EX-99 2 fy17q2exh99earnings.htm EXHIBIT 99 - EARNINGS PRESS RELEASE Exhibit


Exhibit 99
image3a04.jpg
MEREDITH DELIVERS RECORD FISCAL 2017 2nd QUARTER AND 1st HALF RESULTS

Political and Digital Advertising Across the Enterprise Drive Strong Earnings Per Share Growth

Meredith Expects Fiscal 2017 Earnings Per Share to be Highest in Company History

DES MOINES, IA (January 25, 2017) - Meredith Corporation (NYSE:MDP; meredith.com) — the leading media and marketing company with local television brands in large, fast-growing markets and national brands serving more than 100 million American women — today reported record fiscal 2017 second quarter earnings of $1.58 per share, compared to $0.72 in the prior-year period. Total Company revenues increased 9 percent to $443 million, and total advertising revenues increased 11 percent to $267 million, both representing all-time quarterly highs.

Excluding special items in both periods, fiscal 2017 second quarter earnings per share grew 63 percent to a record $1.30 from $0.80 in the prior-year period. (See Other Financial Information later in this release for a description of fiscal 2017 second quarter special items and Tables 1-6 for supplemental disclosures regarding non-GAAP financial measures.)

“We continued our record-setting performance in the second quarter and first half of fiscal 2017, driven by record political advertising revenues at our television stations and double-digit growth in digital ad revenues in both the national and local businesses,” said Meredith Chairman and CEO Stephen M. Lacy. “We continue to expect to deliver record full fiscal year 2017 revenue and earnings performance, driven by aggressive execution of our strategic growth initiatives.”

Looking at Meredith’s performance in the second quarter of fiscal 2017 compared to the prior year:

•
Local Media Group revenues increased 31 percent to $183 million, operating profit grew 90 percent to $77 million, and EBITDA increased over 70 percent to $86 million, all quarterly record highs. Growth was led by a 27 percent increase in total advertising revenues, including $40 million of political advertising revenues. Retransmission revenues also grew strongly.

•
Total Company digital advertising revenues grew 16 percent to a quarterly record high. Traffic across Meredith’s digital and mobile sites grew to an average of nearly 90 million unique visitors per month, and video views jumped 13 percent.

•
National Media Group operating profit grew and profit margin expanded, driven by strong growth in digital advertising revenues. Digital advertising revenues grew 16 percent and represented nearly 40 percent of total National Media Group advertising. Total advertising revenues were off 2 percent, but even on a comparable basis.

•
Consumer engagement in key target demographics expanded across Meredith’s media platforms. Meredith’s National Media brands grew their reach to more than 100 million unduplicated American women, including nearly 75 percent of U.S. Millennial women. Meredith magazine readership currently stands at an impressive 125 million, and Meredith’s television stations delivered a strong November rating book.

Fiscal 2017 first half earnings per share were a record $2.33, compared to $0.96 in the prior-year period. Excluding special items, fiscal 2017 first half earnings per share grew 55 percent to a record $2.05, up from $1.32 in the prior-year period. Total company revenues increased 7 percent to $843 million, and total advertising revenues grew 7 percent to $493 million, both records.

“Our results in calendar 2016 reflect the strength of our diversified media business,” said Meredith President and COO Tom Harty. “In our Local Media Group, we generated a record $67 million of political ad revenues and increased net retransmission contribution. In our National Media Group, we delivered growth in ad revenues as double-digit gains in digital advertising outpaced slight declines in magazine advertising. Importantly, we renewed our industry leading Better Homes & Gardens licensing program at Walmart stores nationwide.”

1


OPERATING GROUP DETAIL

LOCAL MEDIA GROUP

Meredith’s Local Media Group includes 17 owned or operated television stations reaching 11 percent of
households. Meredith’s portfolio is concentrated in large, fast-growing markets, including seven stations in the nation’s Top 25 markets and 13 in the Top 50. Meredith’s stations produce 700 hours of local news and entertainment content each week. Meredith expects to continue to grow its Local Media Group organically and through strategic acquisitions.

