Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Time Inc. | a8k6302017cover.htm |
| EX-99.1 - EXHIBIT 99.1 - Time Inc. | exhibit9912q2017er.htm |
2Q 2017
Earnings
Presentation
August 8, 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 10% year-over-year; excluding FX, total revenues would have declined 8%
year-over-year .
Print and other advertising revenues declined 17% year-over-year including approx. 100 bps of
adverse impact related to FX.
Digital advertising revenues declined 2% year-over-year.
Circulation Revenues declined 12% year-over-year including approx. 200 bps of adverse impact
related to FX .
Other Revenues increased 6% year-over-year driven by content licensing and bookazines including
approx. 200 bps of adverse impact related to FX.
Costs of Revenues and Selling, General and Administrative expenses decreased 11% year-over-
year, including approx. 100 bps of benefit related to FX.
Operating Loss of $38 million versus Operating Income of $50 million in the prior year.
Adjusted OIBDA of $88 million versus $89 million in the prior year.
Quarter-end cash and cash equivalents of $269 million or $2.70 per share.
2Q17 Financial Highlights
3
$299
$249
$127
$125
2016 2017
Digital Advertising
Print and Other Advertising
2Q17 Advertising Revenues
Total advertising revenues down 12%
- Print and other advertising revenues
down 17%
- Digital advertising revenues down
2%
$426
$374
4
HIGHLIGHTS
2Q 2Q
$MM
Revenues
Revenues
$154
$141
$74
$58
$8
$8
Other Circulation Revenues
Newsstand Revenues
Subscription Revenues
Total Circulation revenues down 12%
- Subscription revenues down 8%
- Newsstand revenues down 22%
$MM
$236
$207
2Q17 Circulation Revenues
HIGHLIGHTS
2Q16 2Q17
5
2Q17 Other Revenues
Other revenues up 6%
$107
$113
HIGHLIGHTS
2Q16 2Q17
$MM
6
$357 $313
$330
$301
Costs of Revenues (COR)
Selling, General & Administrative Expenses (SG&A)
2Q17 Costs of Revenues and SG&A Expenses
COR and SG&A combined down
11%
- Other costs include transaction-related expenses, as
well as integration and transformation costs, which
are excluded from our Adjusted OIBDA calculation:
2Q16 2Q17
Other Costs $7 $8
$614
$687
HIGHLIGHTS
2Q16 2Q17
$MM
7
1 2
2Q17 Adjusted OIBDA
$89 $88
2Q17 Operating loss of $38 million vs.
Operating income of $50 million in the prior
year
2Q17 Adjusted OIBDA of $88 million vs. $89
million in the prior year
2Q17 Diluted Net Loss Per Share of $(0.44)
vs. Diluted Net EPS of $0.18 in the prior
year
2Q17 Adjusted Diluted EPS of $0.13 vs.
$0.22 in the prior year
HIGHLIGHTS
2Q16 2Q17
$MM
8
2Q17 Cash Update
HIGHLIGHTS
2Q17 ending cash and cash equivalents of $269 million
Cash provided by operations of $36 million
Quarterly dividend of $0.04 per share, or
$4 million, paid on 6/15/17
As of 6/30/17, net leverage ratio of 2.47x
- Target net leverage ratio 2.0x to 2.5x
9
CHANGES IN CASH AND CASH
EQUIVALENTS
Beginning Cash Balance 3/31/17 $281
Free Cash Flow
Acquisitions/Divestitures, net
Dividends paid
Term Loan Prepayment
Other
16
(1)
(4)
(15)
(8)
Ending Cash Balance 6/30/17 $269
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 a gain on sale of certain of our titles and 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, and integration and transformation costs 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, and integration and transformation costs.
TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA
(Unaudited; in millions)
Schedule I
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Operating income (loss) $ (38 ) $ 50 $ (64 ) $ 47
Depreciation 15 14 28 27
Amortization of intangible assets 19 20 39 41
OIBDA(1) (4 ) 84 3 115
Asset impairments 5 1 5 1
Goodwill impairment 50 — 50 —
Restructuring and severance costs 31 10 47 11
(Gain) loss on operating assets, net(2) (2 ) (13 ) (4 ) (16 )
Other costs(3) 8 7 10 21
Adjusted OIBDA(4) $ 88 $ 89 $ 111 $ 132
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 a gain on sale of certain of our titles and 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, and integration and transformation costs 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, and integration and transformation costs; as well as the impact of income taxes on the above items
Three Months Ended
June 30, 2017
Three Months Ended
June 30, 2016
Gross
Impact Tax Impact Net Impact
Gross
Impact Tax Impact Net Impact
Net income (loss) attributable
to Time Inc. $ (57 ) $ 13
$ (44 ) $ 29
$ (11 ) $ 18
Asset impairments 5 (2 ) 3 1 — 1
Goodwill impairment 50 (19 ) 31 — — —
Restructuring and severance
costs 31
(10 ) 21
10
(4 ) 6
(Gain) loss on operating
assets, net(1) (2 ) —
(2 ) (13 ) 4
(9 )
Bargain purchase (gain)(2) — — — 2 — 2
(Gain) loss on extinguishment
of debt(3) —
—
—
—
1
1
Other costs(4) 8 (4 ) 4 7 (4 ) 3
Adjusted Net income (loss)(5) $ 35 $ (22 ) $ 13 $ 36 $ (14 ) $ 22
Six Months Ended
June 30, 2017
Six Months Ended
June 30, 2016
Gross
Impact Tax Impact Net Impact
Gross
Impact Tax Impact Net Impact
Net income (loss) $ (102 ) $ 30 $ (72 ) $ 8 $ — $ 8
Asset impairments 5 (2 ) 3 1 — 1
Goodwill impairment 50 (19 ) 31 — — —
Restructuring and severance
costs 47
(16 ) 31
11
(4 ) 7
(Gain) loss on operating
assets, net(1) (4 ) —
(4 ) (16 ) 4
(12 )
Bargain purchase (gain)(2) — — — (3 ) — (3 )
(Gain) loss on extinguishment
of debt(3) —
—
—
(4 ) 2
(2 )
Other costs(4) 10 (4 ) 6 21 (9 ) 12
Adjusted Net income (loss)(5) $ 6 $ (11 ) $ (5 ) $ 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 a gain on sale of certain of our titles and 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, and integration and transformation costs 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, and integration and transformation costs; as well as the impact of income taxes on the above items.
(6) For periods in which we were in net loss and adjusted net loss positions, we used the diluted shares from Diluted net income (loss) per common share in the calculation of
Adjusted Diluted EPS, without giving effect to the impact of participating securities. For periods in which we were in Net loss and Adjusted net income positions, we have
used the expected diluted shares in the calculation of Adjusted diluted EPS as if we were in a Net income position.
14
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Diluted net income (loss) per common share $ (0.44 ) $ 0.18 $ (0.72 ) $ 0.08
Asset impairments 0.03 0.01 0.03 0.01
Goodwill impairment 0.31 — 0.31 —
Restructuring and severance costs 0.21 0.06 0.31 0.07
(Gain) loss on operating assets, net(1) (0.02 ) (0.09 ) (0.04 ) (0.12 )
Bargain purchase (gain)(2) — 0.02 — (0.03 )
(Gain) loss on extinguishment of debt(3) — 0.01 — (0.02 )
Other costs(4) 0.04 0.03 0.06 0.12
Adjusted Diluted EPS(5)(6) $ 0.13 $ 0.22 $ (0.05 ) $ 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 and six months ended June 30,
2017 reflect lower capital spending due to the completion of the construction of our corporate headquarters in early 2016.
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Cash provided by (used in) operations $ 36 $ 79 $ 51 $ 27
Less: Capital expenditures (20 ) (26 ) (41 ) (61 )
Free cash flow(1) $ 16 $ 53 $ 10 $ (34 ) ______________
16
Schedule V TIME INC.
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED
OIBDA - 2017 & 2021 OUTLOOK
(Unaudited; in millions)
(1) 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, and
integration and transformation costs. Adjusted OIBDA does not include the impact of any potential divestitures.
(2) OIBDA is defined as Operating income (loss) excluding Depreciation and Amortization of intangible assets.
Full Year 2017 Outlook Range Full Year 2021 Outlook Range
Adjusted OIBDA(1) $400 to 414 $500 to 600
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, and integration and transformation
costs
Unable to estimate beyond the $108
recognized from
January 1, 2017 through
June 30, 2017
Unable to estimate
OIBDA(2) Unable to estimate Unable to estimate
Amortization of intangible assets ~$75 Unable to estimate
Depreciation ~$60 Unable to estimate
Operating income (loss) Unable to estimate Unable to estimate
2Q 2017
Earnings
Presentation
August 8, 2017