- Total Revenues of $404.4 million
- Operating income of $12.2 million
- As Adjusted EBITDA of $47.5 million*
- Free Cash Flow of $33.6 million*
- Declared second quarter dividend of $0.38
- Today announced the acquisition of Gannett in a concurrent
press release. Management will host an investor call about the
transaction and earnings at 4:15pm ET. The conference call may be
accessed by dialing 1-855-319-1124 (from within the U.S.) or
1-703-563-6359 (from outside of the U.S.) 10 minutes prior to the
scheduled start of the call; please reference access code
“3747329”. A simultaneous webcast of the conference call will be
accessible to the public on a listen-only basis through each
company’s website. Please visit www.newmediainv.com and
www.gannett.com.
New Media Investment Group Inc. (NYSE: NEWM) today reported its
financial results for the second quarter ended June 30, 2019.
($ in million, except per share)
GAAP
Reporting
Q2
2019
Revenues
$ 404.4
Operating income
$ 12.2
Net income attributable to New Media
$ 2.8
Non-GAAP
Reporting*
Q2
2019
As Adjusted EBITDA
$ 47.5
Free Cash Flow
$ 33.6
*For definitions and reconciliations of Non-GAAP Reporting
measures, please refer to the Non-GAAP Financial Measures Note and
reconciliations below.
“Our results this quarter were in line with our expectations and
reflect improvement over the first quarter in organic same store
revenue by fifty basis points. Our growth businesses continue to
perform well, with revenue at GateHouse Live up 82.9% over the
prior year. Circulation revenue trends were in line with the first
quarter and we continue to see strength in our strategy to grow
subscribers, with digital subscriptions of 195,000, up 54.6% to
prior year,” said Michael Reed, New Media President and Chief
Executive Officer.
“As Adjusted EBITDA and Free Cash Flow were strong in the
quarter at $47.5 million and $33.6 million respectively. We are
also very excited to announce this morning our agreement to acquire
Gannett, which will create the leading media and marketing services
company in the U.S. The combined company will be well positioned to
accelerate its digital transformation and unlock meaningful
shareholder value through synergies.”
Second Quarter 2019 Financial
Results
New Media recorded total revenues of $404.4 million for the
quarter, up 4.0% compared to the prior year, and down 6.9% on an
organic same store basis. The same store trend was an improvement
of fifty basis points over the first quarter.
Traditional Print advertising revenue for the quarter decreased
15.3% on an organic same store basis compared to the prior year.
This decline was fifty basis points worse than the first
quarter.
Digital revenue increased 12.2% on a reported basis from the
prior year to $51.2 million, representing 12.7% of total revenue in
the second quarter. UpCurve generated $27.3 million in revenue, an
increase of 13.7% as compared with the prior year on a reported
basis.
Circulation revenue decreased 5.5% on an organic same store
basis, which was in line with the first quarter trend. Our focus on
growing subscriber volumes continues to perform well with
digital-only subscribers growing to 195,000, an increase of 54.6%
compared to the prior year.
Commercial Print, Distribution and Events revenue increased 9.7%
compared to the prior year on an organic same store basis, driven
by the 82.9% growth of GateHouse Live and Promotions. The second
quarter typically is the largest for that business.
Operating income was $12.2 million for the quarter and Net
income attributable to New Media was $2.8 million for the
quarter.
As Adjusted EBITDA and Free Cash Flow were $47.5 million and
$33.6 million, respectively, for the quarter.
Second Quarter 2019
Dividend
New Media’s Board of Directors declared a second quarter 2019
cash dividend of $0.38 per share of common stock. The dividend is
payable on August 28, 2019 to shareholders of record as of the
close of business on August 20, 2019.
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.
Earnings Conference Call
In light of today’s announcement of the agreement to acquire
Gannett Co., Inc., New Media’s management will host a conference
call to discuss the transaction and earnings on Monday, August 5,
2019 at 4:15 P.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. 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.) 10
minutes prior to the scheduled start of the call; please reference
access code “3747329”. A simultaneous webcast of the conference
call will be accessible to the public on a listen-only basis
through each company’s website. Please visit www.newmediainv.com
and www.gannett.com.
The webcast replay of the conference call will also be available
approximately two hours following the completion of the call on the
Investor Relation section of New Media’s website.
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 to our small and medium
business partners. The Company is one of the largest publishers of
locally based print and online media in the United States as
measured by our 154 daily publications. As of June 30, 2019, New
Media operates in over 600 markets across 39 states reaching over
21 million people on a weekly basis and serves over 200,000
business customers.
