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Meredith (MDP) Q4 Earnings Miss, Revenues In Line, Stock Down
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Meredith Corporation reported an earnings miss in fourth-quarter fiscal 2018 after four straight quarters of beat. The bottom line declined year over year as well. However, the company’s top line came almost in line with the consensus estimate after a miss in the previous quarter.
Following the dismal bottom-line performance, shares of the company have lost 6.7% on Aug 10. In addition, management issued guidance for fiscal 2019, which fell shy of analysts’ expectations. In the past six months, this Zacks Rank #4 (Sell) stock has plunged 11.4% against the industry’s 2.1% growth.
Nevertheless, management reiterated its debt reduction and EBITDA goals for fiscal 2020.
Q4 Highlights
Meredith reported adjusted earnings per share of 69 cents, which missed the Zacks Consensus Estimate of 87 cents and plunged 35.5% year over year.
Earnings from continuing operations came in $31.1 million in the reported quarter, down from $49 million recorded in the prior-year period.
Meredith’s total revenues surged 76.9% year over year to $788.1 million and came almost in line with the Zacks Consensus Estimate.
While advertising revenues jumped 63% to $375.5 million, circulation revenues were more than doubled to $190.4 million in the fiscal fourth quarter. Also, all other revenues advanced 78% to $222.2 million.
Adjusted EBITDA totaled $159.7 million, up 75.9% from the prior-year period, whereas the adjusted EBITDA margin contracted 10 basis points from the prior-year period to 20.3%.
Meredith Corporation Price, Consensus and EPS Surprise
Meredith’s National Media Group revenues surged to a whopping $590 million from $293.2 million in the year-ago period. This upside was driven by more than twofold jump in both advertising and circulation revenues to $281.7 million and $190.4 million, respectively. Also, the segment’s other revenues soared 73.6% to $117.9 million in the quarter. The segment’s adjusted EBITDA totaled $113.7 million compared with $46.9 million in the prior-year quarter.
Revenues at the company’s Local Media Group segment ascended 30.7% to $198.9 million. The improvement was driven by a significant increase in political advertising revenues, which summed $10.3 million compared with $4.4 million in the year-earlier quarter. Also, other revenues were up 84.7% to $105.1 million. However, this growth was somewhat offset by a 8.1% decline in non-political advertising revenues. The segment’s adjusted EBITDA came in at $68.5 million that increased 22.3% from the year-ago period.
Financial Update
Meredith ended the quarter with cash and cash equivalents of $437.6 million, long-term debt of $3,117.9 million and total shareholders’ equity of $1,097.5 million. In fiscal 2018, the company generated net cash flow from operations of $151.3 million, down 31% year over year.
A couple of days prior to this earnings release, Meredith announced a quarterly dividend of 54.5 cents per share, payable Sep 14, 2018 to shareholders of record as on Aug 31. Further, the company has buybacks worth $56 million remaining under its current share repurchase plan as of Jun 30, 2018.
This apart, management remains on track to lower its debt by $1 billion by the end of fiscal 2019. Hence, it targets achieving a net debt-to-EBITDA ratio of 2.0 to 1 or better, by fiscal 2020 end. Notably, the company anticipates EBITDA of $1 billion and net debt to be lower than $2 billion by the end of fiscal 2020.
Other Developments
Apart from completing the buyout of Time Inc., Meredith has undertaken other strategic initiatives post third-quarter earnings announcement. The company has simplified its National Media portfolio by divesting its Meredith Xcelerated Marketing, Time Inc. UK and Golf brands. Furthermore, it plans to off load the TIME, Sports Illustrated, Money, Fortune and 60% equity investment in Viant.
The company’s digital business witnessed record traffic and robust performance. Notably, its digital activities generated $350 million of high margin revenues in fiscal 2018. Also, Meredith's Local Media Group realized $16 million political advertising revenues. It anticipates witnessing a political advertising season in fiscal 2019.
Notably, management expects generating cost synergies of more than $500 million annually in the first two years of operations of the combined firm to enhance its scale.
FY19 Outlook
Going into fiscal 2019, Meredith remains optimistic about the Time Inc. properties to boost its market position and financial performance. Also, the company is likely to witness record digital revenues for the National Media Group backed by People.com owing to its higher traffic. Further, it projects National Media Group’s adjusted EBITDA margins to come in the mid 20% range in the fiscal year, courtesy of higher margin brands and cost synergies. Its Local Media Group is also expected to gain from MNI. As a result, management anticipates delivering higher consumer revenues driven by the acquired brands, Synapse business along with increasing lead generation and e-commerce capabilities. It anticipates above 45% of National Media Group revenues from high margin consumer-related sources.
