Time Inc. Archives
Time Inc. Reports First Quarter 2017 Results
Q1 Digital Advertising Revenues Grew 32% Year-Over-Year
Q1 Print Advertising Revenues Declined 21% due to Secular Industry Trends, Media Speculation about Company’s Ownership and Impact of Advertising Sales Force Reorganization
Time Inc. Board of Directors Revises Capital Allocation Strategy to Enhance Financial Flexibility; Reduces Regular Quarterly Cash Dividend to $0.04 Per Share; Plans to Reduce Leverage Ratio toward Lower End of 2.0x-2.5x Target Range of Net Debt
Performance Improvement Initiatives Reduced First Quarter Costs by 7% Year-Over-Year; Company Hires Advisor to Assist with Aggressive Cost Re-Engineering for Meaningful Margin Expansion
Growth Initiatives Driving Strong Gains in Native and Branded Content Advertising Revenues and Video Revenues; Company Achieved Record One Billion Monthly Video Views in April
May 10, 2017
Results Summary | |||||||||
In millions (except per share amounts) | Three Months Ended March 31, |
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2017 | 2016 | ||||||||
GAAP Measures | |||||||||
Revenues | $ | 636 | $ | 690 | |||||
Operating income (loss) | (26 | ) | (3 | ) | |||||
Net income (loss) attributable to Time Inc. | (28 | ) | (10 | ) | |||||
Diluted EPS | (0.29 | ) | (0.10 | ) | |||||
Cash provided by (used in) operations | 15 | (52 | ) | ||||||
Non-GAAP Measures | |||||||||
Adjusted OIBDA | $ | 23 | $ | 43 | |||||
Adjusted Net income (loss) | (18 | ) | (11 | ) | |||||
Adjusted Diluted EPS | (0.18 | ) | (0.11 | ) | |||||
Free cash flow | (6 | ) | (87 | ) | |||||
The Company’s Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free cash flow are non-GAAP financial measures. See “Use of Non-GAAP Financial Measures” below and the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in Schedules I through IV attached hereto.
FIRST QUARTER RESULTS
Revenues decreased
Advertising Revenues decreased
Circulation Revenues decreased
Other Revenues, which include marketing and support services provided to third parties, book publishing, events and licensing, increased
Revenues Summary | ||||||||||||
In millions | Three Months Ended March 31, |
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2017 | 2016 | % Change | ||||||||||
Print and other advertising | $ | 212 | $ | 270 | (21)% | |||||||
Digital advertising | 119 | 90 | 32% | |||||||||
Advertising revenues | 331 | 360 | (8)% | |||||||||
Subscription | 140 | 161 | (13)% | |||||||||
Newsstand | 56 | 68 | (18)% | |||||||||
Other circulation | 9 | 9 | —% | |||||||||
Circulation revenues | 205 | 238 | (14)% | |||||||||
Other revenues | 100 | 92 | 9% | |||||||||
Revenues | $ | 636 | $ | 690 | (8)% | |||||||
Costs of Revenues and Selling, General and Administrative Expenses decreased
Restructuring and Severance Costs increased
Operating Income (Loss) was a loss of
Adjusted OIBDA decreased
Cash Provided By (Used In) Operations increased
Free Cash Flow was an outflow of
On
Capital Allocation Update
Following a comprehensive review of Time Inc.’s capital allocation, capital structure and operating plan, the
As of
Updating Guidance Practices
CONFERENCE CALL WEBCAST
The Company’s conference call can be heard live at
To access a live audio webcast of the conference call, visit the Events and Presentations section of invest.timeinc.com.
The earnings press release and management presentation will be available on our website at invest.timeinc.com.
USE OF NON-GAAP FINANCIAL MEASURES
Some limitations of OIBDA, Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free cash flow are that they do not reflect certain charges that affect the operating results of the Company's business and they involve judgment as to whether items affect fundamental operating performance.
A general limitation of these measures is that they are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. OIBDA, Adjusted OIBDA, Adjusted Net income (loss), Adjusted Diluted EPS and Free cash flow should be considered in addition to, not as a substitute for, the Company's Operating income (loss), Net income (loss) attributable to
In addition, this earnings release includes comparisons that exclude the impacts of foreign currency exchange rate changes. These comparisons, which are non-GAAP measures, are calculated by assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates. We believe this provides useful supplemental information regarding our results of operations, consistent with how we evaluate our own performance.
