The New York Times Company (NYSE:NYT) announced today first-quarter 2014
diluted earnings per share from continuing operations of $.02 compared
with $.04 in the same period of 2013. Adjusted diluted earnings per
share from continuing operations (as discussed below) were $.07 in the
first quarter of 2014 compared with $.08 in the first quarter of 2013.
The Company had an operating profit of $22.1 million in the first
quarter of 2014 compared with $28.1 million in the same period of 2013,
with the decline mainly resulting from investments associated with the
Company’s strategic growth initiatives. Adjusted operating profit was
$56.6 million in the first quarter of 2014 compared with $57.1 million
in the first quarter of 2013.
Total revenues increased 2.6 percent in the first quarter of 2014, with
advertising revenues up 3.4 percent and circulation revenues up 2.1
percent. The Company added more net digital subscribers in the first
quarter of 2014 than in any quarter in 2013. The total number of paid
digital-only subscribers at the end of the first quarter was
approximately 799,000, an increase of 39,000 compared with the end of
the fourth quarter of 2013.
“2014 is off to a good start, with revenue growth across the board in
the first quarter followed by the launch of new digital subscription
products at the beginning of April,” said Mark Thompson, president and
chief executive officer. “For the first time in several years, we saw
quarterly growth in both print and digital advertising revenues, with
total advertising revenues increasing by more than 3 percent
year-over-year. We’re pleased with this result, which we believe
demonstrates the progress we are making in both performance and
innovation in advertising. Paid Posts, our native advertising
initiative, launched very successfully during the quarter. However, we
are certainly not claiming victory in advertising yet; we expect
continued month-to-month volatility and recognize that we will face some
significantly tougher year-on-year comparisons as the year goes on.
“Just after the quarter’s end we began the rollout of NYT Now and Times
Premier, expanding the target market for our digital products and
increasing our ability to monetize our unparalleled journalism and
features across a more comprehensive spectrum of current and potential
subscribers. Our new mobile product, NYT Now, in particular is being
embraced by the market. As we have said previously, we expect these
products to take some time to ramp up, but we are pleased with the
reception thus far and by the continued strength of our core digital
subscription packages, which grew by 18% year-over-year in Q1.”
Comparisons
Unless otherwise noted, all comparisons are for
the first quarter of 2014 to the first quarter of 2013. The results of
the New England Media Group (NEMG), which was sold at the beginning of
the fourth quarter of 2013, are reported within discontinued operations
in 2013.
This release presents certain non-GAAP financial measures, including
diluted earnings per share from continuing operations excluding
severance, non-operating retirement costs and a special item (or
adjusted diluted earnings per share from continuing operations);
operating profit before depreciation, amortization, severance,
non-operating retirement costs and a special item (or adjusted operating
profit); and operating costs before depreciation, amortization,
severance and non-operating retirement costs (or adjusted operating
costs). The exhibits include a discussion of management’s reasons for
the presentation of these non-GAAP financial measures and
reconciliations to the most comparable GAAP financial measures, as well
as an explanation of non-operating retirement costs, which is presented
for the first time in this release.
First-quarter 2014 results included the following special item:
-
A $2.6 million ($1.5 million after tax or $.01 per share) charge for
the early termination of a distribution agreement, which will result
in distribution cost savings for the Company in future periods.
There were no special items in the first quarter of 2013.
The Company had severance costs of $3.1 million ($1.8 million after tax
or $.01 per share) and $4.9 million ($2.9 million after tax or $.02 per
share) in the first quarters of 2014 and 2013, respectively.
Results from Continuing Operations
Revenues
Total revenues increased 2.6 percent to $390.4
million from $380.7 million. Circulation revenues increased 2.1 percent,
advertising revenues were up 3.4 percent and other revenues increased
1.4 percent.
Circulation revenues rose as the Company’s digital subscription
initiatives and the 2014 increase in home-delivery prices at The New
York Times more than offset a decline in print copies sold. Revenues
from the Company’s digital-only subscription packages, e-readers and
replica editions were $40.3 million in the first quarter of 2014, up
13.6 percent from the first quarter of 2013.
