New Media Investment Group Inc. (“New Media” or the “Company”,
NYSE: NEWM) today reported its financial results for the second
quarter ended June 25, 2017.
Second Quarter 2017 Financial
Summary
- New Media declares a cash dividend of
$0.35 per common share
- Total revenues of $322.9 million were
up 2.6% to prior year on a reported basis, and down 5.4% to the
prior year on an organic same store basis
- Digital revenue increased to $34.8
million, or up 9.0% to prior year on a reported basis
- As Adjusted Expenses of $279.6 million
were up 1.8% to prior year, and Organic Same Store Expenses were
down 6.3% to prior year*
- Net loss of $21.7 million, negatively
impacted by approximately $36.6 million of non-cash charges,
primarily $27.4 million of intangible impairments and $8.0 million
of book tax expense. Excluding these items, the Company’s result
was $14.9 million of Net income.
- As Adjusted EBITDA of $43.3 million*,
up 8.0% to prior year
- Free Cash Flow of $33.7 million*, up
15.8% to prior year
Second Quarter 2017 & Subsequent
Business Highlights
- Closed the acquisition of Calkins Media
on June 30, 2017 for $17.5 million, within our stated acquisition
range of 3.5x-4.5x seller’s LTM As Adjusted EBITDA
- Closed the sale of the Medford, Oregon
Mail Tribune for $15.0 million on June 2, 2017 for above 7x LTM As
Adjusted EBITDA
- Completed repurchases of 391,120 shares
at a weighted average execution price of $12.77 per share pursuant
to previously announced share repurchase program
- Liquidity, consisting of cash on the
balance sheet and undrawn revolver, of $194.3 million
- Closed on an amendment to our term loan
extending the maturity date to July 14, 2022, increasing the
outstanding term loan by $20 million, and increasing the accordion
to $80 million
- Rebranded Propel Business Services to
UpCurve and Propel Marketing to ThriveHive
- UpCurve, our SMB solutions provider,
had revenue of $17.3 million, a 44.4% increase as compared to prior
year∆. LTM revenue for this business is now $63.1 million.
Summary of Second
Quarter 2017 Results
($ in million, except per share)
GAAP
Reporting
Revenues $ 322.9 Operating (loss) $ (6.5) Net
(loss) $ (21.7)
Non-GAAP
Reporting*
As Adjusted EBITDA $ 43.3 Free Cash Flow $ 33.7
*For definitions and reconciliations of Non-GAAP Reporting
measures, please refer to the Non-GAAP Financial Measures Note and
reconciliations below.
∆ Comparison to prior year reported Propel Marketing
revenue.
Michael E. Reed, New Media President and Chief Executive Offer,
commented, “We were pleased with the direction of our second
quarter operating results. We saw an improvement in the trends for
most of the important segments of our business. Our organic same
store revenue trend decline improved to (5.4)% after being (6.2)%
the previous two quarters. Further, as we forecasted on our first
quarter earnings call, As Adjusted EBITDA and Free Cash Flow both
showed growth over the prior year, reversing the declines we have
seen the past few quarters. We feel very good about the initiatives
we have in place across the Company and that they will positively
impact future revenue, costs, and cash flow.
“Our small and medium business solutions platform was rebranded
to UpCurve this quarter, better reflecting the goal we have for our
products and services to help SMBs grow. UpCurve continues to show
strong growth in terms of both revenues and customers. Based on our
internal forecasts for the third quarter, UpCurve is now close
to $90 million a year in revenue run rate, and we believe it
will be a rapidly growing cash flow contributor as we continue to
scale.”
Mr. Reed went on to say, “We were pleased to get a few deals
done in the second quarter and subsequent, closing on the sale of
the Medford, Oregon Mail Tribune for $15 million at a very
attractive multiple, and acquiring the local media business in
Pennsylvania from the Calkins family for $17.5 million. Even more
importantly, we feel very good about our pipeline for acquisitions
for the back half of 2017.
“We have also had some other positive developments since our
last report including a $100 million share repurchase program that
we instituted. We bought back over 390,000 shares during the
quarter at a weighted average price of $12.77 per share. We also
recently completed an amendment to our existing credit facility,
extending the tenor of the term loan by two years to July 2022,
increasing the size of the term loan by $20 million, and increasing
our accordion to $80 million. Finally, this week the board
authorized a second quarter dividend of $0.35 per share.
“Our optimism for the second half of the year and beyond is
beginning to be validated by the progress in our performance that
we saw during the second quarter. With available liquidity of
$194.3 million at the end of the second quarter, we believe we are
well positioned to deliver attractive future returns for
shareholders.”