Fiscal 2017 second quarter Local Media Group operating profit grew 90 percent to $77 million, up from $40 million in the prior-year period. EBITDA grew 71 percent to $86 million. Profit margin was 42 percent and EBITDA margin was 47 percent. Revenues increased 31 percent to $183 million.

Looking more closely at fiscal 2017 second quarter performance:

•
Total advertising revenues increased 27 percent, driven by strong political and digital advertising performance. Highlights included:

▪
Political advertising revenues were $40 million, up 37 percent from the last political cycle in the second quarter of fiscal 2015. Political spending was particularly robust in the Las Vegas, St. Louis, Phoenix and Kansas City markets, primarily due to very competitive “down-ballot” races.

▪
Non-political advertising revenues were $92 million, reflecting political crowd-out, especially in the above-mentioned markets. Excluding those markets, non-political advertising revenues were down low-single digits.

▪
Digital advertising revenues grew 18 percent compared to the prior-year period, as innovative growth strategies continue to drive higher digital sales across Meredith’s station group.

•
Other revenues and operating expenses increased compared to the prior-year period, due primarily to growth in retransmission revenues from cable and satellite television operators, partially offset by higher programming fees paid to affiliated networks.

Meredith delivered strong performance in the November 2016 rating book. Nine Meredith stations ranked number one or two in late news, while seven stations ranked number one or two in morning news.

To further strengthen its competitive position, in fiscal 2017 Meredith has launched additional newscasts in the Atlanta, Phoenix, Portland, Nashville, Greenville and Flint/Saginaw markets. These initiatives increased Meredith’s total local news and entertainment programming hours to 700 per week. Additionally, Meredith continues to implement a local audience development initiative designed to increase Millennial audience engagement with its stations on social and digital platforms.

Fiscal 2017 first half Local Media Group operating profit grew 83 percent to $127 million, up from $70 million in the prior-year period. EBITDA grew 63 percent to $145 million. Profit margin was 38 percent and EBITDA margin was 43 percent. Revenues increased 26 percent to $336 million, including $56 million of political advertising. All represent fiscal first-half records.




2


NATIONAL MEDIA GROUP

Meredith’s National Media Group reaches more than 100 million unduplicated American women, including nearly 75 percent of U.S. Millennial women. Meredith is a leader in creating content across media platforms and life stages in key consumer interest areas such as food, home, parenting and lifestyle. It also features robust brand licensing activities and innovative business-to-business marketing solutions provided by Meredith Xcelerated Marketing. Meredith expects to continue to grow its National Media Group organically and through strategic acquisitions.

Fiscal 2017 second quarter National Media Group operating profit was $47 million, or $34 million excluding special items. That compares to $34 million in the prior-year period. Revenues were $259 million, compared to $267 million in the prior-year period. (See Other Financial Information later in this release for a description of fiscal 2017 second quarter special items and Tables 1-6 for supplemental disclosures regarding non-GAAP financial measures.)

Looking more closely at National Media Group fiscal 2017 second quarter performance compared to the prior-year period:

•
Total advertising revenues declined slightly to $135 million, but were even on a comparable basis, which excludes MORE magazine.

•
Digital advertising revenue rose 16 percent, and accounted for 38 percent of total National Media Group advertising revenues. Growth was led by the Allrecipes, Parents and Shape brands.

•
Meredith’s share of total magazine advertising revenues increased to 13.8 percent from 12.5 percent, according to the most recent data from Publishers Information Bureau. The Family Circle, Allrecipes and EatingWell brands posted strong performance. The beauty, pets and direct response advertising categories were growth leaders.

•
Circulation revenues increased slightly to $67 million, driven by an increase in newsstand revenues that was led by a strong debut of The Magnolia Journal, Meredith’s quarterly lifestyle magazine based on Joanna and Chip Gaines’ popular Magnolia brand.

•
Expenses declined 9 percent, and were down 3 percent excluding special items, compared to the prior-year period, as Meredith continued to pursue operational efficiencies.