ABOUT
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of Time Inc.’s businesses. More detailed information about these factors may be found in filings by
TIME INC. CONSOLIDATED BALANCE SHEETS (Unaudited; in millions, except share amounts) |
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March 31, |
December 31, |
|||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 241 | $ | 296 | ||||||
Short-term investments | 40 | 40 | ||||||||
Receivables, less allowances of $183 and $203 at March 31, 2017 and December 31, 2016, respectively | 427 | 543 | ||||||||
Inventories, net of reserves | 30 | 31 | ||||||||
Prepaid expenses and other current assets | 132 | 110 | ||||||||
Total current assets | 870 | 1,020 | ||||||||
Property, plant and equipment, net | 311 | 304 | ||||||||
Intangible assets, net | 835 | 846 | ||||||||
Goodwill | 2,086 | 2,069 | ||||||||
Other assets | 69 | 66 | ||||||||
Total assets | $ | 4,171 | $ | 4,305 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities | ||||||||||
Accounts payable and accrued liabilities | $ | 513 | $ | 598 | ||||||
Deferred revenue | 420 | 403 | ||||||||
Current portion of long-term debt | 7 | 7 | ||||||||
Total current liabilities | 940 | 1,008 | ||||||||
Long-term debt | 1,232 | 1,233 | ||||||||
Deferred tax liabilities | 195 | 210 | ||||||||
Deferred revenue | 81 | 86 | ||||||||
Other noncurrent liabilities | 323 | 328 | ||||||||
Redeemable noncontrolling interests | 1 | — | ||||||||
Stockholders' equity | ||||||||||
Common stock, $0.01 par value, 400 million shares authorized; 99.34 million and 98.95 million shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 1 | 1 | ||||||||
Preferred stock, $0.01 par value, 40 million shares authorized; none issued | — | — | ||||||||
Additional paid-in-capital | 12,531 | 12,548 | ||||||||
Accumulated deficit | (10,760 | ) | (10,732 | ) | ||||||
Accumulated other comprehensive loss, net | (373 | ) | (377 | ) | ||||||
Total Time Inc. stockholders' equity | 1,399 | 1,440 | ||||||||
Equity attributable to noncontrolling interests | — | — | ||||||||
Total stockholders' equity | 1,399 | 1,440 | ||||||||
Total liabilities and stockholders' equity | $ | 4,171 | $ | 4,305 | ||||||
TIME INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in millions, except per share amounts) |
||||||||||
Three Months Ended March 31, |
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2017 | 2016 | |||||||||
Revenues | ||||||||||
Advertising | ||||||||||
Print and other advertising | $ | 212 | $ | 270 | ||||||
Digital advertising | 119 | 90 | ||||||||
Total advertising revenues | 331 | 360 | ||||||||
Circulation | ||||||||||
Subscription | 140 | 161 | ||||||||
Newsstand | 56 | 68 | ||||||||
Other circulation | 9 | 9 | ||||||||
Total circulation revenues | 205 | 238 | ||||||||
Other | 100 | 92 | ||||||||
Total revenues | 636 | 690 | ||||||||
Costs of revenues | ||||||||||
Production costs | 135 | 159 | ||||||||
Editorial costs | 83 | 92 | ||||||||
Other | 65 | 45 | ||||||||
Total costs of revenues | 283 | 296 | ||||||||
Selling, general and administrative expenses | 332 | 365 | ||||||||
Amortization of intangible assets | 20 | 21 | ||||||||
Depreciation | 13 | 13 | ||||||||
Restructuring and severance costs | 16 | 1 | ||||||||
(Gain) loss on operating assets, net | (2 | ) | (3 | ) | ||||||
Operating income (loss) | (26 | ) | (3 | ) | ||||||
Bargain purchase (gain) | — | (5 | ) | |||||||
Interest expense, net | 17 | 17 | ||||||||
Other (income) expense, net | 2 | 6 | ||||||||
Income (loss) before income taxes | (45 | ) | (21 | ) | ||||||
Income tax provision (benefit) | (17 | ) | (11 | ) | ||||||
Net income (loss) | (28 | ) | (10 | ) | ||||||
Less: Net income (loss) attributable to noncontrolling interests | — | — | ||||||||
Net income (loss) attributable to Time Inc. | $ | (28 | ) | $ | (10 | ) | ||||
Per share information attributable to Time Inc. common stockholders: | ||||||||||
Basic net income (loss) per common share | $ | (0.29 | ) | $ | (0.10 | ) | ||||
Weighted average basic common shares outstanding | 99.65 | 102.59 | ||||||||
Diluted net income (loss) per common share | $ | (0.29 | ) | $ | (0.10 | ) | ||||
Weighted average diluted common shares outstanding | 99.65 | 102.59 | ||||||||
Cash dividends declared per share of common stock | $ | 0.04 | $ | 0.19 | ||||||
TIME INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in millions) |
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Three Months Ended March 31, |
||||||||||
2017 | 2016 | |||||||||
Cash provided by (used in) operations | $ | 15 | $ | (52 | ) | |||||
Cash provided by (used in) investing activities | (44 | ) | (139 | ) | ||||||
Cash provided by (used in) financing activities | (27 | ) | (117 | ) | ||||||
Effect of exchange rate changes on Cash and cash equivalents | 1 | (3 | ) | |||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (55 | ) | (311 | ) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 296 | 651 | ||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 241 | $ | 340 | ||||||
Schedule I |
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TIME INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA (Unaudited; in millions) |
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Three Months Ended March 31, |
|||||||||
2017 | 2016 | ||||||||
Operating income (loss) | $ | (26 | ) | $ | (3 | ) | |||
Depreciation | 13 | 13 | |||||||
Amortization of intangible assets | 20 | 21 | |||||||
OIBDA(1) | 7 | 31 | |||||||
Restructuring and severance costs | 16 | 1 | |||||||
(Gain) loss on operating assets, net(2) | (2 | ) | (3 | ) | |||||
Other costs(3) | 2 | 14 | |||||||
Adjusted OIBDA(4) | $ | 23 | $ | 43 |
______________
(1) OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets.
