Meredith's Fiscal 2015 First Quarter Earnings Grow Over 20 Percent

Meredith's Fiscal 2015 First Quarter Earnings Grow Over 20 Percent

Local Media Group Delivers Record Revenue and Operating Profit Performance

Digital Advertising and Brand Licensing Produce Record First Quarter Revenue

DES MOINES, Iowa, Oct. 23, 2014 /PRNewswire/ -- Meredith Corporation (NYSE:MDP; www.meredith.com), one of the nation's leading media and marketing companies, today reported fiscal 2015 first quarter earnings per share increased 23 percent to $0.65, compared to $0.53 in the prior-year period. Revenues increased 4 percent to $371 million, including 10 percent growth in advertising revenues.

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"Fiscal 2015 is off to a solid start," said Meredith Chairman and CEO Stephen M. Lacy. "We're encouraged by improving advertising trends, particularly in the digital sector, and the strong performance of our recent acquisitions. In addition, our brands continue to resonate extremely well with consumers across our media platforms and at retail."

Looking more closely at Meredith's fiscal 2015 first quarter compared to the prior-year period:


-- Local Media Group revenues increased nearly 40 percent to a fiscal first
quarter record of $125 million. Operating profit and EBITDA also set
fiscal first quarter records, growing approximately 40 percent each to
$36 million and $45 million, respectively. Growth was spurred by the
additions of television stations KMOV in St. Louis and KTVK in Phoenix,
political advertising, and higher net retransmission contribution.
-- National Media Group operating profit and margin strengthened, driven by
record fiscal first quarter digital advertising and brand licensing
revenues; improved performance by Meredith Xcelerated Marketing; and a 9
percent decrease in operating expenses.
-- Total Company digital advertising revenues grew more than 20 percent to
a fiscal first quarter record. National Media Group digital advertising
revenues increased 17 percent, while Local Media Group digital
advertising revenues grew more than 40 percent.
-- Consumer engagement expanded across Meredith's media platforms.
According to the current Magazine Media 360 Brand Audience Report,
Meredith's national brands grew their audience reach 8 percent to 180
million on a monthly basis across print, digital, mobile and video.
Traffic to Meredith's digital and mobile sites averaged approximately 60
million unique visitors per month, ranking Meredith among the top 40
digital operators in the U.S. Also, Meredith's television stations
delivered a strong July ratings book.





-- Finally, Meredith continues to strategically expand its media portfolio.
On October 15, 2014, Meredith announced an agreement to acquire the
rights to Martha Stewart Living and Martha Stewart Weddings magazines
and the www.marthastewart.com and www.marthastewartweddings.com
websites, effective November 1, 2014. Under the terms of this 10-year
agreement, Meredith will lead advertising sales, marketing, circulation,
production and other non-editorial functions, while Martha Stewart's
editorial team will continue to provide its award-winning
content.Additionally, on August 20, 2014, Meredith announced an
agreement to buy the broadcast assets of WALA, the Fox affiliate in
Mobile-Pensacola. That purchase is expected to close by the end of
calendar 2014.Meredith expects both of these acquisitions will be
accretive to earnings and cash flow in fiscal 2015, consistent with its
Total Shareholder Return strategy.
OPERATING GROUP DETAIL

LOCAL MEDIA GROUP

Meredith's Local Media Group includes 15 owned or operated television stations reaching more than 10 percent of U.S. households. Meredith's portfolio is concentrated in large, fast-growing markets, including seven stations in the nation's Top 25 and 13 in Top 50 markets. Meredith's stations produce approximately 550 hours of local news and entertainment content each week. Meredith expects to continue to grow its Local Media Group both organically and through strategic acquisitions.

Fiscal 2015 first quarter Local Media Group operating profit grew more than 40 percent to a fiscal first quarter record of $36 million. EBITDA grew to a first quarter record of $45 million, and EBITDA margin was 36 percent. Revenues rose 39 percent to $125 million, also a fiscal first quarter record.

Looking more closely at fiscal 2015 first quarter performance compared to the prior-year period:


-- Total advertising revenues increased 43 percent to $93 million, a first
quarter record.
-- Political advertising revenues were $13 million. In addition to
contributions from newly acquired KMOV and KTVK, KPHO (Phoenix) and WFSB
(Hartford) generated significant political dollars.
-- Non-political advertising revenues grew 24 percent to $80 million,
benefiting from the recent acquisitions and strong digital advertising
revenue performance. Excluding recent acquisitions, non-political
advertising revenues declined 3 percent, as expected during a political
advertising cycle (See Table 2).
-- Other revenues and operating expenses both increased, due primarily to
growth in retransmission revenues from cable and satellite television
operators and higher programming fees paid to affiliated networks, along
with contributions from KMOV and KTVK. A majority of Meredith's
retransmission agreements with cable and satellite operators are
scheduled for renegotiation in the next 24 months. Meanwhile, almost all
of Meredith's network affiliation agreements are in place into fiscal
2017 and beyond.
On August 20, 2014, Meredith announced an agreement to buy the broadcast assets of WALA, the Fox affiliate in Mobile-Pensacola, for approximately $86 million, subject to certain purchase price adjustments. This purchase is expected to close when Media General's merger with LIN Media LLC and the sale of WALA to Meredith receive final regulatory approval.