Meredith’s National Media Group continues to extend its reach to American consumers and further diversify its revenue streams in fiscal 2017. For example:

•
Meredith renewed its licensing program with Walmart. This program features more than 3,000 SKUs of Better Homes & Gardens branded products at 5,000 Walmart stores and on Walmart.com. In addition, Meredith launched several new brand licensing programs, including an EatingWell line of frozen foods; SHAPE fitness apparel; and Allrecipes cooking utensils.

•
Meredith grew the reach and impact of its Allrecipes brand, the world’s largest in food media. Traffic increased 13 percent to an average of more than 55 million monthly unique visitors. Meredith introduced a new national broadcast television series based on the Allrecipes brand, and increased the ratebase of Allrecipes magazine to 1.35 million, up from 500,000 when it launched three years ago.

Fiscal 2017 first half National Media Group operating profit was $71 million, or $58 million excluding special items. Fiscal 2017 first half revenues were $507 million compared to $525 million in the prior-year period.






3


OTHER FINANCIAL INFORMATION

Cash flow from operations grew to $117 million in the first six months of fiscal 2017 from $48 million in the prior-year period. Total debt was $674 million and the weighted average interest rate was 2.8 percent, with $400 million effectively fixed at low rates. Meredith’s debt-to-EBITDA ratio for the trailing 12 months was 1.9 to 1 (as defined in Meredith’s credit agreements). All metrics are as of December 31, 2016.

Meredith continues to focus on its successful Total Shareholder Return strategy. Key elements include:

•
An annualized dividend of $1.98 per share that’s yielding approximately 3.5 percent based on yesterday’s closing price. Meredith has paid dividends for 69 consecutive years and increased them for 23 years straight.

•
An ongoing share repurchase program with $74 million remaining under current authorizations.

•
Strategic investments to scale the business and increase shareholder value.

Fiscal 2017 second quarter special items included a reduction in a previously accrued contingent consideration payable and the resolution of certain federal and state tax matters.  These benefits were partially offset by restructuring and other charges.  (See Tables 1-6 for supplemental disclosures regarding non-GAAP financial measures.)

All earnings-per-share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached Condensed Consolidated Statements of Earnings. All fiscal 2017 second quarter comparisons are against the comparable prior-year period unless otherwise stated.


OUTLOOK

Including special items recorded in fiscal 2017, Meredith expects fiscal 2017 full-year earnings per share to range from $3.78 to $4.08.

Excluding special items recorded in fiscal 2017, Meredith continues to expect fiscal 2017 full-year earnings per share to range from $3.50 to $3.80, as originally communicated on July 28, 2016.

Meredith expects fiscal 2017 third quarter earnings per share to range from $0.75 to $0.80, with total revenues for each of its Local and National Media Groups flat to down slightly.


CONFERENCE CALL WEBCAST

Meredith will host a conference call on January 25, 2017, at 8:30 a.m. EST to discuss fiscal 2017 second quarter results. A live webcast will be accessible to the public on the Company’s website, meredith.com, and a replay will be available for two weeks. A transcript will be available within 48 hours of the call at meredith.com.

RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS

Management uses and presents GAAP and non-GAAP results to evaluate and communicate its performance. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin are common supplemental measures of performance used by investors and financial analysts. Management believes that EBITDA provides an additional analytical tool to clarify the Company’s results from core operations and delineate underlying trends. Management does not use EBITDA as a measure of liquidity or funds available for management’s discretionary use because it includes certain contractual and non-discretionary expenditures. Adjusted EBITDA is defined as EBITDA before special items.


4


Results excluding special items are supplemental non-GAAP financial measures. While these adjusted results are not a substitute for reported results under GAAP, management believes this information is useful as an aid in further understanding Meredith’s current performance, performance trends and financial condition. Reconciliations of non-GAAP to GAAP measures are attached to this press release and available at meredith.com.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management’s current knowledge and estimates of factors affecting the Company and its operations. Statements in this release that are forward-looking include, but are not limited to, the Company’s revenue and earnings-per-share outlook for third quarter and full-year fiscal 2017.

Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients or vendors; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company’s industries; increases in interest rates; and the consequences of acquisitions and/or dispositions. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

ABOUT MEREDITH CORPORATION

Meredith Corporation (NYSE: MDP; meredith.com) has been committed to service journalism for 115 years. Today, Meredith uses multiple distribution platforms — including broadcast television, print, digital, mobile and video — to provide consumers with content they desire and to deliver the messages of its advertising and marketing partners.

Meredith's Local Media Group includes 17 owned or operated television stations reaching 11 percent of
U.S. households. Meredith's portfolio is concentrated in large, fast-growing markets, with seven stations in the nation's Top 25 — including Atlanta, Phoenix, St. Louis and Portland — and 13 in Top 50 markets. Meredith's stations produce 700 hours of local news and entertainment content each week, and operate leading local digital destinations.

Meredith's National Media Group reaches more than 100 million unduplicated women every month, including nearly 75 percent of U.S. Millennial women. Meredith is the leader in creating and distributing content across platforms in key consumer interest areas such as food, home, parenting and lifestyle through well-known brands such as Better Homes & Gardens, Allrecipes, Parents and Shape. Meredith also features robust brand licensing activities, including more than 3,000 SKUs of branded products at 5,000 Walmart stores across the U.S. and at walmart.com. Meredith Xcelerated Marketing is an award-winning, strategic and creative agency that provides fully integrated marketing solutions for many of the world’s top brands, including The Kraft Heinz Co., Bank of America, WebMD, Volkswagen and NBCUniversal.

Meredith’s balanced portfolio consistently generates substantial free-cash flow, and the Company is committed to growing Total Shareholder Return through dividend payments, share repurchases and strategic business investments. Meredith’s current annualized dividend of $1.98 per share yields approximately 3.5 percent. Meredith has paid a dividend for 69 straight years and increased it for 23 consecutive years.

-- # # # # --

5


Shareholder/Financial Analyst Contact:
 
Media Contact:
Mike Lovell
 
Art Slusark
Director of Investor Relations
 
Chief Communications Officer
Phone: (515) 284-3622
 
Phone: (515) 284-3404
E-mail: Mike.Lovell@meredith.com
 
E-mail: Art.Slusark@meredith.com



6


Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)

 
Three Months
 
Six Months
Periods ended December 31,
2016
 
2015
 
2016
 
2015
(In thousands except per share data)
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
Advertising
$
267,129

 
$
241,571

 
$
493,018

 
$
460,241

Circulation
66,805

 
66,351

 
135,473

 
138,526

All other
108,708

 
98,491

 
214,030

 
192,312

Total revenues
442,642

 
406,413

 
842,521

 
791,079

Operating expenses
 
 
 
 
 
 
 
Production, distribution, and editorial
148,625

 
151,065

 
298,853

 
304,243

Selling, general, and administrative
170,643

 
176,792

 
345,636

 
351,522

Depreciation and amortization
13,549

 
14,986

 
27,445

 
30,066

Merger-related costs
—

 
3,457

 
—

 
16,123

Total operating expenses
332,817

 
346,300

 
671,934

 
701,954

Income from operations
109,825

 
60,113

 
170,587

 
89,125

Interest expense, net
(4,679
)
 
(5,265
)
 
(9,428
)
 
(10,578
)
Earnings before income taxes
105,146

 
54,848

 
161,159

 
78,547

Income taxes
(33,341
)
 
(22,329
)
 
(55,381
)
 
(34,999
)
Net earnings
$
71,805

 
$
32,519

 
$
105,778

 
$
43,548

 
 
 
 
 
 
 
 
Basic earnings per share
$
1.61

 
$
0.73

 
$
2.38

 
$
0.98

Basic average shares outstanding
44,511

 
44,640

 
44,535

 
44,626

 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.58

 
$
0.72

 
$
2.33

 
$
0.96

Diluted average shares outstanding
45,378

 
45,358

 
45,385

 
45,373

 
 
 
 
 
 
 
 
Dividends paid per share
$
0.4950

 
$
0.4575

 
$
0.9900

 
$
0.9150




7


Meredith Corporation and Subsidiaries
Segment Information (Unaudited)

 
Three Months
 
Six Months
Periods ended December 31,
2016
 
2015
 
2016
 
2015
(In thousands)
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
National media
 
