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| 8-K - FORM 8-K - MARTHA STEWART LIVING OMNIMEDIA INC | d723102d8k.htm |
Exhibit 99.1
Martha Stewart Living Omnimedia Reports First Quarter 2014 Results
NEW YORK, May 6, 2014 /PRNewswire/ - Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the first quarter ended March 31, 2014. The Company reported revenue for the first quarter of $33.3 million.
Dan Dienst, Chief Executive Officer, said, “First quarter results reflect the current transition underway at the Company as we start to benefit from the significant changes we made at the end of 2013 to realign our business. We still have work to do but are encouraged by the early results of these decisions. Our efforts in 2014 are now keenly focused on growing our business across all verticals and with existing and new partners. As a company of ideas and inspirations, we are excited about the future growth for our peerless brand.”
First Quarter 2014 Summary
Revenues totaled $33.3 million in the first quarter of 2014, compared to $37.2 million in the first quarter of 2013, due largely to lower digital and print advertising revenues.
Total operating loss for the first quarter of 2014 was $(2.2) million compared to a loss of $(3.0) million in the prior-year period. The first quarter of 2013 included a net gain on the sale of a subscriber list of $2.7 million.
Basic and diluted net income per share was $(0.05) for both the first quarter of 2014 and 2013. Included in this year’s first quarter results is the planned $2.1 million accelerated amortization related to vacating space in the Company’s headquarters.
First Quarter 2014 Results by Segment
Three Months Ended March 31,
(unaudited, in thousands)
| 2014 | 2013 | |||||||
| REVENUES |
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| Publishing |
$ | 19,506 | $ | 24,482 | ||||
| Merchandising |
13,084 | 11,507 | ||||||
| Broadcasting |
678 | 1,235 | ||||||
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| Total Revenues |
$ | 33,268 | $ | 37,224 | ||||
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| OPERATING (LOSS) / INCOME |
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| Publishing |
$ | (2,750 | ) | $ | (990 | ) | ||
| Merchandising |
9,300 | 5,686 | ||||||
| Broadcasting |
193 | 961 | ||||||
| Corporate |
(8,933 | ) | (8,702 | ) | ||||
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| Total Operating Loss |
$ | (2,190 | ) | $ | (3,045 | ) | ||
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Recent Business Highlights
| • | MSLO’s media properties have been nominated and have won several prestigious awards this quarter: Martha Stewart’s Cooking School recently won a James Beard Award, which is the highest honor for food and beverage professionals; Martha Stewart Living was nominated for two National Magazine Awards, for General Excellence (Service & Lifestyle) and for Design; Martha Stewart Living was also named a Society of Publication Designers’ Medal Finalist, which is the world’s most prestigious editorial design competition; and MSLO recently won a Webby People’s Voice Award in the lifestyle category and was also nominated for two of Media Industry Newsletter’s Digital Awards - both are top honors in the digital industry. |
| • | We continue to have a growing presence on PBS as the third season of Martha Bakes began airing last month. Together, Martha Bakes and Martha’s Cooking School draw a total of 1.8 million viewers a week. |
Publishing
Revenues in the first quarter of 2014 were $19.5 million, compared to $24.5 million in the prior year’s first quarter. The decline in revenue is due to lower digital advertising revenue and the absence of Whole Living, a supplement issue of Everyday Food and a special issue publication in the quarter.
Operating loss was $(2.8) million for the first quarter of 2014, compared to $(1.0) million in the prior year. Last year’s first quarter results included the non-recurring gain of $2.7 million associated with the sale of our Whole Living subscriber list.
Merchandising
Revenues increased 14% to $13.1 million for the first quarter of 2014, as compared to $11.5 million in the prior year’s first quarter, due mainly to non-cash revenue from J.C. Penney’s return of MSO shares and the recognition of J.C. Penney’s minimum royalties with no comparable revenue in the first quarter of 2013.
Operating income was $9.3 million for the first quarter of 2014 as compared to $5.7 million in the first quarter of 2013.
Broadcasting
Revenue in the first quarter of 2014 was $0.7 million, compared to $1.2 million in the first quarter of 2013, primarily due to non-recurring revenue components in the prior year related to our historical Broadcasting operations.
Operating income was $0.2 million for the first quarter of 2014 compared to operating income of $1.0 million in the first quarter of 2013.
Corporate
Corporate expenses were $(8.9) million in the first quarter of 2014 compared to $(8.7) million in the prior year’s quarter, due to the expected $2.1 million charge of accelerated amortization related to vacating space in the Company’s headquarters.
The Company will host a conference call with analysts and investors on May 6, 2014 at 8:30am EDT that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through May 20, 2014.
About Martha Stewart Living Omnimedia, Inc.
Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original “how-to” information, inspiring and engaging consumers with unique lifestyle content and well-designed, high-quality products. MSLO is organized into the following business segments: Publishing, Merchandising and Broadcasting. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.
Forward-Looking Statements
This press release may contain certain statements that we believe are, or may be considered to be, “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “continue,” “potential” or similar words or phrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements.
