UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 8-K |
CURRENT REPORT |
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 |
Date of Report (Date of earliest event reported): January 25, 2017 |
MEREDITH CORPORATION | ||
(Exact name of registrant as specified in its charter) | ||
Iowa | 1-5128 | 42-0410230 |
(State or other jurisdiction of incorporation or organization) | (Commission file number) | (I.R.S. Employer Identification No.) |
1716 Locust Street, Des Moines, Iowa | 50309-3023 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code: (515) 284-3000 | ||
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits | ||
99 | Conference call script of conversation with analysts on January 25, 2017, concerning news release of the same date which reported earnings for the second fiscal quarter and six months ended December 31, 2016. |
SIGNATURE | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
MEREDITH CORPORATION | ||
Registrant | ||
/s/ Joseph Ceryanec | ||
Joseph Ceryanec | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
Date: January 25, 2017 |
• | Earnings per share increased to $1.58 in the quarter. |
• | Excluding special items in both periods, we increased earnings per share 63 percent to $1.30, compared to $0.80 in the prior-year period. Total company revenues grew by 9 percent and total advertising revenues were up 11 percent, both representing all-time quarterly highs. |
• | Results were led by our Local Media Group, which delivered all-time record performance across the board in revenue, operating profit and EBITDA. This included political-related advertising revenues of $40 million in the quarter, and $56 million for our fiscal first half. |
• | Total Company digital advertising revenues grew 16 percent to a fiscal second quarter record. |
• | National Media Group operating profit grew and profit margin expanded, driven by strong growth in digital advertising revenues. Digital ad revenues grew 16 percent and represented nearly 40 percent of total National Media Group advertising. Total ad revenues were off 2 percent, but were even on a comparable basis. |
• | Consumer engagement in key target demographics expanded across Meredith’s media |
• | And finally, we renewed the CBS affiliations in four of our markets including Atlanta, Phoenix, our two largest, as well as Kansas City and Flint, Michigan. When you combine these affiliation renewals with those completed last April for St. Louis, Hartford and Springfield, we have now secured all seven of our CBS affiliations into the year 2020. I am very pleased with the terms and conditions of these new agreements with CBS. |
• | We delivered 6 percent growth in total advertising, as ad revenues grew in both our Local and our National Media groups. |
◦ | In our Local Media Group, 12 percent advertising growth was driven by a very strong political cycle. Between the primaries and the general elections, we generated a record $67 million of political advertising. We also increased net retransmission profit contribution. |
◦ | In our National Media Group, we delivered growth in ad revenues as low-double-digit growth in digital advertising more than offset low-single-digit declines in print. We’re very pleased to have reached this ‘inflection point’ in advertising performance, with digital growth surpassing print declines. |
• | In our Local Media Group, we increased total news and local entertainment programming to 700 hours weekly as we launched new newscasts in multiple markets, including Atlanta, Phoenix and Portland. |
• | In our National Media Group, we refreshed several of our brands including Better Homes & Gardens, EatingWell and Family Circle, increasing their appeal to Millennial women. We launched The Magnolia Journal, a new quarterly lifestyle magazine from popular television personalities Joanna and Chip Gaines. For our Allrecipes brand, we expanded its social media functionality, increased the ratebase of the Allrecipes magazine to 1.35 million, and launched an Allrecipes-branded national television show airing on the CW Network to over 100 million U.S. television households. |
• | Our ongoing work to improve the reach, relevance and vibrancy of our media assets continues to strengthen our audience connection. For example, our reach increased to nearly 75 percent of American female Millennials. Our total multi-channel reach among unduplicated American women now stands at an all-time high of 102 million. Our rating performance in our Local Media Group was strong throughout the year, with nine of our stations consistently ranking No. 1 or No. 2 in late news and seven stations ranking No. 1 or 2 in the morning. |
• | Our Local Media Group delivered significant growth in retransmission revenues by renegotiating rates with MVPDs for a large portion of our subscriber households. |
• | In our National Media Group, we renewed our industry leading licensing agreement with Walmart, grew our Better Homes & Gardens real estate program with Realogy, and launched new licensing programs for EatingWell, Shape and Allrecipes. We’re now ranked as the second largest licensor behind Disney, according to License!Global magazine. |
• | Total advertising revenues declined slightly to $135 million. However on a comparable basis excluding MORE magazine, total advertising was even with the prior year. This performance was driven by 16 percent growth in digital ad revenues, which offset declines in print advertising. |
• | Digital advertising revenues accounted for 38 percent of total National Media Group ad revenues. Performance was led by the Allrecipes, Parents and Shape brands. |
• | Our magazines grew their share of total industry advertising 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. |
• | Circulation revenues grew to $67 million. Newsstand performance drove overall circulation revenue growth, led by a strong debut of The Magnolia Journal, which Steve referenced earlier. |
• | Finally, we reduced expenses 3 percent through operational efficiencies, again before special items. |
1. | A current annual dividend of $1.98 a share that we typically revisit in late January or early February each year; |
2. | A $100 million share repurchase program, with $74 million remaining under current authorizations; and |
3. | Ongoing strategic investments to scale our business and increase shareholder value over time. |
4. | The combination of our dividend, share buybacks and stock price appreciation drove a Total Shareholder Return of 45 percent for Meredith shareholders in calendar 2016. |
• | Cash flow from operations grew to $117 million from $48 million in the prior-year period. |
• | Our total debt was $674 million and our weighted average interest rate was 2.8 percent, with $400 million of that debt effectively fixed at low rates. |
• | Our leverage was 1.9 to 1 for the trailing 12 months. |
1. | A great group of television stations in large and faster-growing markets. |
2. | Trusted national brands with an unrivaled reach to American women, particularly our growing reach to the Millennial generation. |
3. | A profitable and growing digital business. |
4. | Vibrant and growing brand licensing activities that are based on our very strong National Media brands; and |
5. | A strong and proven management team with a very successful record of generating growing free cash flow and shareholder value over time. |
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