 
 
 
 
 
 
Advertising
$
135,103

 
$
137,216

 
$
260,455

 
$
264,456

Circulation
66,805

 
66,351

 
135,473

 
138,526

Other revenues
57,437

 
62,960

 
110,710

 
121,744

Total national media
259,345

 
266,527

 
506,638

 
524,726

Local media
 
 
 
 
 
 
 
Non-political advertising
91,958

 
103,557

 
176,142

 
192,867

Political advertising
40,068

 
798

 
56,421

 
2,918

Other revenues
51,271

 
35,531

 
103,320

 
70,568

Total local media
183,297

 
139,886

 
335,883

 
266,353

Total revenues
$
442,642

 
$
406,413

 
$
842,521

 
$
791,079

 
 
 
 
 
 
 
 
Operating profit
 
 
 
 
 
 
 
National media
$
46,757

 
$
33,583

 
$
70,868

 
$
56,386

Local media
76,815

 
40,441

 
127,437

 
69,768

Unallocated corporate
(13,747
)
 
(13,911
)
 
(27,718
)
 
(37,029
)
Income from operations
$
109,825

 
$
60,113

 
$
170,587

 
$
89,125

 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
National media
$
4,330

 
$
4,833

 
$
8,848

 
$
9,398

Local media
8,865

 
9,616

 
17,855

 
19,594

Unallocated corporate
354

 
537

 
742

 
1,074

Total depreciation and amortization
$
13,549

 
$
14,986

 
$
27,445

 
$
30,066

 
 
 
 
 
 
 
 
EBITDA 1
 
 
 
 
 
 
 
National media
$
51,087

 
$
38,416

 
$
79,716

 
$
65,784

Local media
85,680

 
50,057

 
145,292

 
89,362

Unallocated corporate
(13,393
)
 
(13,374
)
 
(26,976
)
 
(35,955
)
Total EBITDA 1
$
123,374

 
$
75,099

 
$
198,032

 
$
119,191


1 EBITDA is net earnings before interest, taxes, depreciation, and amortization.


8


Meredith Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

Assets
December 31, 2016
 
June 30,
2016
(In thousands)
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
44,488

 
$
24,970

Accounts receivable, net
284,840

 
273,927

Inventories
20,009

 
20,678

Current portion of subscription acquisition costs
147,630

 
133,338

Current portion of broadcast rights
11,093

 
4,220

Other current assets
23,422

 
24,023

Total current assets
531,482

 
481,156

Property, plant, and equipment
536,744

 
530,052

Less accumulated depreciation
(352,986
)
 
(339,099
)
Net property, plant, and equipment
183,758

 
190,953

Subscription acquisition costs
97,939

 
95,960

Broadcast rights
4,610

 
4,565

Other assets
57,711

 
57,151

Intangible assets, net
913,157

 
913,877

Goodwill
895,389

 
883,129

Total assets
$
2,684,046

 
$
2,626,791

 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
Current liabilities
 
 
 
Current portion of long-term debt
$
62,500

 
$
75,000

Current portion of long-term broadcast rights payable
11,956

 
4,649

Accounts payable
75,694

 
82,107

Accrued expenses and other liabilities
127,598

 
116,777

Current portion of unearned subscription revenues
213,648

 
199,359

Total current liabilities
491,396

 
477,892

Long-term debt
611,691

 
618,506

Long-term broadcast rights payable
5,528

 
5,524

Unearned subscription revenues
131,002

 
128,534

Deferred income taxes
361,278

 
336,346

Other noncurrent liabilities
127,266

 
170,946

Total liabilities
1,728,161

 
1,737,748

Shareholders’ equity
 
 
 
Common stock
39,335

 
39,272

Class B stock
5,160

 
5,284

Additional paid-in capital
55,333

 
54,282

Retained earnings
879,661

 
818,706

Accumulated other comprehensive loss
(23,604
)
 
(28,501
)
Total shareholders’ equity
955,885

 
889,043

Total liabilities and shareholders’ equity
$
2,684,046

 
$
2,626,791


9


Meredith Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

Six months ended December 31,
2016
 
2015
(In thousands)
 
