Meredith Corporation (NYSE: MDP) ended last week on a high note, releasing its fiscal 2018 full year and fourth quarter results on Friday. For the fourth quarter, Meredith reported total revenue from continuing operations of $788 million, a 77 percent increase year-over-year. Earnings from continuing operations were $17 million, down from $43 million for the same period last year. However, adjusted EBITDA was $160 million, a 76 percent increase year-over-year.
“Our legacy Meredith businesses continue to perform in-line with our expectations, and we are very pleased with the progress being made on integrating the acquired Time Inc. properties,” said Meredith Corporation President and CEO Tom Harty in a news release. “We expect to see meaningful improvement in advertising results for the acquired Time Inc. brands during fiscal 2019.”
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“Given the progress made on synergy achievement and asset divestitures, we expect to achieve our goals of reducing debt by $1 billion by the end of fiscal 2019 and generating $1 billion of adjusted EBITDA in fiscal 2020, meaningfully contributing to total shareholder return,” Harty added.
Highlights for the fiscal 2018 full year include:
- Total company revenue for the full year were $2.2 billion, a 30 percent increase year-over-year.
- Total advertising revenue was $1.1 billion, a 20 percent increase.
- Earnings from continuing operations were $114 million, compared to $189 million for fiscal 2017.
- Adjusted EBITDA was a record $421 million, compared to $362 million for the prior year, representing a 16 percent increase.
Meredith Corporation executive chairman Stephen M. Lacy also commented on the company’s results.
“We have positioned Meredith Corporation on a growth track not realizable absent this acquisition, while continuing to pay a very attractive dividend to our shareholders,” said Lacy. “In fiscal 2018, we continued to strengthen our leading national and local media brands while adding powerful new brands such as People, InStyle, Southern Living and Real Simple, creating the most attractive portfolio in the marketplace.”
Perhaps the most notable achievement during fiscal year 2018 was Meredith’s “transformational” acquisition of Time Inc. which expanded the company’s reach to more than 175 million unduplicated U.S. consumers, including 80 percent of millennial women. The company now has 135 million monthly unique visitors, and claims it is number 1 in entertainment (People.com), food (Allrecipes.com) and lifestyle (BHG.com and MarthaStewart.com).
In addition to a larger audience and additional revenue, Meredith said that cost synergies will save the company more than $500 million in the first two full years of combined operations.
Since acquiring Time Inc., Meredith has closed on the sale of Golf and Time Inc. UK. It is also anticipating selling TIME, Sports Illustrated, Fortuna and Money in early fiscal year 2019. Meredith is selling off these assets because they are not core to Meredith’s business. They have different target audiences and advertising bases than the rest of the Meredith portfolio.
Meredith’s outlook for the first quarter of fiscal 2019 includes the following:
- National Media Group revenue between $540 million and $550 million
- Local Media Group revenue between $200 million and $210 million
- Earnings from continuing operations between $2 million and $10 million
- Adjusted EBITDA between $122 million and $127 million
Meredith’s outlook for the full year fiscal 2019 includes the following:
- Total revenue between $3.0 billion and $3.2 billion
- Earnings from continuing operations between $205 million and $225 million
- Adjusted EBITDA between $720 million and $750 million
- Earnings per share between $2.78 and $3.20
Investors do not appear to be pleased with Meredith’s earnings report. On August 9, the day before financials were released, Meredith stock closed at $53.25 per share. At 11:16 a.m. EDT on August 13, stock had dropped to $48.90 per share.
Meredith Corp. had a strong fiscal 2018, with solid revenue growth. The company’s acquisition of Time Inc. and its assets seem to have padded the company’s coffers, expanding their reach and giving them a larger base to which it can advertise. We are eager to see what changes Meredith might make to its existing and new magazine properties and what synergies will be needed to save the projected $500 million over two years.