Meredith Corporation Reports Fiscal 2012 Second Quarter Results
(Press Release) DES MOINES, Iowa, Jan. 24, 2012—Meredith Corporation, the leading media and marketing company serving American women, today reported fiscal 2012 second quarter earnings per share of $0.70, compared to $0.88 in the year-ago period. Revenues were $329 million, compared to $366 million. Meredith recorded $21 million, or $0.28 per share, less of political advertising revenues in the second quarter of fiscal 2012 than in the year-ago period, which is expected in an off-election year.
"Our Local Media Group delivered an industry-leading 9 percent gain in non-political advertising revenues during the second quarter of fiscal 2012," said Meredith Chairman and Chief Executive Officer Stephen M. Lacy. "While the advertising market remained challenging for our National Media Group, we're seeing an improving trend as we look to early calendar 2012, particularly in the food and home advertising categories."
Lacy noted Meredith's Total Shareholder Return financial strategy, announced on October 25, has been very well received by the investment community. Key elements include (1) A 50 percent annual dividend increase to $1.53 from $1.02 per share that produced yields of 5 to 6 percent during the quarter; (2) A new $100 million share repurchase authorization; and (3) Ongoing strategic investments to drive incremental revenue and profit growth over time, such as today's announcement that Meredith would acquire Allrecipes.com from The Reader's Digest Association, Inc.
The addition of Allrecipes.com, the world's No. 1 digital food site, doubles the scale of the Meredith Women's Network in terms of both audience reach and revenues. It also fulfills two of Meredith's previously stated criteria for strategic acquisitions: (1) National media brands that provide access to new audiences and advertising categories; and (2) Digital platforms that significantly increase scale. With Allrecipes.com, the Meredith Women's Network will be the No. 1 premium owned and operated website in the Women's Lifestyle Category, according to the most recent comScore data.
"Allrecipes.com significantly enhances our digital platform," Lacy said. "It increases our relevance with a large and loyal group of consumers, and strengthens our position in the marketplace by connecting advertisers with an audience of 100 million consumers. It fits perfectly with our Total Shareholder Return Strategy, adding strategic value to Meredith, and is expected to drive incremental growth in revenues, profit and free cash flow over time."
Lacy noted that Meredith has executed the following strategic initiatives since the start of fiscal 2012:
- Acquisition of the popular FamilyFun and Every Day with Rachael Ray brands.
- Launch of tablet editions of Meredith's national brands across the iPad, NOOK Color, Kindle Fire and Samsung Galaxy platforms.
- Extension of Meredith's very successful brand licensing arrangement for its Better Homes and Gardens line of home and garden products with Walmart through 2016.
- Investment in Iris, a leading global marketing company, and the creation of the Meredith-Iris Global Network to serve the increasing global needs of domestic clients, and open doors to international clients.
- Expansion of Meredith's daily syndicated /The Better Show/'s reach to 150 markets across the country.
"I'm particularly pleased about the ongoing execution of our digital and video expansion strategy," said Lacy. "We've grown our audience online and on television, and we're aggressively extending our brands across tablet and mobile platforms. Digital and video are perfect complements to our leading portfolio of national brands – both for consumers and advertisers alike. We will continue to extend our reach on these platforms, and the acquisition of Allrecipes.com is our latest initiative."
For the first six months of fiscal 2012, earnings per share were $1.18, compared to $1.45 in the year-ago period. Revenues were $657 million, compared to $709 million. Meredith recorded $32 million, or $0.43 per share, less of political advertising revenues in the first six months of fiscal 2012 than in the year-ago period, which is expected in an off-election year.
NATIONAL MEDIA GROUP
Fiscal 2012 second quarter National Media Group operating profit was $36 million, compared to $42 million in the year-ago period. Revenues were $244 million, compared to $268 million. Expenses decreased 8 percent.
Fiscal 2012 second quarter advertising revenues were $107 million, compared to $122 million in the year-ago period. Fiscal 2012 second-quarter weighted average net advertising revenues per magazine page increased 8 percent, due primarily to a change in mix and stronger pricing.
The advertising declines were primarily related to food and consumer packaged goods producers – who have been particularly impacted by higher commodity prices – and pharmaceutical companies – who brought fewer new drugs to market. Meredith over-indexes the industry by more than 2 to 1 in these two categories.
The home, non-prescription drug and financial services-related advertising categories each posted double-digit revenue growth during the second quarter of fiscal 2012, their second-consecutive quarter of year-over-year growth.
"We are seeing gains in food-related advertising in early calendar 2012, and we believe overall advertising performance will improve as calendar 2012 progresses," Lacy said. "Our largest clients have had time to adjust to economic conditions, and our innovative Meredith Engagement Dividend – which guarantees marketers a return on their advertising investment in Meredith magazines – is gaining traction in the marketplace. Magazine industry advertising as a whole has held up fairly well in calendar 2011, particularly in categories such as beauty and financial services, where we are expanding our efforts via multi-platform marketing programs."
Circulation revenues increased during the second quarter of fiscal 2012/,/ driven by a gain in subscription revenues. Online orders for print magazine subscriptions nearly doubled to more than 500,000 compared to the year-ago period, due primarily to more aggressive website and email marketing programs as well as efforts to shift to online billing and renewals. Meredith is particularly focused on driving online subscriptions and paperless transactions because of cost saving and up-selling opportunities.
Meredith's brands continued their strong engagement with American consumers in the second quarter of fiscal 2012 compared to the prior-year period, as demonstrated by:
- An increase in readership of Meredith's magazines, which stood at a record 113 million according to Fall 2011 data from Mediamark Research and Intelligence.
- Strong traffic growth for Meredith's branded websites, as monthly unique visitors and page views rose more than 50 percent each to 20 million, and 450 million, respectively. The multi-channel brand Recipe.com has grown to approximately 2 million monthly unique visitors in its first six months of operation. The acquisition of Allrecipes.com will double the Meredith Women's Network's monthly unique visitors to 40 million.
- Expansion of Meredith's electronic tablet issues and capabilities, including a strong presence on the newly launched Amazon Kindle Fire and Barnes & Noble NOOK Tablet, as well as product availability on the Apple iPad and NOOK Color devices.
- More /magazine's second annual television special was aired in 145 markets reaching 85 percent of U.S. television households.
Fiscal 2012 second quarter other revenues were $73 million, compared to $82 million in the year-ago period. Results were primarily due to select clients within Meredith Xcelerated Marketing that scaled back programs for the same commodity-related reasons that impacted advertising results earlier in calendar 2011. Meredith Xcelerated Marketing's programs are typically long-term in nature, and its results typically lag shorter-term changes in economic conditions.
For the first six months of fiscal 2012, National Media Group operating profit was $72 million, compared to $82 million in the year-ago period. Revenues were $503 million, compared to $535 million. Expenses decreased 5 percent.
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