Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Time Inc. | a8k9302016cover.htm |
| EX-99.1 - EXHIBIT 99.1 - Time Inc. | exhibit9913q16pr.htm |
THIRD QUARTER 2016
Financial Results
NOVEMBER 3, 2016
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995;
particularly statements regarding future financial and operating results of Time Inc. (the “Company”) and its business. 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 in this presentation due to changes in
economic, business, competitive, technological, strategic, regulatory and/or other factors. More detailed information about these
factors may be found in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company is under no obligation, and expressly
disclaims any such obligation, to update or alter its forward-looking statements, whether as a result of new information, future
events or otherwise.
Non-GAAP financial measures such as Operating income before depreciation and amortization (“OIBDA”), Adjusted OIBDA,
Adjusted Diluted Earnings Per Share (EPS) and Free Cash Flow, as included in this presentation, are supplemental measures that
are not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Definitions of these measures and
reconciliations to the most directly-comparable U.S. GAAP measures are included at the end of this presentation deck. Our non-
GAAP financial measures have limitations as analytical and comparative tools and you should consider OIBDA, Adjusted OIBDA,
Adjusted Diluted EPS and Free Cash Flow in addition to, and not as a substitute for, the Company’s Operating income (loss), Net
income (loss), Diluted EPS and various cash flow measures (e.g., Cash provided by (used in) operations), as well as other measures
of financial performance and liquidity reported in accordance with U.S. GAAP.
Note: Throughout the presentation, certain numbers may not sum to the total due to rounding.
2
Disclaimer
Total revenues declined 3% year-over-year including approx. 200 bps related to FX.
Total advertising revenues increased 5% year-over year.
Digital advertising revenues increased 63%, representing 31% of total advertising revenues.
Operating expenses decreased 3% year over year including approx. 200 bps related to FX.
Operating loss of ($167) million versus an Operating loss of ($899) million last year.
Adjusted OIBDA was $100 million versus $113 million last year.
Quarter-end cash, cash equivalents and short-term investments of $304 million or $3.06 per share.
In conjunction with our realignment program and other actions, we incurred $43 million of net
restructuring and severance costs.
We now expect 2016 Operating income of $15 million to $25 million.
We are narrowing our 2016 Adjusted OIBDA outlook to a range of $400 million to $415 million.
3Q16 Financial Highlights
3
$319
$288
$79 $129
2015 2016
Digital Advertising
Print and Other Advertising
3Q16 Advertising Revenues
Total advertising revenues up 5%
Print and other advertising revenues
down 10%
Digital advertising revenues up 63%
- Includes the benefit of acquisitions
$398
$417
4
HIGHLIGHTS
3Q 3Q
$MM
Revenues
Revenues
$168
$148
$86
$68
$7
$7
Other Circulation Revenues
Newsstand Revenues
Subscription Revenues
Subscription revenues down 12%
Newsstand revenues down 21%
$MM
$261
$223
3Q16 Circulation Revenues
HIGHLIGHTS
3Q15 3Q16
5
3Q16 Other Revenues
Other revenues down 4%
$114
$110
HIGHLIGHTS
3Q15 3Q16
$MM
6
$359 $326
$310 $326
Costs of Revenues (COR)
Selling, General & Administrative Expenses (SG&A)
3Q16 Operating Expenses
COR and SG&A combined down 3%
- Includes costs related to our growth initiatives
and operations of newly acquired businesses
- Includes transaction-related expenses and
pension settlements/curtailments which are
excluded from our Adjusted OIBDA calculation:
3Q15 3Q16
Transaction-related $3 $2
Pension settlements/curtailments $6 $-
$652 $669
HIGHLIGHTS
3Q15 3Q16
$MM
7
1 2
3Q16 Adjusted OIBDA
$113
$100
3Q16 Operating loss of ($167) million vs. an
Operating loss of ($899) million in the prior year
3Q16 Adjusted OIBDA of $100 million vs. $113
million in the prior year
3Q16 Diluted Net Loss Per Share of ($1.13) vs.