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 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 statements in this communication may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that reflect New Media’s
current views regarding, among other things, the proposed
transaction between New Media and Gannett, the expected timetable
for completing the proposed transaction, the benefits and synergies
of the proposed transaction and future opportunities for the
combined company, as well as other statements that are other than
historical fact. Words such as “anticipate(s),” “expect(s),”
“intend(s),” “plan(s),” “target(s),” “project(s),” “believe(s),”
“will,” “aim,” “would,” “seek(s),” “estimate(s)” and similar
expressions are intended to identify such forward-looking
statements.
Forward-looking statements are based on management’s current
expectations and beliefs and are subject to a number of known and
unknown risks, uncertainties and other factors that could lead to
actual results materially different from those described in the
forward-looking statements. New Media can give no assurance that
its expectations will be attained. The actual results, liquidity
and financial condition may differ from the anticipated results,
liquidity and financial condition indicated in these
forward-looking statements. These forward-looking statements are
not a guarantee of future performance and involve risks and
uncertainties, and there are certain important factors that could
cause actual results to differ, possibly materially from
expectations or estimates reflected in such forward-looking
statements, including, among others:
- continued declines in advertising and circulation revenues,
economic conditions in the markets in which New Media operates,
including natural disasters, tariffs and other factors affecting
economic conditions generally, competition from other media
companies;
- the possibility of insufficient interest in New Media's digital
and other businesses, 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;
- New Media's and Gannett's ability to consummate the proposed
transaction and to meet expectations regarding the timing and
completion of the proposed transaction;
- the satisfaction or waiver of the conditions to the completion
of the proposed transaction, including the receipt of the required
approval of New Media’s stockholders and Gannett’s stockholders
with respect to the proposed transaction and the receipt of
regulatory clearances required to consummate the proposed
transaction, in each case, on the terms expected or on the
anticipated schedule;
- the risk that the parties may be unable to achieve the
anticipated benefits of the proposed transaction, including
synergies and operating efficiencies, within the expected
time-frames or at all;
- the risk that the committed financing necessary for the
consummation of the proposed transaction is unavailable at the
closing, and that any replacement financing may not be available on
similar terms, or at all;
- the risk that the businesses will not be integrated
successfully or that integration may be more difficult,
time-consuming or costly than expected;
- the risk that operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected following the proposed
transaction;
- general economic and market conditions;
- the retention of certain key employees; and
- the combined company’s ability to grow its digital marketing
and business services initiatives, and grow its digital audience
and advertiser base.
Additional risk factors that could cause actual results to
differ materially from expectations include, but are not limited
to, the risks identified by New Media in its most recent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q and Current
Reports on Form 8-K. Such forward-looking statements speak only as
of the date on which they are made. Except to the extent required
by law, New Media expressly disclaims any obligation to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in their expectations with
regard thereto or change in events, conditions or circumstances on
which any statement is based.
No Offer or Solicitation
This communication is neither an offer to sell, nor a
solicitation of an offer to buy any securities, the solicitation of
any vote or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Additional Information and Where to
Find It
This communication may be deemed to be solicitation material in
respect of the proposed transaction between the Company and
Gannett. The proposed transaction will be submitted to the
Company’s stockholders and Gannett’s stockholders for their
consideration. In connection with the proposed transaction, the
Company intends to file with the SEC a registration statement on
Form S-4 (the “Registration Statement”), which will include a
prospectus with respect to shares of the Company’s common stock to
be issued in the proposed transaction and a joint proxy statement
for the Company’s stockholders and Gannett’s stockholders (the
“Joint Proxy Statement”), and each of the Company and Gannett will
mail the Joint Proxy Statement to their respective stockholders and
file other documents regarding the proposed acquisition with the
SEC. Stockholders of the Company and Gannett are urged to read
all relevant documents filed with the SEC, including the
Registration Statement and the Joint Proxy Statement, as well as
any amendments or supplements to these documents, carefully when
they become available because they will contain important
information about the proposed transaction. The Registration
Statement, the Joint Proxy Statement and other relevant materials
(when they become available) and any other documents filed or
furnished by the Company or Gannett with the SEC may be obtained
free of charge at the SEC’s web site, http://www.sec.gov. In
addition, security holders will be able to obtain free copies of
the Registration Statement and the Joint Proxy Statement from the
Company upon written request to the Company at 1345 Avenue of the
Americas, Floor 45, New York, NY 10105, or by calling (212)
479-3160.
Participants in
Solicitation
The Company and Gannett and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the holders of shares of the Company
common stock and holders of shares of Gannett common stock in
respect of the proposed transaction. Information about the
directors and executive officers of the Company is set forth in the
proxy statement for the Company’s 2019 Annual Meeting of
Stockholders, which was filed with the SEC on April 12, 2019.