Such forward-looking statements include: the continued success of our brands and the reputation and popularity of Martha Stewart and Emeril Lagasse; adverse reactions to publicity relating to Ms. Stewart or Mr. Lagasse by consumers, advertisers and business partners; loss of the services of Ms. Stewart or Mr. Lagasse; continued management turnover; our ability to successfully implement our growth strategies; our ability to develop new or expand existing merchandising and licensing programs or the loss or failure of existing programs, including as a result of litigation or disputes with our partners; failure to predict, respond to and influence trends in consumer taste; our inability to successfully and profitably develop or introduce new products and services; softening of or increased competition for advertising revenues, including increased competitive pressure on digital display advertising rates as a result of programmatic buying of advertising inventory; inability to successfully capitalize on digital, mobile and video initiatives, including establishing relationships with additional distribution partners; our ability to drive and retain visitors to our digital platforms and to effectively monetize our digital platforms; disruption in the industries in which our publishing and digital third-party vendors operate; continued weak and uncertain worldwide economic conditions; increases in paper, postage, freight or printing costs; weakening in circulation, particularly in newsstand sales; failure to protect our intellectual property; and failure to realize expected efficiencies and benefits from our restructuring activities.
Certain of these and other factors are discussed in more detail in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, especially under the heading “Risk Factors,” which may be accessed through the SEC’s website at http://www.sec.gov/.
Martha Stewart Living Omnimedia, Inc.
Consolidated Statements of Operations
Three Months Ended March 31,
(unaudited, in thousands, except share and per share amounts)
| 2014 | 2013 | |||||||
| REVENUES |
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| Publishing |
$ | 19,506 | $ | 24,482 | ||||
| Merchandising |
13,084 | 11,507 | ||||||
| Broadcasting |
678 | 1,235 | ||||||
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| Total revenues |
33,268 | 37,224 | ||||||
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| Production, distribution and editorial |
(15,413 | ) | (20,614 | ) | ||||
| Selling and promotion |
(8,097 | ) | (9,651 | ) | ||||
| General and administrative |
(8,909 | ) | (11,203 | ) | ||||
| Depreciation and amortization |
(3,039 | ) | (967 | ) | ||||
| Restructuring charges |
— | (523 | ) | |||||
| Gain on sale of subscriber list, net |
— | 2,689 | ||||||
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| OPERATING LOSS |
(2,190 | ) | (3,045 | ) | ||||
| Interest income, net |
62 | 204 | ||||||
| Other expense, net |
(494 | ) | (70 | ) | ||||
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| LOSS BEFORE INCOME TAXES |
(2,622 | ) | (2,911 | ) | ||||
| Income tax benefit / (provision) |
19 | (362 | ) | |||||
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| NET LOSS |
$ | (2,603 | ) | $ | (3,273 | ) | ||
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| LOSS PER SHARE - BASIC AND DILUTED |
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| Net loss |
$ | (0.05 | ) | $ | (0.05 | ) | ||
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| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
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| Basic and diluted |
56,680,826 | 67,241,626 | ||||||
Martha Stewart Living Omnimedia, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| March 31, 2014 (unaudited) |
December 31, 2013 |
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| ASSETS |
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| CURRENT ASSETS |
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| Cash and cash equivalents |
$ | 18,014 | $ | 21,884 | ||||
| Short-term investments |
42,107 | 19,268 | ||||||
| Restricted cash and investments |
5,015 | 5,072 | ||||||
| Accounts receivable, net |
19,795 | 39,694 | ||||||
| Paper inventory |
2,034 | 2,901 | ||||||
| Other current assets |
3,076 | 3,876 | ||||||
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| Total current assets |
90,041 | 92,695 | ||||||
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| PROPERTY AND EQUIPMENT, net |
5,209 | 7,961 | ||||||
| GOODWILL |
850 | 850 | ||||||
| OTHER INTANGIBLE ASSETS, net |
45,200 | 45,200 | ||||||
| OTHER NONCURRENT ASSETS |
1,548 | 1,661 | ||||||
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| Total assets |
$ | 142,848 | $ | 148,367 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| CURRENT LIABILITIES |
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| Accounts payable and accrued liabilities |
$ | 11,828 | $ | 12,464 | ||||
| Accrued payroll and related costs |
5,174 | 8,665 | ||||||
| Current portion of deferred subscription revenue |
7,020 | 7,632 | ||||||
| Current portion of other deferred revenue |
20,052 | 17,227 | ||||||
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| Total current liabilities |
44,074 | 45,988 | ||||||
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| DEFERRED SUBSCRIPTION REVENUE |
2,817 | 3,587 | ||||||
| OTHER DEFERRED REVENUE |
15,212 | 17,307 | ||||||
| DEFERRED INCOME TAX LIABILITY |
7,040 | 7,094 | ||||||
| OTHER NONCURRENT LIABILITIES |
3,889 | 3,916 | ||||||
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| Total liabilities |
73,032 | 77,892 | ||||||
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| COMMITMENTS AND CONTINGENCIES |
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| SHAREHOLDERS’ EQUITY |
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| Class A Common Stock, $0.01 par value, 350,000,000 shares authorized: 31,218,064 and 30,704,491 shares issues in 2014 and 2013, respectively; 31,158,664 and 30,645,091 shares outstanding in 2014 and 2013, respectively |
312 | 307 | ||||||
| Class B Common Stock, $0.01 par value, 150,000,000 shares authorized: 25,734,625 and 25,984,625 shares issued and outstanding in 2014 and 2013, respectively |
257 | 260 | ||||||
| Capital in excess of par value |
343,702 | 342,213 | ||||||
| Accumulated deficit |
(273,654 | ) | (271,051 | ) | ||||
| Accumulated other comprehensive loss |
(26 | ) | (479 | ) | ||||
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| 70,591 | 71,250 | |||||||
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| Less: Class A treasury stock - 59,400 shares at cost |
(775 | ) | (775 | ) | ||||
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| Total shareholders’ equity |
69,816 | 70,475 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 142,848 | $ | 148,367 | ||||
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CONTACT: Katherine Nash, Martha Stewart Living Omnimedia, Inc. Investor Relations, 212-827-8348, knash@marthastewart.com