($8.30) in the prior year
3Q16 Adjusted Diluted EPS of $0.31 vs. $0.32 in
the prior year
HIGHLIGHTS
3Q15 3Q16
$MM
8
3Q16 Cash Update
HIGHLIGHTS
3Q16 ending cash, cash equivalents and short-term
investments of $304 million
Cash provided by operations of $79 million
Quarterly dividend of $0.19 per share, or
$19 million, paid on 9/15/16
$5 million face value of debt purchased at a discount of
$4.9 million (excluding accrued interest)
Stock buyback of $17 million (on settlement date basis)
As of 9/30/16, net leverage ratio of 2.44x
- Target net leverage ratio 2.0x to 2.5x
9
CHANGES IN CASH, CASH EQUIVALENTS
AND SHORT-TERM INVESTMENTS
Beginning Cash Balance 7/1/16 $380
Free Cash Flow
Acquisitions/Divestitures, net
Purchase of common stock
Dividends paid
Repurchase of Senior Notes
Other
62
(95)
(17)
(19)
(5)
(2)
Ending Cash Balance 9/30/16 $304
Time Inc. Outlook For 2016
1 We define Adjusted OIBDA as OIBDA adjusted for impairments of Goodwill, intangibles, 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.
2 The Previous Full Year 2016 Outlook assumed USD to GBP exchange rate of 1.3 for the remainder of the year. The Current Full Year 2016 Outlook assumes USD
to GBP exchange rate of 1.2 for the remainder of the year.
3 2015 Actual capital expenditures were offset by $46 million of tenant improvements allowances.
$MM
FY 2015
ACTUALS
PREVIOUS FY 2016
OUTLOOK RANGE2
CURRENT FY 2016
OUTLOOK RANGE2
Revenues (5)% 0% - 1.5% (1%) – 0%
Operating income (loss) ($823) $215 - $240 $15 - $25
Adjusted OIBDA1 $440 $400 - $430 $400 - $415
Investment spending,
net
($30) ($20) ($20)
Capital expenditures $166 $95 - $105 $95 - $105
Real estate related3 $115 $50 $50
Core & growth $51 $45 - $55 $45 - $55
10
Q&A
Appendix
13
(1) OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets.
(2) Asset impairments primarily related to a definite-lived tradename intangible.
(3) (Gain) loss on operating assets, net primarily reflects the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue
Fin Building in the fourth quarter of 2015.
(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 OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangibles, 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.
TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA
(Unaudited; in millions)
Schedule I
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Operating income (loss) $ (167 ) $ (899 ) $ (120 ) $ (833 )
Depreciation 14 22 41 69
Amortization of intangible assets 22 21 63 60
OIBDA(1) (131 ) (856 ) (16 ) (704 )
Asset impairments(2) 188 — 189 —
Goodwill impairment — 952 — 952
Restructuring and severance costs 43 8 54 22
(Gain) loss on operating assets, net(3) (2 ) — (18 ) —
Pension settlements/curtailments — 6 — 6
Other costs(4) 2 3 23 5
Adjusted OIBDA(5) $ 100 $ 113 $ 232 $ 281
14
TIME INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME
(Unaudited; in millions)
Schedule II
(1) Asset impairments primarily related to a definite-lived tradename intangible.
(2) (Gain) loss on operating assets, net primarily relates to the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue Fin
Building in the fourth quarter of 2015.
(3) Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016.
(4) (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes are included within Other (income) expense, net on the Statements of Operations.
(5) Adjusted Net income (loss) is defined as Net income (loss) adjusted for impairments of Goodwill, intangibles, 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.