Print and digital advertising revenues increased 3.7 percent and 2.2
percent, respectively. Digital advertising revenues were $37.8 million
compared with $37.0 million in the 2013 first quarter.
Operating Costs
Operating costs increased 3.8 percent to
$365.8 million from $352.5 million. Costs rose mainly due to higher
compensation and benefits expenses associated with the strategic growth
initiatives as well as higher retirement costs, partially offset by cost
savings in printing and distribution. Adjusted operating costs increased
3.2 percent to $333.8 million from $323.5 million.
Raw materials costs declined to $22.0 million from $23.8 million due to
both newsprint volume and price declines.
Other Data
Interest Expense, net
Interest expense, net decreased to
$13.3 million from $14.1 million due to a lower level of debt
outstanding as a result of repurchases made in 2013 and higher interest
income.
Income Taxes
The Company had income tax expense of $3.8
million (effective tax rate of 56.9 percent) in the first quarter of
2014 and income tax expense of $5.1 million (effective tax rate of 45.4
percent) in the first quarter of 2013. The foregoing tax rates were
impacted by adjustments to the Company’s reserve for uncertain tax
positions.
Liquidity
As of March 30, 2014, the Company had cash and
marketable securities of approximately $973 million (excluding
restricted cash of approximately $29 million that is mainly subject to
certain collateral requirements for workers’ compensation obligations).
Total debt and capital lease obligations were approximately $685 million.
Capital Expenditures
Capital expenditures totaled
approximately $6 million in the first quarter of 2014.
Outlook
Total circulation revenues are expected to increase
in the low-single digits in the second quarter of 2014 compared with the
second quarter of 2013.
Total advertising revenues in the second quarter of 2014 are expected to
decrease in the mid-single digits compared with the second quarter of
2013 in part because year-over-year comparisons will become more
challenging.
The Company expects second-quarter 2014 operating costs and adjusted
operating costs to each increase in the low- to mid-single digits
compared with the second quarter of 2013 as investments associated with
the Company’s strategic growth initiatives accelerate.
In addition, the Company expects the following on a pre-tax basis in
2014:
-
Results from joint ventures: breakeven,
-
Depreciation and amortization: $75 to $85 million,
-
Interest expense, net: $53 to $57 million, and
-
Capital expenditures: $35 to $45 million.
Conference Call Information
The Company’s first-quarter
2014 earnings conference call will be held on Thursday, April 24 at
11:00 a.m. E.T. To access the call, dial 877-201-0168 (in the U.S.) or
647-788-4901 (international callers). The passcode is 14320771.
Participants should dial in to the conference call approximately 10
minutes before the start time. Online listeners can link to the live
webcast at investors.nytco.com.
An archive of the webcast will be available beginning about two hours
after the call at investors.nytco.com.
The archive will be available for approximately three months. An audio
replay will be available at 855-859-2056 (in the U.S.) and 404-537-3406
(international callers) beginning approximately two hours after the call
until 11:59 p.m. E.T. on Monday, April 28. The passcode is 14320771.
Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve risks and uncertainties that could cause the Company’s actual
results to differ materially from those predicted by such
forward-looking statements. These risks and uncertainties include
changes in the business and competitive environment in which the Company
operates, the impact of national and local conditions and developments
in technology, each of which could influence the levels (rate and
volume) of the Company’s circulation and advertising, the growth of its
digital businesses and the implementation of its strategic growth
initiatives. The Company’s actual results could also be impacted by the
other risks detailed from time to time in its publicly filed documents,
including its Annual Report on Form 10-K for the year ended December 29,
2013. The Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise.
The New York Times Company is a global media organization dedicated to
enhancing society by creating, collecting and distributing high-quality
news and information. The Company includes The New York Times,
International New York Times, NYTimes.com,
INYT.com and
related properties. It is known globally for excellence in its
journalism, and innovation in its print and digital storytelling and its
business model. Follow news about the company at @NYTimesComm or
investor news at @NYT_IR.
