Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Time Inc. | exhibit9911q2017er.htm |
| 8-K - 8-K - Time Inc. | a8k3312017cover.htm |
Management
Presentation
MAY 10, 2017
1Q 2017
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 (loss) excluding Depreciation and Amortization of intangible assets (“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) attributable to Time Inc., 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.
All trademarks and service marks referenced herein are owned by the respective trademark or service mark owners. ©2017 Time Inc.
Published 2017.
2
Caution Concerning Forward-Looking Statements and
Non-GAAP Financial Measures
Total revenues declined 8% year-over-year including approx. 200 bps related to FX .
Print advertising revenues declined 21% year-over-year.
Digital advertising revenues increased 32% year-over-year representing approx. 36% of total advertising
revenues.
Circulation Revenues declined 14% year-over-year including approx. 300 bps related to FX.
Other Revenues increased 9% year-over-year driven by digital syndication and bookazines including
approx. 100 bps of adverse impact from FX.
Costs of Revenues and Selling, General and Administrative expenses decreased 7% year-over-year,
including approx. 200 bps related to FX.
Operating Loss of $26 million versus Operating Loss of $3 million in the prior year.
Adjusted OIBDA of $23 million versus $43 million in the prior year.
Quarter-end cash, cash equivalents and short-term investments of $281 million or $2.83 per share.
1Q17 Financial Highlights
3
$270
$212
$90
$119
2015 2016
Digital Advertising
Print and Other Advertising
1Q17 Advertising Revenues
Total advertising revenues down 8%
Print and other advertising revenues
down 21%
Digital advertising revenues up 32%
- Includes the benefit of acquisitions
$360
$331
4
HIGHLIGHTS
1Q 6 1Q 7
$MM
Revenues
Revenues
$161
$140
$68
$56
$9
$9
Other Circulation Revenues
Newsstand Revenues
Subscription Revenues
Subscription revenues down 13%
Newsstand revenues down 18%
$MM
$238
$205
1Q17 Circulation Revenues
HIGHLIGHTS
1Q16 1Q17
5
1Q17 Other Revenues
Other revenues up 9%
$92
$100
HIGHLIGHTS
1Q16 1Q17
$MM
6
$365 $332
$296
$283
Costs of Revenues (COR)
Selling, General & Administrative Expenses (SG&A)
1Q17 Costs of Revenues and SG&A Expenses
COR and SG&A combined down 7%
- Includes costs related to FX
- Includes transaction-related expenses which are excluded
from our Adjusted OIBDA calculation:
1Q16 1Q17
Transaction-related $14 $2
$615
$661
HIGHLIGHTS
1Q16 1Q17
$MM
7
1 2
1Q17 Adjusted OIBDA
$43
$23
1Q17 Operating loss of $26 million vs. Operating
loss of $3 million in the prior year
1Q17 Adjusted OIBDA of $23 million vs. $43
million in the prior year
1Q17 Diluted Net Loss Per Share of $(0.29) vs.
($0.10) in the prior year
1Q17 Adjusted Diluted EPS of ($0.18) vs. ($0.11)
in the prior year
HIGHLIGHTS
1Q16 1Q17
$MM
8
1Q17 Cash Update
HIGHLIGHTS
1Q17 ending cash, cash equivalents and short-term investments
of $281 million
Cash provided by operations of $15 million
Quarterly dividend of $0.19 per share, or
$19 million, paid on 3/15/17
As of 3/31/17, net leverage ratio of 2.47x
- Target net leverage ratio 2.0x to 2.5x
9
CHANGES IN CASH, CASH EQUIVALENTS
AND SHORT-TERM INVESTMENTS
Beginning Cash Balance 12/31/16 $336
Free Cash Flow
Acquisitions/Divestitures, net
Dividends paid
Other
(6)
(23)
(19)
(7)
Ending Cash Balance 3/31/17 $281
Q&A
Appendix
12
(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 Blue Fin Building that was completed in the fourth
quarter of 2015.
(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.
TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA
(Unaudited; in millions)
Schedule I
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
13
TIME INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME
(Unaudited; in millions)
Schedule II
(1) (Gain) loss on operating assets, net primarily reflects the recognition of the deferred gain from the sale-leaseback of the Blue Fin Building that was
completed in the fourth quarter of 2015.
(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 Time Inc. 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.
Three Months Ended
March 31, 2017
Three Months Ended
March 31, 2016
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 )
Schedule III
TIME INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
(Unaudited; all per share amounts are net of tax)
(1) (Gain) loss on operating assets, net primarily reflects the recognition of the deferred gain from the sale-leaseback of the Blue Fin Building that was completed in the fourth
quarter of 2015.
(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 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.
14
Three Months Ended
March 31,
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 )
15
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 for the three months ended March 31, 2017 reflect lower capital
spending due to the completion of the construction of our corporate headquarters in 2016.
Three Months Ended
March 31,
2017 2016
Cash provided by (used in) operations $ 15 $ (52 )
Less: Capital expenditures (21 ) (35 )
Free cash flow(1) $ (6 ) $ (87 )
16
Schedule V TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA - 2017
OUTLOOK
(Unaudited; in millions)
(1) The Full Year 2016 results averaged a USD to GBP exchange rate of 1.3. The Full Year 2017 Outlook assumes USD to GBP exchange rate of 1.25.
(2) OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets.
(3) 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.
2016 Actual(1)
Full Year 2017 Outlook
Range(1)
Operating income (loss) $ 2 255 to 269
Depreciation 54 60
Amortization of intangible assets 83 75
OIBDA(2) $ 139 390 to 404
Asset impairments, Restructuring and severance costs, (Gains) losses on operating
assets, net; and Other costs related to mergers, acquisitions, investments and
dispositions 275
10
Adjusted OIBDA(3) $ 414 400 to 414
Management
Presentation
MAY 10, 2017
1Q 2017