 
 
Net cash provided by operating activities
$
117,281

 
$
47,702

 
 
 
 
Cash flows from investing activities
 
 
 
Acquisitions of and investments in businesses
(11,819
)
 
(186
)
Additions to property, plant, and equipment
(10,949
)
 
(7,866
)
Proceeds from disposition of assets
—

 
1,767

Net cash used in investing activities
(22,768
)
 
(6,285
)
 
 
 
 
Cash flows from financing activities
 
 
 
Proceeds from issuance of long-term debt
270,000

 
90,000

Repayments of long-term debt
(288,125
)
 
(86,250
)
Dividends paid
(44,823
)
 
(41,362
)
Purchases of Company stock
(26,453
)
 
(6,538
)
Proceeds from common stock issued
16,988

 
6,455

Payment of acquisition related contingent consideration
(4,000
)
 
(288
)
Excess tax benefits from share-based payments
2,883

 
1,706

Other
(1,465
)
 
(114
)
Net cash used in financing activities
(74,995
)
 
(36,391
)
Net increase in cash and cash equivalents
19,518

 
5,026

Cash and cash equivalents at beginning of period
24,970

 
22,833

Cash and cash equivalents at end of period
$
44,488

 
$
27,859




10


Table 1
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following tables show results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.
Three months ended December 31, 2016
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands except per share data)
 
 
 
 
Operating profit excluding special items (non-GAAP)
$
34,269

$
78,938

$
(13,309
)
$
99,898

Special items
 
 
 
 
Write-down of contingent consideration payable
19,580

—

—

19,580

Severance and related benefit costs
(6,695
)
(445
)
(438
)
(7,578
)
Write-down of impaired assets
—

(1,678
)
—

(1,678
)
Other
(397
)
—

—

(397
)
Total special items
12,488

(2,123
)
(438
)
9,927

Operating profit
$
46,757

$
76,815

$
(13,747
)
$
109,825

 
 
 
 
 
Earnings per share excluding special items (non-GAAP)
$
1.30

Per share impact of special items
 
Per share impact of the resolution of certain federal and state tax matters
0.15

Per share impact of special items of $9,927 ($6,105 after tax)
0.13

Total per share impact of special items
0.28

Diluted earnings per share
$
1.58

 
 
 
 
 
 
 
 
 
 
Six months ended December 31, 2016
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands except per share data)
 
 
 
 
Operating profit excluding special items (non-GAAP)
$
58,380

$
129,560

$
(27,280
)
$
160,660

Special items
 
 
 
 
Write-down of contingent consideration payable
19,580

—

—

19,580

Severance and related benefit costs
(6,695
)
(445
)
(438
)
(7,578
)
Write-down of impaired assets
—

(1,678
)
—

(1,678
)
Other
(397
)
—

—

(397
)
Total special items
12,488

(2,123
)
(438
)
9,927

Operating profit
$
70,868

$
127,437

$
(27,718
)
$
170,587

 
 
 
 
 
Earnings per share excluding special items (non-GAAP)
$
2.05

Per share impact of special items
 
Per share impact of the resolution of certain federal and state tax matters
0.15

Per share impact of special items of $9,927 ($6,105 after tax)
0.13

Total per share impact of special items
0.28

Diluted earnings per share
$
2.33



11


Table 2
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following tables show results of operations excluding special items and as reported with the difference being the special items. Results of operations excluding special items are non-GAAP measures. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Three months ended December 31, 2015
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands except per share data)
 
 
 
 
Operating profit excluding special items (non-GAAP)
$
34,083

$
40,441

$
(10,454
)
$
64,070

Special items
 
 
 
 
Merger-related costs
—

—

(3,457
)
(3,457
)
Severance and related benefit costs
(1,014
)
—

—

(1,014
)
Reversal of previously accrued restructuring costs
514

—

—

514

Total special items
(500
)
—

(3,457
)
(3,957
)
Operating profit
$
33,583

$
40,441

$
(13,911
)
$
60,113

 
 
 
 
