Back to top

Image: Bigstock

Meredith (MDP) Earnings and Revenues Deteriorate Y/Y in Q1

Read MoreHide Full Article

Meredith Corporation (MDP - Free Report) reported first-quarter fiscal 2020 results, wherein both earnings and revenues declined from the year-ago period. Lower revenues at National Media Group and Local Media Group hurt the top line. Nonetheless, the company reaffirmed fiscal 2020 projection.

While digital advertising increased, print advertising fell year over year at National Media Group during the reported quarter. Moreover, strong expense management, contributed to the segment’s operating profit. While non-political spot advertising in Local Media Group improved, political spot advertising decreased sharply during the quarter under review.

Shares of this Zacks Rank #3 (Hold) company have declined 22.8% in the past three months against the industry’s growth of 9.6%.

Q1 Highlights

Meredith’s earnings from continuing operations before special items decreased to 3 cents a share from 22 cents reported in the prior-year quarter. Notably, adjusted earnings (excluding the impact of depreciation and amortization) came in at 99 cents, down from $1.24 reported in the year-ago period.

Year-over-year decline in revenues hurt the bottom line. However, lower SG&A costs; fall in production, distribution, and editorial expenses; decline in depreciation and amortization; and reduced interest expense provided some cushion to the bottom line.

Total revenues fell 6.4% to $725.2 million from the prior-year period. The company’s advertising revenues declined 10.8% year over year to $379.6 million. Notably, consumer-related revenues slid 1.4% to $323.1 million, while other revenues improved 6.6% to $22.5 million.

Adjusted EBITDA came in at $122.4 million, down 14.6% from the prior-year period. Adjusted EBITDA margin contracted 160 basis points from the prior-year period to 16.9%.



Segment Details

Meredith’s National Media Group revenues fell 4.9% to $532.9 million from the year-ago period. While advertising revenues declined 5.6% year over year to $271 million, consumer-related revenues fell 4.3% to $243.5 million. Other revenues dropped 2.6% to $18.4 million. The segment’s adjusted EBITDA totaled $90.6 million, up 3.1% from the prior-year quarter.

Digital advertising revenues rose 8% buoyed by Meredith's programmatic platform. However, print advertising revenues were down in the low-teens. On a comparable basis, print advertising fell in the mid-single digits. Management now envisions year-over-year growth in comparable print advertising revenues for second-quarter fiscal 2020.

Looking ahead, Meredith intends to enhance segments’ revenues and profit organically and via strategic buyouts. In this respect, the company plans to launch new lifestyle magazine in early 2020 in partnership with home renovation and interior design experts Drew and Jonathan Scott. It plans to transition the Rachael Ray Every Day subscription magazine to a premium newsstand title published on a quarterly basis from January next year.

Revenues at the company’s Local Media Group segment came in $192.8 million, down 10.1% from the prior-year quarter. We note that non-political spot advertising revenues grew 2.5% to $76.8 million. However, political spot advertising revenues fell to $2.6 million from $36.1 million in the year-ago period. Management stated that non-political spot advertising is currently pacing up in the mid single-digit range in the second quarter. Digital advertising revenues rose 8% during the quarter.

While advertising revenues declined 21.5% year over year to $109.1 million, consumer-related revenues improved 8.6% to $79.6 million during the quarter under review. Other revenues soared 86.4% to $4.1 million. The segment’s adjusted EBITDA decreased 36.8% to $48.9 million.

Looking ahead, Meredith plans to launch a television show based on its Southern Living brand. It also intends to launch People Now weekend show in daily syndication beginning in Fall 2020.

Financial Update

The company ended the quarter with cash and cash equivalents of $27.4 million, long-term debt of $2,394.6 million, and total shareholders’ equity of $928.6 million.

Outlook

Management continues to envision total revenues of $3-$3.2 billion in fiscal 2020 compared with $3.19 billion generated in fiscal 2019. The company anticipates earnings from continuing operations, excluding special items, to be in the band of $2.58-$2.88 per share compared with $3.19 reported in the prior year. Adjusted EBITDA is expected to be between $640 million and $675 million, while adjusted earnings are projected to be in the range $5.75 to $6.20. The company reported adjusted earnings per share of $7.24 in fiscal 2019.

For the second quarter, revenues for the National Media Group are expected to be in the range of $570-$590 million, while revenues for the Local Media Group are estimated to be $215-$220 million. Meredith had generated revenues of $591.3 million and $262.4 million from National Media Group and Local Media Group, respectively, during the second quarter of fiscal 2019.

The company expects earnings from continuing operations, excluding special items, to be in the range of 73-86 cents a share. Adjusted EBITDA is projected to be between $173 million and $181 million, while adjusted earnings are expected to be in the band of $1.59-$1.72 per share.

Looking for Hot Stocks? Check Out These

Roku, Inc. (ROKU - Free Report) has a long-term earnings growth rate of 39.4%. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Charter Communications, Inc. (CHTR - Free Report) has a long-term earnings growth rate of 38% and a Zacks Rank #2.

Shaw Communications Inc.’s (SJR - Free Report) bottom line has outperformed the Zacks Consensus Estimate in the trailing four quarters by 9.4% on average. The stock carries a Zacks Rank #2.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>