of capital.
Additional Information
For additional information that management believes to be useful
for investors, please refer to the presentation posted on the
Investor Relations section of New Media’s website,
www.newmediainv.com and the Company’s Annual Report on Form
10-K, which will be available on the Company’s website.
Nothing on our website is included or incorporated by reference
herein.
Earnings Conference Call
New Media’s management will host a conference call on Tuesday,
February 21, 2017 at 11:00 A.M. Eastern Time. A copy of the
earnings release will be posted to the Investor Relations section
of New Media’s website, www.newmediainv.com.
All interested parties are welcome to participate on the live
call. The conference call may be accessed by dialing 1-855-319-1124
(from within the U.S.) or 1-703-563-6359 (from outside of the U.S.)
ten minutes prior to the scheduled start of the call; please
reference “New Media Fourth Quarter Earnings Call.”
A simultaneous webcast of the conference call will be available
to the public on a listen-only basis at www.newmediainv.com.
Please allow extra time prior to the call to visit the website and
download any necessary software required to listen to the internet
broadcast.
A telephonic replay of the conference call will also be
available approximately two hours following the call’s completion
through 11:59 P.M. Eastern Time on Tuesday, March 7, 2017 by
dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406
(from outside of the U.S.); please reference access code
“56272363.”
About New Media Investment Group
Inc.
New Media is focused primarily on investing in a high quality,
diversified portfolio of local media assets, and on growing
existing advertising and digital marketing and businesses services.
The Company is one of the largest publishers of locally based print
and online media in the United States as measured by our 125 daily
publications. As of December 25, 2016, the Company operates in over
535 markets across 36 states. New Media’s portfolio of products, as
of December 25, 2016, include over 600 community publications and
over 535 websites, serve more than 220,000 business advertising
accounts, and reaches over 20 million people on a weekly basis.
For more information regarding New Media and to be added to our
email distribution list, please visit www.newmediainv.com.
Same Store Results
Same store results take into account material acquisitions and
divestitures of the company by adjusting prior year performance to
include or exclude financial results as if the Company had owned or
divested a business for the comparable period. The results of
several acquisitions (“tuck-in acquisitions”) were funded from the
Company’s available cash and not considered material.
Non-GAAP Financial
Measures
The Company strongly urges stockholders and other interested
persons not to rely on any single financial measure to evaluate its
business. In addition, because Adjusted EBITDA, As Adjusted EBITDA,
and free cash flow are not measures of financial performance under
GAAP and are susceptible to varying calculations, these non-GAAP
measures, as presented in this press release, may differ from and
may not be comparable to similarly titled measures used by other
companies.
Adjusted EBITDA, As Adjusted EBITDA,
and Free Cash Flow
The Company defines Adjusted EBITDA as net income (loss) from
continuing operations before income tax expense (benefit),
interest/financing expense, depreciation and amortization, and
non-cash impairments. The Company defines As Adjusted EBITDA as
Adjusted EBITDA before transaction and project costs, merger and
acquisition related costs, integration and reorganization costs,
gain/loss on sale or disposal of assets, non-cash items such as
non-cash compensation, and Adjusted EBITDA from non-wholly owned
subsidiaries. The Company defines free cash flow as As Adjusted
EBITDA less capital expenditures, cash taxes, interest paid, and
pension payments.
Management’s Use of Adjusted EBITDA, As
Adjusted EBITDA, and Free Cash Flow
Adjusted EBITDA, As Adjusted EBITDA, and free cash flow are not
measures of financial performance under GAAP and should not be
considered in isolation or as alternatives to income from
operations, net income (loss), cash flow from continuing operating
activities or any other measure of performance or liquidity derived
in accordance with GAAP. New Media’s management believes these
non-GAAP measures, as defined above, are useful to investors for
the following reasons:
- Evaluating performance and identifying
trends in day-to-day performance because the items excluded have
little or no significance on the Company’s day-to-day operations;
and
- Providing assessments of controllable
expenses that afford management the ability to make decisions which
are expected to facilitate meeting current financial goals as well
as achieving optimal financial performance.
We use Adjusted EBITDA, As Adjusted EBITDA, and free cash flow
as measures of our deployed revenue generating assets between
periods on a consistent basis. We believe As Adjusted EBITDA and
free cash flow measure our financial performance and help identify
operational factors that management can impact in the short term,
mainly our operating cost structure and expenses. We exclude
mergers and acquisition, transaction, and project related costs
such as diligence activities and new financing related costs
because they represent costs unrelated to the day-to-day operating
performance of the business that management can impact in the short
term. We consider the loss on early extinguishment of debt to be
financing related costs associated with interest expense or
amortization of financing fees, which by definition are excluded
from Adjusted EBITDA. Such charges are incidental to, but not
reflective of our day-to-day operating performance of the business
that management can impact in the short term.