 
Earnings per share excluding special items (non-GAAP)
$
0.80

Per share impact of special items of $3,957 ($3,764 after tax)
(0.08
)
Diluted earnings per share
$
0.72

 
 
 
 
 
 
 
 
 
 
Six months ended December 31, 2015
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands except per share data)
 
 
 
 
Operating profit excluding special items (non-GAAP)
$
60,120

$
68,830

$
(20,906
)
$
108,044

Special items
 
 
 
 
Merger-related costs
—

—

(16,123
)
(16,123
)
Severance and related benefit costs
(4,248
)
(132
)
—

(4,380
)
Reversal of previously accrued restructuring costs
514

1,070

—

1,584

Total special items
(3,734
)
938

(16,123
)
(18,919
)
Operating profit
$
56,386

$
69,768

$
(37,029
)
$
89,125

 
 
 
 
 
Earnings per share excluding special items (non-GAAP)
$
1.32

Per share impact of special items of $18,919 ($16,333 after tax)
(0.36
)
Diluted earnings per share
$
0.96



12


Table 3
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA
Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization.
Segment EBITDA is a measure of segment earnings before depreciation and amortization.
Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.

Adjusted EBITDA
Consolidated adjusted EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, amortization, and special items.
Segment adjusted EBITDA is a measure of segment earnings before depreciation, amortization, and special items.
Segment adjusted EBITDA margin is defined as segment adjusted EBITDA divided by segment revenues.

Three months ended December 31, 2016
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands)
 
 
 
 
Revenues
$
259,345

$
183,297

$
—

$
442,642

 
 
 
 
 
Operating profit
$
46,757

$
76,815

$
(13,747
)
$
109,825

Depreciation and amortization
4,330

8,865

354

13,549

EBITDA
51,087

85,680

(13,393
)
123,374

Special items
 
 
 
 
Write-down of contingent consideration payable
(19,580
)
—

—

(19,580
)
Severance and related benefit costs
6,695

445

438

7,578

Write-down of impaired assets
—

1,678

—

1,678

Other
397

—

—

397

Total special items
(12,488
)
2,123

438

(9,927
)
Adjusted EBITDA
$
38,599

$
87,803

$
(12,955
)
113,447

Less
 
 
 
 
Depreciation and amortization
 
 
 
(13,549
)
Special items
 
 
 
9,927

Net interest expense
 
 
 
(4,679
)
Income taxes
 
 
 
(33,341
)
Net earnings
 
 
 
$
71,805

 
 
 
 
 
Segment EBITDA margin
19.7
%
46.7
%
 
 
Segment adjusted EBITDA margin
14.9
%
47.9
%
 
 




13


Table 3 continued

Six months ended December 31, 2016
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands)
 
 
 
 
Revenues
$
506,638

$
335,883

$
—

$
842,521

 
 
 
 
 
Operating profit
$
70,868

$
127,437

$
(27,718
)
$
170,587

Depreciation and amortization
8,848

17,855

742

27,445

EBITDA
79,716

145,292

(26,976
)
198,032

Special items
 
 
 
 
Write-down of contingent consideration payable
(19,580
)
—

—

(19,580
)
Severance and related benefit costs
6,695

445

438

7,578

Write-down of impaired assets
—

1,678

—

1,678

Other
397

—

—

397

Total special items
(12,488
)
2,123

438

(9,927
)
Adjusted EBITDA
$
67,228

$
147,415

$
(26,538
)
188,105

Less
 
 
 
 
Depreciation and amortization
 
 
 
(27,445
)
Special items
 
 
 
9,927

Net interest expense
 
 
 
(9,428
)
Income taxes
 
 
 
(55,381
)
Net earnings
 
 
 
$
105,778

 
 
 
 
 
Segment EBITDA margin
15.7
%
43.3
%
 
 
Segment adjusted EBITDA margin
13.3
%
43.9
%
 
 
 
 
 
 
 




14


Table 4
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

EBITDA
Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization.
Segment EBITDA is a measure of segment earnings before depreciation and amortization.
Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.