|
Exhibits:
|
|
|
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
Footnotes
|
|
|
|
|
|
Reconciliation of Non-GAAP Information
|
|
|
|
|
|
THE NEW YORK TIMES COMPANY
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(Dollars and shares in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
Revenues
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
% Change
|
|
|
Circulation
|
|
|
|
|
$
|
209,723
|
|
|
|
|
$
|
205,482
|
|
|
|
|
2.1
|
%
|
|
|
Advertising(a)
|
|
|
|
|
158,727
|
|
|
|
|
153,538
|
|
|
|
|
3.4
|
%
|
|
|
Other(b)
|
|
|
|
|
21,958
|
|
|
|
|
21,655
|
|
|
|
|
1.4
|
%
|
|
|
Total revenues
|
|
|
|
|
390,408
|
|
|
|
|
380,675
|
|
|
|
|
2.6
|
%
|
|
|
Operating costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production costs
|
|
|
|
|
158,983
|
|
|
|
|
156,734
|
|
|
|
|
1.4
|
%
|
|
|
Selling, general and administrative costs
|
|
|
|
|
186,724
|
|
|
|
|
176,872
|
|
|
|
|
5.6
|
%
|
|
|
Depreciation and amortization
|
|
|
|
|
20,092
|
|
|
|
|
18,938
|
|
|
|
|
6.1
|
%
|
|
|
Total operating costs
|
|
|
|
|
365,799
|
|
|
|
|
352,544
|
|
|
|
|
3.8
|
%
|
|
|
Early termination charge(c)
|
|
|
|
|
2,550
|
|
|
|
|
—
|
|
|
|
|
N/A
|
|
|
Operating profit
|
|
|
|
|
22,059
|
|
|
|
|
28,131
|
|
|
|
|
-21.6
|
%
|
|
|
Loss from joint ventures
|
|
|
|
|
(2,147
|
)
|
|
|
|
(2,870
|
)
|
|
|
|
-25.2
|
%
|
|
|
Interest expense, net
|
|
|
|
|
13,301
|
|
|
|
|
14,071
|
|
|
|
|
-5.5
|
%
|
|
|
Income from continuing operations before income taxes
|
|
|
|
|
6,611
|
|
|
|
|
11,190
|
|
|
|
|
-40.9
|
%
|
|
|
Income tax expense
|
|
|
|
|
3,764
|
|
|
|
|
5,082
|
|
|
|
|
-25.9
|
%
|
|
|
Income from continuing operations
|
|
|
|
|
2,847
|
|
|
|
|
6,108
|
|
|
|
|
-53.4
|
%
|
|
|
Loss from discontinued operations, net of income taxes(d)
|
|
|
|
|
(994
|
)
|
|
|
|
(2,785
|
)
|
|
|
|
-64.3
|
%
|
|
|
Net income
|
|
|
|
|
1,853
|
|
|
|
|
3,323
|
|
|
|
|
-44.2
|
%
|
|
|
Net (income)/loss attributable to the noncontrolling interest
|
|
|
|
|
(110
|
)
|
|
|
|
249
|
|
|
|
|
*
|
|
|
Net income attributable to The New York Times Company common
stockholders
|
|
|
|
|
$
|
1,743
|
|
|
|
|
$
|
3,572
|
|
|
|
|
-51.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to The New York Times Company common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
2,737
|
|
|
|
|
$
|
6,357
|
|
|
|
|
-56.9
|
%
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
|
|
(994
|
)
|
|
|
|
(2,785
|
)
|
|
|
|
-64.3
|
%
|
|
|
Net income
|
|
|
|
|
$
|
1,743
|
|
|
|
|
$
|
3,572
|
|
|
|
|
-51.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
150,612
|
|
|
|
|
148,710
|
|
|
|
|
1.3
|
%
|
|
|
Diluted
|
|
|
|
|
161,920
|
|
|
|
|
155,270
|
|
|
|
|
4.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per share attributable to The New York
Times Company common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.02
|
|
|
|
|
$
|
0.04
|
|
|
|
|
-50.0
|
%
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
-50.0
|
%
|
|
|
Net income
|
|
|
|
|
$
|
0.01
|
|
|
|
|
$
|
0.02
|
|
|
|
|
-50.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings/(loss) per share attributable to The New York
Times Company common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
$
|
0.02
|
|
|
|
|
$
|
0.04
|
|
|
|
|
-50.0
|
%
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
-50.0
|
%
|
|
|
Net income
|
|
|
|
|
$
|
0.01
|
|
|
|
|
$
|
0.02
|
|
|
|
|
-50.0
|
%
|
|
|
Dividends declared per share
|
|
|
|
|
$
|
0.04
|
|
|
|
|
$
|
—
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Represents an increase or decrease in excess of 100%.