Second Quarter 2017 Financial
Results
New Media recorded total revenues of $322.9 million for the
quarter, up 2.6% to prior year and a decrease of 5.4% on an organic
same store basis. Traditional Print Advertising decreased 12.3% on
an organic same store basis, an improvement from the first quarter
trend, but still reflecting the challenged environment for print
advertising.
Digital revenue closed at $34.8 million, an increase of 9.0% to
prior year. UpCurve generated $17.3 million in revenue, an increase
of 44.4% to the prior year and now comprises 52.2% of total digital
revenue.
Circulation revenue, one of our larger and more stable revenue
categories, was flat on an organic same store basis. Commercial
Print, Distribution, and Events revenue increased 1.0% to the prior
year on an organic same store basis.
New Media continues to be committed to finding ways to operate
more efficiently and reduce our expenses to preserve cash flows. In
the second quarter, Organic Same Store Expenses decreased 6.3% to
the prior year, which was more than enough to offset the decline in
organic same store revenues, thus driving the increase in As
Adjusted EBITDA and Free Cash Flow.
Operating loss was $6.5 million and Net loss was $21.7 million,
both of which were negatively impacted by approximately $36.6
million of non-cash charges, primarily $27.4 million of intangible
impairments and $8.0 million of book tax expense. Excluding these
items, the Company’s result was $14.9 million in Net income. The
impairment is calculated at the level of each of our four reporting
units, where two units have impairment and in total there is more
than $175 million excess of fair value over book value.
As Adjusted EBITDA was $43.3 million, which is up 8.0% to prior
year and Free Cash Flow was $33.7 million, which is up 15.8% to
prior year.
Second Quarter 2017
Dividend
New Media’s Board of Directors declared a second quarter 2017
cash dividend of $0.35 per share of common stock. The dividend is
payable on August 17, 2017 to shareholders of record as of the
close of business on August 9, 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.
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 Thursday,
July 27, 2017 at 10:00 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 Second 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 three hours following the call’s completion
through 11:59 P.M. Eastern Time on Thursday, August 10, 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
“73796611.”
About New Media Investment Group
Inc.
New Media supports small to mid-size communities by providing
locally-focused print and digital content to its consumers and
premier marketing and technology solutions for our small and medium
businesses partners. 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 June 25, 2017, the
Company operates in over 555 markets across 36 states. New Media’s
portfolio of products, as of June 25, 2017, include over 630
community publications and over 550 websites, serve more than
225,000 business advertising accounts, and reaches over 21 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 and Organic Same Store
Revenues
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 are not considered material. Organic
same store revenues are same store revenues adjusted to remove
non-material acquisitions and non-material divestitures, and to
adjust for Commercial Print revenues that are now intercompany.
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 As Adjusted and Organic Same Store
Expenses, 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.
As Adjusted and Organic Same Store
Expenses
As Adjusted Expenses are calculated as reported revenue less As
Adjusted EBITDA. Organic Same Store Expenses are calculated as As
Adjusted Expenses adjusted to remove expenses related to
non-material acquisitions and non-material divestitures. New
Media’s management believes this metric is a useful indicator of
cost reduction performance, as it compares the level of expenses in
the current period versus the prior period for the same assets.
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 our ability to execute on our operational strategy,
expected revenue trends, including expectations for revenue growth,
and our ability to continue to grow our dividend and deliver
shareholder returns, 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,
growing our digital business and revenues including UpCurve,