Information about the directors and executive officers of Gannett
is set forth in the proxy statement for Gannett’s 2019 Annual
Meeting of Stockholders, which was filed with the SEC on March 26,
2019. Investors may obtain additional information regarding the
interest of such participants by reading the Registration Statement
and the Joint Proxy Statement (once available). You may obtain free
copies of these documents using the sources indicated above.
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In
thousands, except share data) June 30,
2019 December 30, 2018 Assets Current
assets: Cash and cash equivalents
$
20,029
$
48,651
Restricted cash
3,155
4,119
Accounts receivable, net of allowance for doubtful accounts of
$8,694 and$8,042 at June 30, 2019 and December 30, 2018,
respectively
150,675
174,274
Inventory
19,647
25,022
Prepaid expenses
30,506
23,935
Other current assets
20,733
21,608
Total current assets
244,745
297,609
Property, plant, and equipment, net of accumulated depreciation of
$243,304and $219,256 at June 30, 2019 and December 30, 2018,
respectively
330,942
339,608
Operating lease right-of-use asset, net
109,521
-
Goodwill
317,151
310,737
Intangible assets, net of accumulated amortization of $119,561 and
$101,543at June 30, 2019 and December 30, 2018, respectively
474,900
486,054
Other assets
10,619
9,856
Total assets
$
1,487,878
$
1,443,864
Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term debt
$
3,296
$
12,395
Current portion of operating lease liabilities
14,492
-
Accounts payable
12,454
16,612
Accrued expenses
98,864
113,650
Deferred revenue
113,259
105,187
Total current liabilities
242,365
247,844
Long-term liabilities: Long-term debt
434,672
428,180
Long-term operating lease liabilities
102,431
-
Deferred income taxes
6,486
8,282
Pension and other postretirement benefit obligations
23,747
24,326
Other long-term liabilities
10,817
16,462
Total liabilities
820,518
725,094
Redeemable noncontrolling interests
1,098
1,547
Stockholders’ equity: Common stock, $0.01 par value, 2,000,000,000
shares authorized;60,806,451 shares issued and 60,481,674 shares
outstanding atJune 30, 2019; 60,508,249 shares issued and
60,306,286 sharesoutstanding at December 30, 2018
608
605
Additional paid-in capital
677,574
721,605
Accumulated other comprehensive loss
(6,938
)
(6,881
)
(Accumulated deficit) retained earnings
(2,409
)
3,767
Treasury stock, at cost, 324,777 and 201,963 shares at June 30,
2019and December 30, 2018, respectively
(2,573
)
(1,873
)
Total stockholders' equity
666,262
717,223
Total liabilities, redeemable noncontrolling interests and
stockholders' equity
$
1,487,878
$
1,443,864
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In thousands,
except per share data) Three months ended
Six months ended June 30, 2019 July 1, 2018
June 30, 2019 July 1, 2018 Revenues:
Advertising
$
184,767
$
187,609
$
363,462
$
350,868
Circulation
150,850
144,536
303,015
274,527
Commercial printing and other
68,770
56,657
125,510
104,172
Total revenues
404,387
388,802
791,987
729,567
Operating costs and expenses: Operating costs
233,407
217,775
462,902
414,164
Selling, general, and administrative
130,040
126,837
261,548
245,656
Depreciation and amortization
23,328
19,935
44,251
39,182
Integration and reorganization costs
3,230
1,749
7,342
4,179
Impairment of long-lived assets
1,262
-
2,469
-
Net loss (gain) on sale or disposal of assets
947
(808
)
2,737
(3,979
)
Operating income
12,173
23,314
10,738
30,365
Interest expense
10,212
8,999
20,346
17,351
Other income
(311
)
(337
)
(571
)
(857
)
Income (loss) before income taxes
2,272
14,652
(9,037
)
13,871
Income tax (benefit) expense
(343
)
2,946
(2,297
)
2,830
Net income (loss)
2,615
11,706
(6,740
)
11,041
Net loss attributable to redeemable noncontrolling interests
(200
)
-
(449
)
-
Net income (loss) attributable to New Media
$
2,815
$
11,706
$
(6,291
)
$
11,041
Income (loss) per share: Basic: Net income (loss)
attributable to New Media
$
0.05
$
0.20
$
(0.10
)
$
0.20
Diluted: Net income (loss) attributable to New Media
$
0.05
$
0.20
$
(0.10
)
$
0.20
Dividends declared per share
$
0.38
$
0.37
$
0.76
$
0.74
Comprehensive income (loss)
$
2,588
$
11,638
$
(6,797
)
$
10,906
Comprehensive loss attributable to redeemable noncontrolling
interests
(199
)
-
(448
)
-
Comprehensive income (loss) attributable to New Media