Forward-Looking
Statements
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
regarding pursuing and completing future acquisitions and strategic
opportunities, the timing and availability of such opportunities,
the ability to source and identify such opportunities and the
benefits associated with such opportunities, expected revenue
trends, including expectations for revenue growth, and our ability
to continue to grow our dividend and deliver shareholder returns,
growing our digital business and revenues, growing our events
business and revenues, the diversification of our revenue streams
away from traditional print media, our ability to leverage our
scale to lower expenses, our ability to grow circulation revenue
through targeted price increase initiatives, and our ability to
identify, implement, and realize expense savings. These statements
are based on management’s current expectations and beliefs and are
subject to a number of risks and uncertainties, such
as continued declines in traditional revenue categories,
economic conditions in the markets in which we operate, competition
from other media companies, the possibility of insufficient
interest in our digital business, technological developments in the
media sector, an ability to source acquisition opportunities with
an attractive risk-adjusted return profile, inadequate diligence of
acquisition targets, and difficulties integrating and reducing
expenses, including at our newly acquired businesses. These and
other risks and uncertainties could cause actual results to differ
materially from those described in the forward-looking statements,
many of which are beyond our control. The Company can give no
assurance that its expectations will be attained. Accordingly, you
should not place undue reliance on any forward-looking statements
contained in this press release. For a discussion of some of the
risks and important factors that could cause actual results to
differ from such forward-looking statements, see the risks and
other factors detailed from time to time in the Company’s Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, and other
filings with the Securities and Exchange Commission. Furthermore,
new risks and uncertainties emerge from time to time, and it is not
possible for the Company to predict or assess the impact of every
factor that may cause its actual results to differ from those
contained in any forward-looking statements. Such forward-looking
statements speak only as of the date of this press release. The
Company expressly disclaims any obligation to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with
regard thereto or change in events, conditions or circumstances on
which any statement is based.
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
Consolidated Balance Sheets (In thousands, except share
data)
December 25,2016
December 27,2015
Assets
Current assets: Cash and cash equivalents $ 172,246 $ 146,638
Restricted cash 3,406 6,967 Accounts receivable, net of allowance
for doubtful accounts of $5,478 and $4,479 at December 25, 2016 and
December 27, 2015, respectively 138,115 136,249 Inventory 18,167
15,744 Prepaid expenses 18,720 14,549 Other current assets
19,694 11,763 Total current assets 370,348
331,910 Property, plant, and equipment, net of accumulated
depreciation of $130,839 and $85,038 at December 25, 2016 and
December 27, 2015, respectively 381,319 384,824 Goodwill 227,954
171,119 Intangible assets, net of accumulated amortization of
$43,632 and $23,122 at December 25, 2016 and December 27, 2015,
respectively 351,477 303,575 Other assets 4,932
5,692 Total assets $ 1,336,030 $ 1,197,120
Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term debt $ 14,387 $ 3,509
Accounts payable 20,129 9,571 Accrued expenses 83,365 100,173
Deferred revenue 77,987 62,294 Total
current liabilities 195,868 175,547 Long-term liabilities:
Long-term debt 338,860 350,266 Long-term liabilities, less current
portion 12,597 9,192 Deferred income taxes 7,786 3,988 Pension and
other postretirement benefit obligations 25,946
11,054 Total liabilities 581,057
550,047 Stockholders’ equity: Common stock, $0.01 par value,
2,000,000,000 shares authorized at December 25, 2016 and December
27, 2015; 53,543,226 and 44,710,497 issued at December 25, 2016 and
December 27, 2015, respectively 531
445 Additional paid-in capital 742,543 605,033 Accumulated other
comprehensive loss (3,977 ) (3,158 ) Retained earnings 16,293
44,753 Treasury stock, at cost, 46,438 and 0 shares at December 25,
2016 and December 27, 2015, respectively (417 ) -
Total stockholders' equity 754,973
647,073 Total liabilities and stockholders' equity $
1,336,030 $ 1,197,120
NEW MEDIA
INVESTMENT GROUP INC. AND SUBSIDIARIES Consolidated
Statements of Operations and Comprehensive Income (In
thousands, except per share data)
Three monthsended
Three monthsended
Twelve months ended
Twelve months ended
December 25, 2016
December 27,2015
December 25,2016
December 27,2015
Revenues: Advertising $ 182,426 $ 196,592 $ 684,900 $
696,696 Circulation 108,833 105,007 421,497 378,263 Commercial
