) reported adjusted earnings of 88 cents per share for the fourth
quarter of fiscal 2014, which was way ahead of the Zacks Consensus
Estimate of 84 cents and grew 17.3% on a year-over-year basis.
Including one-time items, earnings came in at 89 cents, up 19% year
For the fiscal, adjusted earnings came in at $2.80 per share,
beating the Zacks Consensus Estimate of $2.76 per share but
declining 3.8% year over year. Including one time items, earnings
came in at $2.50, down 8.8%.
Management initiated fiscal 2015 earnings per share guidance and
expects it to range from $3.00 to $3.25. Moreover, for the first
quarter of fiscal 2015, the company expects earnings to be around
60-65 cents per share as compared with 53 cents in the prior-year
period. The Zacks Consensus Estimate for the first quarter and
fiscal 2015 are pegged at 63 cents and $3.24, respectively.
Revenues & Margins
Total revenue for the quarter fell nearly 1% to $390.8 million. A
fall in Advertising revenues of $204.1 million and Circulation
revenues of $87.7 million were partly offset by a rise in other
revenues to $99 million. Total revenue fell short of the Zacks
Consensus Estimate of $399 million.
For the fiscal, revenues of $1,468.7 million dipped 0.2% year over
year and missed the Zacks Consensus Estimate of $1,502 million.
For first quarter of fiscal 2015, total revenue is anticipated to
increase in the mid-single digits range.
Total operating expenses for the quarter increased 0.4% to $330.2
million owing to a 3.1% increase in production, distribution and
editorial costs, and an 18.9% rise in depreciation and amortization
charges. These were partly offset by a 3.1% fall in selling,
general, and administrative expenses.
Operating profit grew 4.4% to $60.6 million, while operating margin
expanded 50 basis points to 15.5%.
National Media Group
revenues fell 5.1% year over year to $279.6 million, due to an 8.6%
decline in advertising revenues to $122.7 million and 4.4% in Other
revenues to $69.2 million. The segment's operating profit was flat
at $43 million.
Meredith now projects National Media Group advertising revenues to
fall in mid-single digits in the first quarter of fiscal 2015.
Local Media Group
revenues rose 20.3% to $111.2 million due to a 13.1% increase in
non-political advertising revenues to $78.3 million, substantial
rise in political advertising revenues to $3.1 million and a 32.6%
increase in other revenues to $29.8 million. The segment's
operating income fell 8% to $25.5 million.
Management now expects Local Media Group's revenues to increase
35%-40%. Nearly a third of the political advertising revenues will
be recorded in the fiscal first quarter of 2015.
Meredith's Growth Catalysts
Meredith boasts a strong portfolio of women's magazines, which
helps it gain market share. Further, the company remains focused on
bolstering advertising revenues, primarily in the digital space and
is increasingly concentrating on brand licensing, marketing
services and e-Commerce to counter possible economic downturns
In Dec 2013, in order to enhance its television portfolio, Meredith
agreed to buy television stations in Phoenix and St. Louis from
Gannett Co. Inc. (
) and Sander Media LLC for $407.5 million in cash. Under the deal,
the stations that Meredith acquired include KTVK, an independent
station in Phoenix, KASW, the CW affiliate in Phoenix and KMOV, the
CBS affiliate in St. Louis.
Further, the company announced its plans to acquire Fox and ABC
affiliate, WGGB station in Springfield, MA. The transaction is
expected to close in the first quarter of fiscal 2015.
In Nov 2013, Meredith launched Allrecipes magazine, the media
industry's most important print extension of a digital brand.
Advertising interest has been strong, with Procter and Gamble (
), Hershey as well as General Motors making commitments.
Meredith is also an ideal pick for yield-seeking investors. The
company, through its total shareholder return (TSR) strategy,
intends to boost shareholder value through dividend payouts, share
repurchases and strategic investments in business to drive growth.
Since the implementation of this strategy two years back, the
company has hiked its dividend by 70% and initiated a $100 million
share repurchase program.
The company has a history of regularly paying dividends for 67
years. Over the last two decades, it has increased its dividend
consistently, which now stands at $1.73 per share. The company's
last dividend hike of 6% came in Feb 2014.
Moreover, the company constantly seeks to venture into new arenas
and add alternative revenue generating channels through strategic
acquisitions and collaborations. Meredith's contract with Wal-Mart
Stores Inc. (
) includes an expansion of the Better Homes and Gardens-branded
home decor and garden program at Wal-Mart stores across the United
States and Canada.
The company's brand licensing revenues rose nearly 10% in the year
on account of continued robust sales of more than 3,000 SKU's of
Better Homes and Gardens' approved products at more than 4,000
Wal-Mart outlets across the U.S.
Other Financial Details
Meredith ended the year with cash and cash equivalents of $36.6
million, long-term debt of $627.5 million and shareholders' equity
of $891.7 million. For the fiscal, the company has bought back 1.6
As of Jun 30, 2014, Meredith had $108 million worth of shares
remaining under its existing share repurchase authorization. The
company's leverage ratio (debt to EBITDA) was 2.7 to 1 for the 12
month-period ended Jun 30, 2014.
Currently, Meredith carries a Zacks Rank #2 (Buy).
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