Three Months Ended
September 30, 2016
Three Months Ended
September 30, 2015
Gross Impact Tax Impact Net Impact Gross Impact Tax Impact Net Impact
Net income (loss) $ (185 ) $ 73 $ (112 ) $ (916 ) $ 3 $ (913 )
Asset impairments(1) 188 (72 ) 116 — — —
Goodwill impairment — — — 952 (11 ) 941
Restructuring and severance costs 43 (14 ) 29 8 (2 ) 6
(Gain) loss on operating assets, net(2)
(2 ) —
(2 ) —
—
—
Pension settlements/curtailments — — — 6 (2 ) 4
Other costs 2 — 2 3 (1 ) 2
Adjusted Net income (loss)(5) $ 46 $ (13 ) $ 33 $ 53 $ (13 ) $ 40
Nine Months Ended
September 30, 2016
Nine Months Ended
September 30, 2015
Gross Impact Tax Impact Net Impact Gross Impact Tax Impact Net Impact
Net income (loss) $ (177 ) $ 73 $ (104 ) $ (894 ) $ (4 ) $ (898 )
Asset impairments (1) 189 (72 ) 117 — — —
Goodwill impairment — — — 952 (11 ) 941
Restructuring and severance costs 54 (18 ) 36 22 (8 ) 14
(Gain) loss on operating assets, net(2)
(18 ) 4
(14 ) —
—
—
Pension settlements/curtailments — — — 6 (2 ) 4
Bargain purchase (gain)(3) (3 ) — (3 ) — — —
(Gain) loss on extinguishment of debt(4)
(4 ) 2
(2 ) —
—
—
Other costs 23 (9 ) 14 5 (1 ) 4
(Gain) loss on non-operating assets, net
—
—
—
(2 ) —
(2 )
Adjusted Net income (loss)(5) $ 64 $ (20 ) $ 44 $ 89 $ (26 ) $ 63
Schedule III
TIME INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
(Unaudited; all per share amounts are net of tax)
(1) Asset impairments primarily related to a definite-lived tradename intangible.
(2) (Gain) loss on operating assets, net primarily relates to the recognition of a gain on sale of certain of our titles and the deferred gain from the sale-leaseback of the Blue Fin Building in the
fourth quarter of 2015.
(3) Bargain purchase (gain) relates to the acquisition of certain assets of Viant in the first quarter of 2016.
(4) (Gain) loss on extinguishment of debt in connection with repurchases of our Senior Notes are included within Other (income) expense, net on the Statements of Operations.
(5) Adjusted Diluted EPS is defined as Diluted EPS adjusted for impairments of Goodwill, intangibles, 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 a net loss position, we have used the expected diluted shares in the calculation of Adjusted Diluted EPS as if we were in a net income position, without
giving effect to the impact of participating securities.
15
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Basic net income (loss) per common share $ (1.13 ) $ (8.30 ) $ (1.05 ) $ (8.17 )
Asset impairments(1) 1.16 — 1.17 —
Goodwill impairment — 8.51 — 8.51
Restructuring and severance costs 0.28 0.05 0.35 0.13
(Gain) loss on operating assets, net(2) (0.02 ) — (0.14 ) —
Pension settlements/curtailments — 0.04 — 0.04
Bargain purchase (gain)(3) — — (0.03 ) —
(Gain) loss on extinguishment of debt(4) — — (0.03 ) —
Other costs 0.02 0.02 0.15 0.04
(Gain) loss on non-operating assets, net — — — (0.02 )
Adjusted Diluted EPS(5)(6) $ 0.31 $ 0.32 $ 0.42 $ 0.53
16
TIME INC.
RECONCILIATION OF CASH PROVIDED BY (USED IN) OPERATIONS TO FREE CASH
FLOW
(Unaudited; in millions)
Schedule IV
(1) Free Cash Flow is defined as Cash provided by (used in) operations, less Capital expenditures. Capital expenditures in the three and nine months ended September 30, 2016
reflect lower capital spending due to the completion of the relocation of our corporate headquarters and other properties in 2015.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Cash provided by (used in) operations $ 79 $ 84 $ 106 $ 127
Less: Capital expenditures (17 ) (69 ) (78 ) (132 )
Free Cash Flow(1) $ 62 $ 15 $ 28 $ (5 )
17
Schedule V TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA - 2016
OUTLOOK
(Unaudited; in millions)
(1) OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets.
(2) Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangibles, 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.
Previous 2016 Outlook Current 2016 Outlook
2015 Actual Low High Low High
Operating income (loss) $ (823 ) $ 215 $ 240 $ 15 $ 25
Depreciation 92 60 60 55 55
Amortization of intangible assets 80 80 80 80 80
OIBDA(1) $ (651 ) $ 355 $ 380 $ 150 $ 160
Asset impairments, Goodwill
impairment, Restructuring and
severance costs, (Gains) losses on
operating assets, net; Pension
settlements/curtailments; and
Other costs related to mergers,
acquisitions, investments and
dispositions 1,091
45
50
250
255
Adjusted OIBDA(2) $ 440 $ 400 $ 430 $ 400 $ 415