realizing revenue from our pipeline of commercial print contracts,
diversifying our revenue streams away from traditional print media,
our ability to lower expenses including by leveraging our scale,
our ability to identify, implement, and realize expense savings and
our ability to grow Free Cash Flow and our ability to repurchase
shares pursuant to the announced share repurchase program. 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
Condensed Consolidated Balance Sheets (In thousands,
except share data) June 25,
2017
December 25,2016
(unaudited) Assets
Current assets: Cash and cash equivalents $ 154,327 $ 172,246
Restricted cash 3,406 3,406
Accounts receivable, net of allowance for
doubtful accounts of $5,652 and $5,478 at June 25,
2017 and December 25, 2016, respectively
125,631 138,115 Inventory 17,218 18,167 Prepaid expenses 22,824
18,720 Other current assets 20,869 19,694
Total current assets 344,275 370,348
Property, plant, and equipment, net of
accumulated depreciation of $149,026
and $130,839 at June 25,
2017 and December 25, 2016, respectively
361,529 381,319 Goodwill 200,735 227,954
Intangible assets, net of accumulated
amortization of $54,864 and $43,632 at June 25,
2017 and December 25, 2016, respectively
340,790 351,477 Other assets 5,991 4,932
Total assets $ 1,253,320 $ 1,336,030
Liabilities and Stockholders' Equity Current liabilities:
Current portion of long-term debt $ 4,387 $ 14,387 Accounts payable
25,492 19,105 Accrued expenses 70,483 84,389 Deferred revenue
78,658 77,987 Total current liabilities
179,020 195,868 Long-term liabilities: Long-term debt 338,498
338,860 Long-term liabilities, less current portion 13,640 12,597
Deferred income taxes 8,877 7,786 Pension and other postretirement
benefit obligations 25,038 25,946 Total
liabilities 565,073 581,057
Stockholders’ equity:
Common stock, $0.01 par value,
2,000,000,000 shares authorized at June 25, 2017
and December 25, 2016; 53,350,746 and
53,543,226 issued at June 25, 2017 and December
25, 2016, respectively
527
531 Additional paid-in capital 719,957 742,543 Accumulated other
comprehensive loss (3,921 ) (3,977 ) (Accumulated deficit) retained
earnings (27,272 ) 16,293
Treasury stock, at cost, 112,809 and
46,438 shares at June 25, 2017 and December 25,
2016, respectively
(1,044 ) (417 ) Total stockholders' equity
688,247 754,973 Total liabilities and
stockholders\' equity $ 1,253,320 $ 1,336,030
NEW MEDIA INVESTMENT GROUP INC. AND
SUBSIDIARIES Unaudited Condensed Consolidated Statements of
Operations and Comprehensive (Loss) Income (In
thousands, except per share data)
Three monthsendedJune 25,
2017
Three monthsendedJune 26,
2016
Six monthsendedJune 25,
2017
Six monthsendedJune 26,
2016
Revenues: Advertising $ 167,381 $ 174,153 $ 322,946 $
337,791 Circulation 110,563 104,094 221,368 207,971 Commercial
printing and other 44,929 36,583
86,083 69,172 Total revenues 322,873 314,830
630,397 614,934 Operating costs and expenses: Operating costs
177,020 172,557 354,811 347,010 Selling, general, and
administrative 106,497 106,029 212,529 206,113 Depreciation and
amortization 18,760 17,258 36,364 33,349 Integration and
reorganization costs 2,237 1,409 4,607 2,335 Impairment of
long-lived assets - - 6,485 - Goodwill and mastheads impairment
27,448 - 27,448 -
(Gain) loss on sale or disposal of
assets
(2,634 ) 831 (2,546 ) 2,351
Operating (loss) income (6,455 ) 16,746 (9,301 ) 23,776
Interest expense 7,217 7,524 14,435 14,878 Other income (expense)
60 (90 ) 12 (254 ) (Loss)
income before income taxes (13,732 ) 9,312 (23,748 ) 9,152 Income
tax expense (benefit) 7,955 (71 ) 1,624
(5,198 ) Net (loss) income (21,687 )
9,383 (25,372 ) 14,350
(Loss) income per share: Basic: Net (loss) income $ (0.41 ) $ 0.21
$ (0.48 ) $ 0.32 Diluted: Net (loss) income $ (0.41 ) $ 0.21 $
(0.48 ) $ 0.32 Dividends declared per share $ 0.35 $ 0.33 $
0.70 $ 0.66 Comprehensive (loss) income $ (21,659 ) $ 9,400
$ (25,316 ) $ 14,391
NEW MEDIA INVESTMENT
GROUP INC. AND SUBSIDIARIES Consolidated Statements of Cash
Flows (In thousands)
Six monthsended
Six monthsended
June 25, 2017 June 26, 2016 Cash flows from
operating activities: Net (loss) income $ (25,372 ) $ 14,350
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization 36,364 33,349 Non-cash compensation
expense 1,595 1,237 Non-cash interest expense 1,392 1,392 Deferred
income taxes 1,091 (5,527 ) (Gain) loss on sale or disposal of
assets (2,546 ) 2,351 Non-cash charge to investments 250 -
Impairment of long-lived assets 6,485 - Goodwill and mastheads