Management also expects to witness a strong year for political advertising owing to 13 gubernatorial races that include nine open seats in Meredith markets. Also, the improvement will be aided by nine U.S. Senate races, comprising open seats in Arizona and Tennessee as well as various competitive U.S. House races. As a result, political advertising revenues at its television stations are projected to be in the band of $55-$65 million for fiscal 2019, majority being booked in the second quarter. On the non-political front, the company projects to renew MVPD contracts that reflect 35% of its subscriber base in fiscal 2019 along with increase in fees. This will be somewhat mitigated by the estimated renewal of the affiliation agreements with the FOX Television Network.
In fiscal 2019, Meredith projects total revenues to be in the band of $3-$3.2 billion, up from $2.2 million in fiscal 2018. Further, adjusted EBITDA is expected between $720 million and $750 million in comparison with $421 million in the prior year. The effective rate for the fiscal year is estimated to be 29% versus 39% last year.
Earnings from continuing operations are expected in the $205-$225 million range for the fiscal, up from $147.7 million recorded last year. Consequently, earnings per share from continuing operations are now envisioned in the $2.78-$3.20 range. The company delivered earnings per share of $3.25 in fiscal 2018. The Zacks Consensus Estimate for the fiscal is pegged at $3.55, which is likely to witness downward revisions in the coming days.
Q1 Guidance
While revenues at National Media Group are projected in the band of $540-$550 million for first-quarter fiscal 2019, it is expected in the $200-$210 million range for the Local Media Group.
Moreover, earnings from continuing operations are likely to come in between $2 million and $10 million. Management expects adjusted EBITDA for the fiscal first quarter to be in the band of $122-$127 million. Further, the effective tax rate for the quarter is forecasted to be 28%.
Three Better-Ranked Stocks Seeking Your Attention
The E.W. Scripps Company (SSP - Free Report) , with a long-term earnings growth rate of 6.3%, has delivered an average positive earnings surprise of 52.6% in the trailing four quarters. Also, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Entravision Communications Corporation (EVC - Free Report) is a Zacks Rank #2 (Buy) stock, which has pulled off a positive earnings surprise of 100% in the last reported quarter.
Entercom Communications Corp. , also a Zacks Rank #2 company, has gained 6.8% in the last three months.
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Meredith (MDP) Q4 Earnings Miss, Revenues In Line, Stock Down
Meredith Corporation reported an earnings miss in fourth-quarter fiscal 2018 after four straight quarters of beat. The bottom line declined year over year as well. However, the company’s top line came almost in line with the consensus estimate after a miss in the previous quarter.
Following the dismal bottom-line performance, shares of the company have lost 6.7% on Aug 10. In addition, management issued guidance for fiscal 2019, which fell shy of analysts’ expectations. In the past six months, this Zacks Rank #4 (Sell) stock has plunged 11.4% against the industry’s 2.1% growth.
Nevertheless, management reiterated its debt reduction and EBITDA goals for fiscal 2020.
Q4 Highlights
Meredith reported adjusted earnings per share of 69 cents, which missed the Zacks Consensus Estimate of 87 cents and plunged 35.5% year over year.
Earnings from continuing operations came in $31.1 million in the reported quarter, down from $49 million recorded in the prior-year period.
Meredith’s total revenues surged 76.9% year over year to $788.1 million and came almost in line with the Zacks Consensus Estimate.
While advertising revenues jumped 63% to $375.5 million, circulation revenues were more than doubled to $190.4 million in the fiscal fourth quarter. Also, all other revenues advanced 78% to $222.2 million.
Adjusted EBITDA totaled $159.7 million, up 75.9% from the prior-year period, whereas the adjusted EBITDA margin contracted 10 basis points from the prior-year period to 20.3%.
Meredith Corporation Price, Consensus and EPS Surprise
Meredith Corporation Price, Consensus and EPS Surprise | Meredith Corporation Quote
Segment Details
Meredith’s National Media Group revenues surged to a whopping $590 million from $293.2 million in the year-ago period. This upside was driven by more than twofold jump in both advertising and circulation revenues to $281.7 million and $190.4 million, respectively. Also, the segment’s other revenues soared 73.6% to $117.9 million in the quarter. The segment’s adjusted EBITDA totaled $113.7 million compared with $46.9 million in the prior-year quarter.
Revenues at the company’s Local Media Group segment ascended 30.7% to $198.9 million. The improvement was driven by a significant increase in political advertising revenues, which summed $10.3 million compared with $4.4 million in the year-earlier quarter. Also, other revenues were up 84.7% to $105.1 million. However, this growth was somewhat offset by a 8.1% decline in non-political advertising revenues. The segment’s adjusted EBITDA came in at $68.5 million that increased 22.3% from the year-ago period.