|
|
|
See footnotes page for additional information.
|
|
|
|
|
|
THE NEW YORK TIMES COMPANY
|
|
|
|
|
|
|
|
|
FOOTNOTES
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
(a)
|
|
The following table summarizes the first quarter of 2014 advertising
revenues by category:
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
vs. 2013
|
|
|
|
|
|
|
|
|
|
|
National
|
|
|
$
|
125,620
|
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
19,082
|
|
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Classified
|
|
|
14,025
|
|
|
|
-6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Total advertising
|
|
|
$
|
158,727
|
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Other revenues consist primarily of revenues from news
services/syndication, digital archives, rental income and
conferences/events.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
In the first quarter of 2014, the Company recorded a $2.6 million
charge for the early termination of a distribution agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
In the fourth quarter of 2013, the Company completed the sale of
NEMG – consisting of The Boston Globe, BostonGlobe.com,
Boston.com, Worcester Telegram & Gazette, Telegram.com and related
properties – and its 49% interest in Metro Boston. The results of
NEMG have been classified as discontinued operations for all
periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize the 2014 and 2013 results of
operations presented as discontinued operations for NEMG:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
First Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
—
|
|
|
|
$
|
85,258
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
|
|
|
—
|
|
|
|
89,725
|
|
|
|
|
|
|
|
|
|
|
|
Loss from joint ventures
|
|
|
—
|
|
|
|
(70
|
)
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
—
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax loss
|
|
|
—
|
|
|
|
(4,540
|
)
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
—
|
|
|
|
(1,755
|
)
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
—
|
|
|
|
(2,785
|
)
|
|
|
|
|
|
|
|
|
|
|
(Loss)/gain on sale, net of income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale
|
|
|
(1,559
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
(565
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Loss on sale, net of income taxes
|
|
|
(994
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
$
|
(994
|
)
|
|
|
$
|
(2,785
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE NEW YORK TIMES COMPANY
|
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RECONCILIATION OF NON-GAAP INFORMATION
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(Dollars in thousands, except per share data)
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In this release, the Company has referred to non-GAAP financial
information with respect to diluted earnings per share from
continuing operations excluding severance, non-operating
retirement costs and a special item (or adjusted diluted earnings
per share from continuing operations); operating profit before
depreciation, amortization, severance, non-operating retirement
costs and a special item (or adjusted operating profit); and
operating costs before depreciation, amortization, severance and
non-operating retirement costs (or adjusted operating costs). The
Company has included these non-GAAP financial measures because
management reviews them on a regular basis and uses them to
evaluate and manage the performance of the Company’s operations.
Management believes that, for the reasons outlined below, these
non-GAAP financial measures provide useful information to
investors as a supplement to reported diluted earnings/(loss) per
share from continuing operations, operating profit/(loss) and
operating costs. However, these measures should be evaluated only
in conjunction with the comparable GAAP financial measures and
should not be viewed as alternative or superior measures of GAAP
results.
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Adjusted diluted earnings per share provides useful information in
evaluating the Company’s period-to-period performance because it
eliminates items that the Company does not consider to be indicative
of earnings from ongoing operating activities. Adjusted operating
profit is useful in evaluating the ongoing performance of the
Company’s businesses as it excludes the significant non-cash impact
of depreciation and amortization as well as items not indicative of
ongoing operating activities. Total operating costs include
depreciation, amortization, severance and non-operating retirement
costs. Total operating costs excluding these items provide investors
with helpful supplemental information on the Company’s underlying
operating costs that is used by management in its financial and
operational decision-making.