impairment 27,448 -
Pension and other postretirement benefit
obligations
(877 ) (973 ) Changes in assets and liabilities: Accounts
receivable, net 15,519 20,494 Inventory 1,043 (1,166 ) Prepaid
expenses (4,012 ) (3,087 ) Other assets (1,865 ) (2,763 ) Accounts
payable 6,001 (1,164 ) Accrued expenses (13,619 ) (28,693 )
Deferred revenue (301 ) 268 Other long-term liabilities
1,043 756 Net cash provided by operating
activities 49,639 30,824 Cash flows
from investing activities: Purchases of property, plant, and
equipment (4,824 ) (5,443 ) Proceeds from sale of publications and
other assets 14,663 3,076 Acquisitions, net of cash acquired
(22,060 ) (82,819 ) Net cash used in investing activities
(12,221 ) (85,186 ) Cash flows from financing
activities: Repayments under term loans (11,754 ) (1,755 ) Payment
of offering costs (431 ) - Purchase of treasury stock (627 ) (353 )
Repurchase of common stock (5,001 ) - Payment of dividends
(37,524 ) (29,479 ) Net cash used in financing activities
(55,337 ) (31,587 ) Net decrease in cash and cash
equivalents (17,919 ) (85,949 ) Cash and cash equivalents at
beginning of period 172,246 146,638
Cash and cash equivalents at end of period $ 154,327 $
60,689
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
Same Store and Organic Same Store Revenues (In
thousands)
Three monthsended
Three monthsended
Six monthsended
Six monthsended
June 25, 2017 June 26, 2016 June 25, 2017
June 26, 2016 Total revenues from continuing
operations $ 322,873 $ 314,830 $ 630,397 $ 614,934 Revenue
adjustment for material acquisitions(1) - -
- 773 Same Store Revenues
322,873 314,830 630,397 615,707 Tuck-in Acquisitions(2)
(28,298 ) (3,415 ) (54,382 ) (4,100 ) Organic
Same Store Revenues $ 294,575 $ 311,415 $ 576,015
$ 611,607 (1) Material acquisitions include
Erie.
(2) Tuck in acquisitions are adjusted to
remove non-material acquisition and non-material divestitures, and
to adjust for Commercial Print revenues
the now intercompany
NEW MEDIA INVESTMENT GROUP INC. AND
SUBSIDIARIES As Adjusted EBITDA (In thousands, except
share data)
Three months endedJune
25, 2017
Three months endedJune
26, 2016
Six monthsendedJune 25,
2017
Six monthsendedJune 26,
2016
Net (loss) income $ (21,687 ) $ 9,383 $ (25,372 ) $ 14,350
Income tax expense (benefit) 7,955 (71 ) 1,624 (5,198 ) Interest
expense 7,217 7,524 14,435 14,878 Impairment of long-lived assets -
- 6,485 - Goodwill and mastheads impairment 27,448 - 27,448 -
Depreciation and amortization 18,760 17,258
36,364 33,349 Adjusted EBITDA
from continuing operations 39,693 34,094 60,984 57,379 Non-cash
compensation and other expense 3,980 3,750 6,922 7,113 Integration
and reorganization costs 2,237 1,409 4,607 2,335 (Gain) loss on
sale or disposal of assets (2,634 ) 831
(2,546 ) 2,351 As Adjusted EBITDA 43,276 40,084
69,967 69,178 Interest Paid(1) (6,507 ) (6,696 ) (13,170 ) (13,469
) Net capital expenditures (2,424 ) (2,855 ) (4,824 ) (5,443 )
Pension payments (455 ) (913 ) (877 ) (973 ) Cash taxes(2)
(223 ) (549 ) (236 ) (1,604 ) Free Cash Flow
33,667 29,071 50,860
47,689 Basic weighted average shares outstanding
53,119,530 44,528,457 53,153,138 44,505,991 Diluted weighted
average shares outstanding 53,119,530 44,912,694 53,153,138
44,890,922 (1) Average interest paid during 2017 for the
three and six month period, respectively. (2) Cash paid, net of
refunds.
NEW MEDIA INVESTMENT GROUP
INC. AND SUBSIDIARIES As Adjusted and Organic Same Store
Expenses (In thousands)
Three monthsended
Three monthsended
June 25, 2017 June 26, 2016 Net (loss) income
(21,687 ) 9,383 Income tax expense (benefit) 7,955 (71 ) Interest
expense 7,217 7,524 Impairment of long-lived assets - - Goodwill
and mastheads impairment 27,448 - Depreciation and amortization
18,760 17,258 Adjusted EBITDA from
continuing operations 39,693 34,094 Non-cash compensation and other
expense 3,980 3,750 Integration and reorganization costs 2,237
1,409 (Gain) loss on sale or disposal of assets (2,634 )
831 As Adjusted EBITDA 43,276 40,084 Reported
Revenues 322,873 314,830 As Adjusted
Expenses 279,597 274,746 Tuck-in Acquisitions(1) (25,030 )
(3,039 ) Organic Same Store Expenses $ 254,567 $
271,707
(1) Tuck in acquisitions are adjusted to
remove non-material acquisitions and non-material divestitures.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005490/en/
New Media Investment Group Inc.Investor RelationsAshley
Higgins, 212-479-3160ir@newmediainv.com
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