Newspaper & Mailroom

The New York Times Company Reports 2013 First-Quarter Results

Thursday 25. April 2013 - The New York Times Company (NYSE: NYT) announced today first-quarter 2013 diluted earnings per share from continuing operations of $.02 compared with $.06 in the same period of 2012. Excluding severance and the 2012 special items discussed below, diluted earnings per share from continuing operations were $.04 in the first quarter of 2013 compared with $.05 in the first quarter of 2012.

The Company had operating profit of $22.9 million in the first quarter of 2013 compared with $12.6 million in the same period of 2012. Excluding depreciation, amortization and severance, operating profit rose 3.4 percent to $49.6 million from $48.0 million in the first quarter of 2012.
“Our first-quarter results reflect our continued strides in reshaping The New York Times Company,” said Mark Thompson, president and chief executive officer. “The increase in operating profit, excluding depreciation, amortization and severance, was driven by solid growth in circulation revenues coupled with tightly managed costs, which were lower despite ongoing investment in our high-quality journalism and digital operations.
“Circulation revenues rose nearly 7 percent, led by continued strength in our digital subscription initiatives. Paid digital subscriptions across the Company totaled approximately 708,000 at quarter end, an increase of more than 45 percent year-over-year from the end of the first quarter of 2012. At the same time, the difficult advertising environment has continued, though there are currently some signs of improvement in the second quarter.
“During the first quarter, we took a number of decisive steps to reposition the Company for the evolving media landscape. We announced that we were marketing for sale the New England Media Group and that later this year we will rebrand the International Herald Tribune as the International New York Times. We will be rolling out other strategic initiatives designed to further leverage The Times brand and newsroom to create new products and services for a wider range of customers domestically and around the globe.”
Comparisons
Unless otherwise noted, all comparisons are for the first quarter of 2013 to the first quarter of 2012. The results of the Regional Media Group, which was sold in the first quarter of 2012, and the results of the About Group, which was sold in the fourth quarter of 2012, are reported within discontinued operations in 2012.
This release includes other non-GAAP financial measures, a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.
There were no special items in the first quarter of 2013.
The first-quarter 2012 results included the following special items:
A $17.8 million ($10.4 million after tax or $.07 per share) gain on the sale of 100 of the Company’s units in Fenway Sports Group.
A $6.7 million ($3.7 million after tax or $.02 per share) charge for accelerated depreciation expense for certain assets at the Worcester Telegram & Gazette’s (T&G) facility in Millbury, Mass., associated with the consolidation of most of T&G’s printing into The Boston Globe’s facility in Boston in the second quarter of 2012.
A $4.9 million ($2.9 million after tax or $.02 per share) non-cash charge for a write-down of certain investments.
In addition to these special items, the Company had severance costs of $5.0 million ($2.9 million after tax or $.02 per share) and $5.3 million ($3.1 million after tax or $.02 per share) in the first quarters of 2013 and 2012, respectively.
First-Quarter Results from Continuing Operations
Revenues
Total revenues decreased 2.0 percent to $465.9 million from $475.4 million. Circulation revenues increased 6.5 percent, while advertising and other revenues decreased 11.2 percent and 0.7 percent, respectively.
Circulation revenues rose as digital subscription initiatives and the increase in print circulation prices at The New York Times in the first quarter of 2013 offset a decline in print copies sold. Paid subscribers to The Times and the International Herald Tribune digital subscription packages, e-readers and replica editions totaled about 676,000 as of the end of the first quarter of 2013, an increase of more than 45 percent year-over-year from the end of the first quarter of 2012. Paid digital subscribers to BostonGlobe.com and The Boston Globe’s e-readers and replica editions totaled about 32,000 as of the end of the first quarter of 2013, an increase of more than 50 percent year-over-year from the end of the first quarter of 2012.
Print and digital advertising revenues decreased 13.3 percent and 4.0 percent, respectively, largely due to ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace. In the first quarter of 2013, digital advertising revenues were $46.5 million compared with $48.5 million in the 2012 first quarter. Digital advertising revenues as a percentage of total Company advertising revenues were 24.3 percent in the first quarter of 2013 compared with 22.5 percent in the first quarter of 2012.
Operating Costs
Operating costs decreased 4.3 percent to $443.1 million from $462.8 million. Excluding depreciation, amortization and severance, operating costs decreased 2.6 percent to $416.3 million from $427.4 million mainly due to lower compensation costs, raw materials expense and outside printing costs.
Other Data
Joint Ventures
Loss from joint ventures was $2.9 million compared with $29,000 largely because of lower results for the paper mills in which the Company has an investment.
Interest Expense, net
Interest expense, net decreased to $14.1 million from $15.5 million mainly due to the Company’s payment at maturity on September 26, 2012 of all $75 million aggregate principal amount of the Company’s 4.610 percent senior notes.
Income Taxes
The Company had income tax expense of $3.0 million (effective tax rate of 50.7 percent) in the first quarter of 2013.
The Company had income tax expense of $1.4 million (effective tax rate of 13.9 percent) in the first quarter of 2012 impacted by an adjustment to reduce the Company’s reserve for uncertain tax positions.
Liquidity
As of March 31, 2013, the Company had cash and marketable securities of approximately $866 million (excluding restricted cash of approximately $22 million that is subject to certain collateral requirements). Total debt and capital lease obligations were approximately $698 million.
The Company’s cash and marketable securities decreased in the first quarter of 2013 from the end of 2012, due in part to the Company’s contributions of approximately $61 million to certain qualified pension plans, the majority of which was discretionary. In 2013, the Company expects contributions to its qualified pension plans to be approximately $75 million inclusive of the first-quarter contributions.
Capital Expenditures
Capital expenditures totaled approximately $4 million in the first quarter of 2013.
Outlook
Total circulation revenues are projected to increase in the mid-single digits in the second quarter of 2013 compared with the same period in 2012.
Total advertising revenue trends in the second quarter of 2013 are expected to be somewhat better than the level experienced in the first quarter of 2013.
Total operating costs are expected to decrease in the low-single digits in the second quarter.
In addition, the Company expects the following on a pre-tax basis in 2013:
Results from joint ventures: loss of $1 to $5 million,
Depreciation and amortization: $90 to $95 million,
Interest expense, net: $55 to $60 million, and
Capital expenditures: approximately $40 million.