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Non-operating retirement costs include interest cost, expected
return on plan assets and amortization of actuarial gains and loss
components of pension expense; interest cost and amortization of
actuarial gains and loss components of retiree medical expense; and
all expenses associated with multiemployer pension plan withdrawal
obligations. These non-operating retirement costs are primarily tied
to financial market performance and changes in market interest rates
and investment performance. Non-operating retirement costs do not
include service costs and amortization of prior service costs for
pension and retiree medical benefits, which management believes
reflect the ongoing service-related costs of providing pension and
retiree medical benefits to its employees. Management considers
non-operating retirement costs to be outside the performance of the
business and believes that presenting operating results excluding
non-operating retirement costs, in addition to the Company’s GAAP
operating results, will provide increased transparency and a better
understanding of the underlying trends in the Company’s operating
business performance.
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Reconciliations of these non-GAAP financial measures from,
respectively, diluted earnings per share from continuing
operations, operating profit and operating costs, the most
directly comparable GAAP items, are set out in the tables below.
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Reconciliation of diluted earnings per
share from continuing operations excluding severance,
non-operating retirement costs and a special item (or adjusted
diluted earnings per share from continuing operations)
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First Quarter
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2014
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2013
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% Change
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Diluted earnings per share from continuing operations
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$
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0.02
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$
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0.04
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-50.0
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%
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Add:
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Severance
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0.01
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0.02
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Non-operating retirement costs
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0.03
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0.02
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Special item:
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Early termination charge
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0.01
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—
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Adjusted diluted earnings per share from continuing
operations
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$
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0.07
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$
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0.08
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-12.5
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%
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THE NEW YORK TIMES COMPANY
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RECONCILIATION OF NON-GAAP INFORMATION (continued)
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(Dollars in thousands)
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Reconciliation of operating profit before
depreciation & amortization, severance, non-operating retirement
costs and a special item (or adjusted operating profit)
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First Quarter
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2014
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2013
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% Change
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Operating profit
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$
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22,059
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$
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28,131
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-21.6%
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Add:
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Depreciation & amortization
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20,092
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18,938
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Severance
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3,054
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4,868
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Non-operating retirement costs
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8,877
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5,204
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Special item:
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Early termination charge
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2,550
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—
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Adjusted operating profit
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$
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56,632
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$
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57,141
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-0.9%
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Reconciliation of operating costs before
depreciation & amortization, severance and non-operating
retirement costs (or adjusted operating costs)
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First Quarter
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2014
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2013
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% Change
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Operating costs
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$
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365,799
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$
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352,544
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3.8%
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Less:
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Depreciation & amortization
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20,092
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18,938
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Severance
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3,054
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4,868
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Non-operating retirement costs
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8,877
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5,204
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Adjusted operating costs
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$
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333,776
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$
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323,534
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3.2%
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Components of non-operating retirement
costs
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First Quarter
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2014
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2013
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% Change
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Pension:
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Interest cost
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$
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23,987
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$
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21,927
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Expected return on plan assets
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(28,460
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)
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(31,063
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)
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Amortization of actuarial loss
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7,652
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9,754
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Non-operating pension costs
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3,179
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618
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*
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Other postretirement benefits:
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Interest cost
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1,010
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1,009
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Amortization of actuarial loss
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1,184
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1,022
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Non-operating other postretirement benefits costs
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2,194
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2,031
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8.0%
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Expenses associated with multiemployer pension plan withdrawal
obligations
|
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3,504
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2,555
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Total non-operating retirement costs(1)
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$
|
8,877
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$
|
5,204
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70.6%
|
|
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(1)
|
|
In 2013, total non-operating retirement costs on a quarterly
basis were as follows: $2.8 million in the second quarter, $5.1
million in the third quarter and $7.4 million in the fourth
quarter.
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This press release can be downloaded from www.nytco.com.
Copyright Business Wire 2014