Adjusted EBITDA
Consolidated adjusted EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, amortization, and special items.
Segment adjusted EBITDA is a measure of segment earnings before depreciation, amortization, and special items.
Segment adjusted EBITDA margin is defined as segment adjusted EBITDA divided by segment revenues.

Three months ended December 31, 2015
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands)
 
 
 
 
Revenues
$
266,527

$
139,886

$
—

$
406,413

 
 
 
 
 
Operating profit
$
33,583

$
40,441

$
(13,911
)
$
60,113

Depreciation and amortization
4,833

9,616

537

14,986

EBITDA
38,416

50,057

(13,374
)
75,099

Special items
 
 
 
 
Merger-related costs
—

—

3,457

3,457

Severance and related benefit costs
1,014

—

—

1,014

Reversal of previously accrued restructuring costs
(514
)
—

—

(514
)
Total special items
500

—

3,457

3,957

Adjusted EBITDA
$
38,916

$
50,057

$
(9,917
)
79,056

Less
 
 
 
 
Depreciation and amortization
 
 
 
(14,986
)
Special items
 
 
 
(3,957
)
Net interest expense
 
 
 
(5,265
)
Income taxes
 
 
 
(22,329
)
Net earnings
 
 
 
$
32,519

 
 
 
 
 
Segment EBITDA margin
14.4
%
35.8
%
 
 
Segment adjusted EBITDA margin
14.6
%
35.8
%
 
 



15


Table 4 continued

Six months ended December 31, 2015
National
Media
Local
Media
Unallocated Corporate
Total
(In thousands)
 
 
 
 
Revenues
$
524,726

$
266,353

$
—

$
791,079

 
 
 
 
 
Operating profit
$
56,386

$
69,768

$
(37,029
)
$
89,125

Depreciation and amortization
9,398

19,594

1,074

30,066

EBITDA
65,784

89,362

(35,955
)
119,191

Special items
 
 
 
 
Merger-related costs
—

—

16,123

16,123

Severance and related benefit costs
4,248

132

—

4,380

Reversal of previously accrued restructuring costs
(514
)
(1,070
)
—

(1,584
)
Total special items
3,734

(938
)
16,123

18,919

Adjusted EBITDA
$
69,518

$
88,424

$
(19,832
)
138,110

Less
 
 
 
 
Depreciation and amortization
 
 
 
(30,066
)
Special items
 
 
 
(18,919
)
Net interest expense
 
 
 
(10,578
)
Income taxes
 
 
 
(34,999
)
Net earnings
 
 
 
$
43,548

 
 
 
 
 
Segment EBITDA margin
12.5
%
33.6
%
 
 
Segment adjusted EBITDA margin
13.2
%
33.2
%
 
 
 
 
 
 
 





16


Table 5
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows national media operating expenses excluding special items and as reported with the difference being the special items. National media operating expenses excluding special items is a non-GAAP measure. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Three months ended December 31,
2016
 
2015
 
Change
(In thousands)
 
 
 
 
 
National media operating expenses
 
 
 
 
 
Operating expenses excluding special items (non-GAAP)
$
225,076

 
$
232,444

 
(3
)%
Special items
 
 
 
 
 
Write-down of contingent consideration payable
(19,580
)
 
—

 
 
Severance and related benefit costs
6,695

 
1,014

 
 
Reversal of previously accrued restructuring costs
(13
)
 
(514
)
 
 
Other
410

 
—

 
 
Total special items
(12,488
)
 
500

 
 
National media operating expenses
$
212,588

 
$
232,944

 
(9
)%




Table 6
Meredith Corporation and Subsidiaries
Supplemental Disclosures Regarding Non-GAAP Financial Measures

Special Items - The following table shows projected diluted earnings per share excluding special items and as projected with the difference being the special items. Projected diluted earnings per share excluding special items is a non-GAAP measure. Management’s rationale for presenting non-GAAP measures is included in the text of this earnings release.

Year ended June 30, 2017
Low
 
High
Projected diluted earnings per share excluding special items (non-GAAP)
$
3.50

 
$
3.80

Total per share impact of special items (see Table 1)
0.28

 
0.28

Projected diluted earnings per share
$
3.78

 
$
4.08



17