printing and other 42,325 32,050
148,959 120,856 Total revenues 333,584 333,649
1,255,356 1,195,815 Operating costs and expenses: Operating costs
179,329 179,725 699,312 656,555 Selling, general, and
administrative 108,818 117,621 414,983 406,282 Depreciation and
amortization 17,410 16,451 67,774 67,752 Integration and
reorganization costs 820 2,832 8,352 8,052 Loss (gain) on sale or
disposal of assets 239 (54,458 ) 3,564 (51,051 ) Mastheads
impairment - 4,800 -
4,800 Operating income 26,968 66,678 61,371 103,425 Interest
expense 7,366 7,622 29,635 32,057 Other expense 2,731
359 2,414 350 Income before
income taxes 16,871 58,697 29,322 71,018 Income tax expense
(benefit) 2,375 2,321 (2,319 )
3,404 Net income 14,496 56,376
31,641 67,614 Income per share:
Basic: Net income $ 0.31 $ 1.27 $ 0.70 $ 1.54 Diluted: Net income $
0.31 $ 1.26 $ 0.70 $ 1.53 Dividends declared per share $
0.35 $ 0.33 $ 1.34 $ 1.29 Comprehensive income $
13,616 $ 57,617 $ 30,822 $ 68,925
NEW MEDIA
INVESTMENT GROUP INC. AND SUBSIDIARIES Consolidated
Statements of Cash Flows (In thousands)
Twelve monthsended
Twelve monthsended
December 25, 2016
December 27, 2015
Cash flows from operating activities: Net income $ 31,641 $
67,614 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 67,774 67,752
Non-cash compensation expense 2,442 1,319 Non-cash interest expense
2,786 2,784 Deferred income taxes (2,862 ) 1,167 Loss (gain) on
sale or disposal of assets 3,564 (51,051 ) Pension and other
postretirement benefit obligations (2,276 ) (1,002 ) Mastheads
impairment - 4,800 Non-cash charge to investments 2,766 - Changes
in assets and liabilities: Accounts receivable, net 14,880 (4,255 )
Inventory (999 ) 2,701 Prepaid expenses (1,805 ) (219 ) Other
assets (3,617 ) (1,412 ) Accounts payable 6,010 (14,666 ) Accrued
expenses (22,747 ) 37,814 Deferred revenue (629 ) (1,508 ) Other
long-term liabilities 1,433 3,481 Net
cash provided by operating activities 98,361
115,319 Cash flows from investing activities: Purchases of
property, plant, and equipment (10,631 ) (10,155 ) Proceeds from
sale of publications and other assets 3,284 142,583 Acquisitions,
net of cash acquired (137,486 ) (431,126 ) Net cash
used in investing activities
(144,833 ) (298,698 ) Cash flows from financing
activities: Payment of debt issuance costs - (592 ) Borrowings
under term loans - 122,872 Borrowings under revolving credit
facility - 99,000 Repayments under term loans (3,509 ) (3,135 )
Repayments under revolving credit facility - (104,000 ) Payment of
offering costs (83 ) (1,343 ) Issuance of common stock, net of
underwriter's discount 135,849 150,866 Purchase of treasury stock
(417 ) - Payment of dividends (59,760 ) (57,360 ) Net
cash provided by financing activities 72,080
206,308 Net increase in cash and cash equivalents 25,608
22,929 Cash and cash equivalents at beginning of period
146,638 123,709 Cash and cash equivalents at
end of period $ 172,246 $ 146,638 Supplemental
disclosures on cash flow information: Cash interest paid $ 26,908 $
21,726 Cash income taxes paid $ 2,601 $ 1,389
NEW
MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES As Adjusted
EBITDA (In thousands, except share and per share data)
Three monthsended
Three monthsended
Twelvemonths ended
Twelvemonths ended
December 25,2016
December 27, 2015
December 25, 2016
December 27, 2015
Net income $ 14,496 $ 56,376 $ 31,641 $ 67,614 Income tax
expense (benefit) 2,375 2,321 (2,319 ) 3,404 Interest expense 7,366
7,622 29,635 32,057 Depreciation and amortization 17,410 16,451
67,774 67,752 Mastheads impairment - 4,800
- 4,800 Adjusted EBITDA from
continuing operations 41,647 87,570 126,731 175,627 Non-cash
compensation and other expense 6,945 18,373 17,175 29,433
Integration and reorganization costs 820 2,832 8,352 8,052 Loss
(gain) on sale or disposal of assets 239
(54,458 ) 3,564 (51,051 ) As Adjusted EBITDA
49,651 54,317 155,822 162,061 Interest paid (6,748 ) (4,056 )
(26,908 ) (21,726 ) Net capital expenditures (2,900 ) (3,770 )
(10,631 ) (10,155 ) Pension payments (479 ) 53 (2,276 ) (1,002 )
Cash taxes(1) (693 ) (993 ) (2,601 )
(1,214 ) Free Cash Flow 38,831 45,551
113,406 127,964 Basic weighted average
shares outstanding 47,391,972 44,465,646 45,234,369 44,039,415
Diluted weighted average shares outstanding 47,466,939 44,575,187
45,316,907 44,209,114 (1) Cash paid, net of refunds.
.
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
Same Store Revenues (In thousands)
Three monthsended
Three monthsended
Twelvemonths ended
Twelvemonths ended
December 25, 2016
December 27, 2015
December 25,2016
December 27, 2015
Total revenues from continuing operations $ 333,584 $
333,649 $ 1,255,356 $ 1,195,815 Revenue adjustment for material
acquisitions(1) - 2,114 - 92,341 Same
Store Revenues $ 333,584 $ 335,763 $ 1,255,356 $ 1,288,156
(1) Material acquisitions include Halifax, Stephens (less Las
Vegas), Columbus, Dolan, and Erie.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221005645/en/
New Media Investment Group Inc.Ashley Higgins,
212-479-3160Investor Relationsir@newmediainv.com
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