(2) (Gain) loss on operating assets, net primarily reflects the recognition of the deferred gain from the sale-leaseback of the
(3) Other costs related to mergers, acquisitions, investments and dispositions during the periods presented are included within Selling, general and administrative expenses within the Statements of Operations.
(4) Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangible assets, fixed assets and investments; Restructuring and severance costs; (Gain) loss on operating assets, net; Pension settlements/curtailments; and Other costs related to mergers, acquisitions, investments and dispositions.
Schedule II |
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TIME INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS) (Unaudited; in millions) |
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Three Months Ended March 31, 2017 |
Three Months Ended March 31, 2016 |
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Gross Impact | Tax Impact | Net Impact | Gross Impact | Tax Impact | Net Impact | |||||||||||||||||||||||||
Net income (loss) attributable to Time Inc. | $ | (45 | ) | $ | 17 | $ | (28 | ) | $ | (21 | ) | $ | 11 | $ | (10 | ) | ||||||||||||||
Restructuring and severance costs | 16 | (6 | ) | 10 | 1 | — | 1 | |||||||||||||||||||||||
(Gain) loss on operating assets, net(1) | (2 | ) | — | (2 | ) | (3 | ) | — | (3 | ) | ||||||||||||||||||||
Bargain purchase (gain)(2) | — | — | — | (5 | ) | — | (5 | ) | ||||||||||||||||||||||
(Gain) loss on extinguishment of debt(3) | — | — | — | (4 | ) | 1 | (3 | ) | ||||||||||||||||||||||
Other costs(4) | 2 | — | 2 | 14 | (5 | ) | 9 | |||||||||||||||||||||||
Adjusted Net income (loss)(5) | $ | (29 | ) | $ | 11 | $ | (18 | ) | $ | (18 | ) | $ | 7 | $ | (11 | ) |
________________________
(1) (Gain) loss on operating assets, net primarily reflects the recognition of the deferred gain from the sale-leaseback of the
(2) Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016.
(3) (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes is included within Other (income) expense, net within the Statements of Operations.
(4) Other costs related to mergers, acquisitions, investments and dispositions during the periods presented are included within Selling, general and administrative expenses within the Statements of Operations.
(5) Adjusted Net income (loss) is defined as Net income (loss) attributable to
Schedule III |
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TIME INC. RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS (Unaudited; all per share amounts are net of tax) |
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Three Months Ended March 31, |
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2017 | 2016 | ||||||||
Diluted net income (loss) per common share | $ | (0.29 | ) | $ | (0.10 | ) | |||
Restructuring and severance costs | 0.10 | 0.01 | |||||||
(Gain) loss on operating assets, net(1) | (0.02 | ) | (0.03 | ) | |||||
Bargain purchase (gain)(2) | — | (0.05 | ) | ||||||
(Gain) loss on extinguishment of debt(3) | — | (0.03 | ) | ||||||
Other costs(4) | 0.03 | 0.09 | |||||||
Adjusted Diluted EPS(5)(6) | $ | (0.18 | ) | $ | (0.11 | ) |
______________
(1) (Gain) loss on operating assets, net primarily reflects the recognition of the deferred gain from the sale-leaseback of the
(2) Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016.
(3) (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes is included within Other (income) expense, net within the Statements of Operations.
(4) Other costs related to mergers, acquisitions, investments and dispositions during the periods presented are included within Selling, general and administrative expenses within the Statements of Operations.
(5) Adjusted Diluted EPS is defined as Diluted EPS adjusted for impairments of Goodwill, intangible assets, fixed assets and investments; Restructuring and severance costs; Gain (loss) on operating and/or non-operating assets; Pension settlements/curtailments; Bargain purchase (gain); (Gain) loss on extinguishment of debt; and Other costs related to mergers, acquisitions, investments and dispositions; as well as the impact of income taxes on the above items.
(6) For periods in which we were in net loss and adjusted net loss positions, we used the diluted shares from Diluted net income (loss) per common share in the calculation of Adjusted Diluted EPS, without giving effect to the impact of participating securities.
Schedule IV |
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TIME INC. RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATIONS TO FREE CASH FLOW (Unaudited; in millions) |
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Three Months Ended March 31, |
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2017 | 2016 | ||||||
Cash provided by (used in) operations | $ | 15 | $ | (52 | ) | ||
Less: Capital expenditures | (21 | ) | (35 | ) | |||
Free cash flow(1) | $ | (6 | ) | $ | (87 | ) |
______________
(1) Free cash flow is defined as Cash provided by (used in) operations, less Capital expenditures. Capital expenditures for the three months ended
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Source:
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Investor Relations
Jaison Blair, 212-522-5952
or
Tanya Levy-Odom, 212-522-9225