$
2,787
$
11,638
$
(6,349
)
$
10,906
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands) Six months ended June
30, 2019 July 1, 2018 Cash flows from operating
activities: Net (loss) income
$
(6,740
)
$
11,041
Adjustments to reconcile net (loss) income to net cash providedby
operating activities: Depreciation and amortization
44,251
39,182
Non-cash compensation expense
1,843
1,832
Non-cash interest expense
689
1,078
Deferred income taxes
(1,796
)
2,264
Net loss (gain) on sale or disposal of assets
2,737
(3,979
)
Impairment of long-lived assets
2,469
-
Pension and other postretirement benefit obligations
(649
)
(984
)
Changes in assets and liabilities: Accounts receivable, net
26,707
15,591
Inventory
6,287
(4,858
)
Prepaid expenses
(6,035
)
(3,777
)
Other assets
(109,775
)
5,255
Accounts payable
(4,962
)
(806
)
Accrued expenses
3,328
(6,845
)
Deferred revenue
2,254
1,452
Other long-term liabilities
97,045
1,157
Net cash provided by operating activities
57,653
57,603
Cash flows from investing activities: Acquisitions, net of cash
acquired
(39,353
)
(149,604
)
Purchases of property, plant, and equipment
(4,934
)
(5,041
)
Proceeds from sale of real estate, other assets and insurance
7,107
12,585
Net cash used in investing activities
(37,180
)
(142,060
)
Cash flows from financing activities: Payment of debt issuance
costs
-
(500
)
Borrowings under term loans
-
49,750
Repayments under term loans
(11,296
)
(2,062
)
Borrowings under revolving credit facility
102,900
-
Repayments under revolving credit facility
(94,900
)
-
Payment of offering costs
-
(152
)
Issuance of common stock, net of underwriters' discount
-
111,099
Purchase of treasury stock
(700
)
(753
)
Payment of dividends
(46,066
)
(42,226
)
Net cash (used in) provided by financing activities
(50,062
)
115,156
Effect of exchange rate changes on cash and cash equivalents
3
-
Net (decrease) increase in cash, cash equivalents andrestricted
cash
(29,586
)
30,699
Cash, cash equivalents and restricted cash at beginning of period
52,770
46,162
Cash, cash equivalents and restricted cash at end of period
$
23,184
$
76,861
NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES
AS ADJUSTED EBITDA AND FREE CASH FLOW (In thousands,
except share data) Three months ended Six
months ended June 30, 2019 July 1, 2018 June
30, 2019 July 1, 2018 Net income (loss)
$
2,615
$
11,706
$
(6,740
)
$
11,041
Income tax (benefit) expense
(343
)
2,946
(2,297
)
2,830
Interest expense
10,212
8,999
20,346
17,351
Impairment of long-lived assets
1,262
-
2,469
-
Depreciation and amortization
23,328
19,935
44,251
39,182
Adjusted EBITDA
37,074
43,586
58,029
70,404
Non-cash compensation and other expense
6,255
4,224
12,454
10,674
Integration and reorganization costs
3,230
1,749
7,342
4,179
Net loss (gain) on sale or disposal of assets
947
(808
)
2,737
(3,979
)
As Adjusted EBITDA
47,506
48,751
80,562
81,278
Interest Paid(1)
(9,928
)
(8,652
)
(19,495
)
(16,332
)
Net capital expenditures
(2,692
)
(3,112
)
(4,934
)
(5,041
)
Pension payments
(373
)
(615
)
(649
)
(984
)
Cash taxes(2)
(908
)
(699
)
(921
)
(699
)
Free Cash Flow
$
33,605
$
35,673
$
54,563
$
58,222
Basic weighted average shares outstanding
60,030,748
59,279,159
59,997,891
56,106,899
Diluted weighted average shares outstanding
60,030,748
59,720,010
59,997,891
56,486,474
(1) Average interest paid during 2019 for the six month period. (2)
Cash paid, net of refunds.
NEW MEDIA INVESTMENT GROUP
INC. AND SUBSIDIARIES
SAME STORE AND ORGANIC SAME STORE REVENUES (In
thousands) Three months ended Six months
ended June 30, 2019 July 1, 2018 June 30,
2019 July 1, 2018 Total revenues from
continuing operations
$
404,387
$
388,802
$
791,987
$
729,567
Revenue adjustment for material acquisitions
-
-
-
-
Same Store Revenues
404,387
388,802
791,987
729,567
Tuck-in Acquisitions(1)
(47,196
)
(4,959
)
(120,255
)
(6,034
)
Organic Same Store Revenues
$
357,191
$
383,843
$
671,732
$
723,533
(1)
Tuck-in acquisitions are adjusted to remove non-material
acquisitions and non-material divestitures, and to adjust for
Commercial Print revenues that are now intercompany.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190805005550/en/
Ashley Higgins, Investor Relations ir@newmediainv.com (212)
479-3160 Source: New Media Investment Group Inc.
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