Financial Update
Meredith ended the quarter with cash and cash equivalents of $437.6 million, long-term debt of $3,117.9 million and total shareholders’ equity of $1,097.5 million. In fiscal 2018, the company generated net cash flow from operations of $151.3 million, down 31% year over year.
A couple of days prior to this earnings release, Meredith announced a quarterly dividend of 54.5 cents per share, payable Sep 14, 2018 to shareholders of record as on Aug 31. Further, the company has buybacks worth $56 million remaining under its current share repurchase plan as of Jun 30, 2018.
This apart, management remains on track to lower its debt by $1 billion by the end of fiscal 2019. Hence, it targets achieving a net debt-to-EBITDA ratio of 2.0 to 1 or better, by fiscal 2020 end. Notably, the company anticipates EBITDA of $1 billion and net debt to be lower than $2 billion by the end of fiscal 2020.
Other Developments
Apart from completing the buyout of Time Inc., Meredith has undertaken other strategic initiatives post third-quarter earnings announcement. The company has simplified its National Media portfolio by divesting its Meredith Xcelerated Marketing, Time Inc. UK and Golf brands. Furthermore, it plans to off load the TIME, Sports Illustrated, Money, Fortune and 60% equity investment in Viant.
The company’s digital business witnessed record traffic and robust performance. Notably, its digital activities generated $350 million of high margin revenues in fiscal 2018. Also, Meredith's Local Media Group realized $16 million political advertising revenues. It anticipates witnessing a political advertising season in fiscal 2019.
Notably, management expects generating cost synergies of more than $500 million annually in the first two years of operations of the combined firm to enhance its scale.
FY19 Outlook
Going into fiscal 2019, Meredith remains optimistic about the Time Inc. properties to boost its market position and financial performance. Also, the company is likely to witness record digital revenues for the National Media Group backed by People.com owing to its higher traffic. Further, it projects National Media Group’s adjusted EBITDA margins to come in the mid 20% range in the fiscal year, courtesy of higher margin brands and cost synergies. Its Local Media Group is also expected to gain from MNI. As a result, management anticipates delivering higher consumer revenues driven by the acquired brands, Synapse business along with increasing lead generation and e-commerce capabilities. It anticipates above 45% of National Media Group revenues from high margin consumer-related sources.
Management also expects to witness a strong year for political advertising owing to 13 gubernatorial races that include nine open seats in Meredith markets. Also, the improvement will be aided by nine U.S. Senate races, comprising open seats in Arizona and Tennessee as well as various competitive U.S. House races. As a result, political advertising revenues at its television stations are projected to be in the band of $55-$65 million for fiscal 2019, majority being booked in the second quarter. On the non-political front, the company projects to renew MVPD contracts that reflect 35% of its subscriber base in fiscal 2019 along with increase in fees. This will be somewhat mitigated by the estimated renewal of the affiliation agreements with the FOX Television Network.
In fiscal 2019, Meredith projects total revenues to be in the band of $3-$3.2 billion, up from $2.2 million in fiscal 2018. Further, adjusted EBITDA is expected between $720 million and $750 million in comparison with $421 million in the prior year. The effective rate for the fiscal year is estimated to be 29% versus 39% last year.
Earnings from continuing operations are expected in the $205-$225 million range for the fiscal, up from $147.7 million recorded last year. Consequently, earnings per share from continuing operations are now envisioned in the $2.78-$3.20 range. The company delivered earnings per share of $3.25 in fiscal 2018. The Zacks Consensus Estimate for the fiscal is pegged at $3.55, which is likely to witness downward revisions in the coming days.
Q1 Guidance
While revenues at National Media Group are projected in the band of $540-$550 million for first-quarter fiscal 2019, it is expected in the $200-$210 million range for the Local Media Group.
Moreover, earnings from continuing operations are likely to come in between $2 million and $10 million. Management expects adjusted EBITDA for the fiscal first quarter to be in the band of $122-$127 million. Further, the effective tax rate for the quarter is forecasted to be 28%.
Three Better-Ranked Stocks Seeking Your Attention
The E.W. Scripps Company (SSP - Free Report) , with a long-term earnings growth rate of 6.3%, has delivered an average positive earnings surprise of 52.6% in the trailing four quarters. Also, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Entravision Communications Corporation (EVC - Free Report) is a Zacks Rank #2 (Buy) stock, which has pulled off a positive earnings surprise of 100% in the last reported quarter.
Entercom Communications Corp. , also a Zacks Rank #2 company, has gained 6.8% in the last three months.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>