The Better Show, the daily syndicated program produced by Meredith Video Studios, began its eighth season. The daytime talk show is currently available on more than 200 stations, reaching 80 percent of U.S. television households.

"This was our first full quarter operating both KTVK in Phoenix and KMOV in St. Louis, and they are great additions to the Meredith portfolio," said Meredith Local Media Group President Paul Karpowicz. "We were also very pleased to see political advertising strengthen as the quarter progressed."

NATIONAL MEDIA GROUP

Meredith's National Media Group reaches an audience of 180 million consumers monthly, including 100 million unduplicated women and 60 percent of American millennial women. Meredith is a leader at creating content across media platforms and life stages in key consumer interest areas such as food, home, parenthood and health. The National Media Group also features robust brand licensing activities and innovative business-to-business marketing services. Meredith expects to continue to grow its National Media Group organically and through strategic acquisitions.

Fiscal 2015 first quarter National Media Group operating profit grew 3 percent to $29 million and operating margin grew to 12 percent. Revenues were $246 million.

Looking more closely at fiscal 2015 first quarter performance, compared to the prior-year period:


-- Total advertising revenues were $125 million, compared to $134 million,
with about one-half of the decline due to the transition of Ladies' Home
Journal to a newsstand-only publication. Digital advertising revenues
grew 17 percent to a fiscal first quarter record, and accounted for an
all-time high 17 percent of total National Media Group advertising
revenues.
-- Circulation revenues were $66 million, compared to $76 million,
primarily due to the Ladies' Home Journal transition and wholesaler
disruption in the newsstand channel. These factors were partially offset
by the addition of Allrecipes magazine, which increased its rate base by
40 percent to 900,000 beginning with the October/November 2014 issue.
-- Meredith continued to expand its digital consumer marketing activities,
driving approximately one-third of magazine subscription acquisitions
from digital sources over the last 12 months, compared to one-fourth in
the prior period.
-- Brand Licensing revenues grew 8 percent to a first quarter record, led
by continued strong sales of more than 3,000 SKUs of Better Homes and
Gardens licensed products at more than 4,000 Walmart stores nationwide.
-- Meredith Xcelerated Marketing (MXM) operating profit increased
significantly. Client expansions with Bank of America, Volkswagen and
Continental Mills drove the increases. In addition, MXM recently was
named Content Marketing Agency of the Year by the Content Marketing
Institute.
-- Meredith continued to demonstrate strong expense discipline, as
operating expenses declined 9 percent.
Meredith's consumer engagement continued to grow in the first quarter of fiscal 2015. According to the recently released Magazine Media 360 report, Meredith has two of the four largest brands in the industry: Better Homes and Gardens (No. 2 with a total monthly audience of 48 million) and Allrecipes (No. 4 with a total monthly audience of 40 million).

"We are encouraged by the performance of our non-advertising businesses, particularly Brand Licensing and Meredith Xcelerated Marketing," said Meredith National Media Group President Tom Harty. "Additionally, the advertising environment is improving, particularly on the digital side, where we delivered record performance."

"We are very excited to be adding Martha Stewart Living magazine and www.marthastewart.com to our portfolio," Harty continued. "We will leverage our expertise and scale in the magazine and digital fields with the award-winning multi-platform content created by the Martha Stewart team to benefit both consumers and advertisers."

OTHER FINANCIAL INFORMATION

Consistent with its Total Shareholder Return (TSR) strategy, Meredith repurchased 365,000 shares of its stock in the fiscal first quarter 2015 and $100 million remained under the current repurchase authorization. Total debt was $722 million and the weighted average interest rate was 2.5 percent, with more than half effectively at a fixed rate. Meredith's debt-to-EBITDA ratio for the trailing 12 months was 2.6 to 1. All metrics are as of September 30, 2014.

Key elements of Meredith's TSR strategy are (1) An annual dividend of $1.73 per share (yielding approximately 4 percent), which reflects a 6 percent increase in the annual dividend over the prior year and a 70 percent increase since Meredith launched its TSR strategy in October 2011; (2) A share repurchase program with $100 million currently authorized; and (3) Ongoing investments to scale the business and increase shareholder value.

All earnings per share figures in the text of this release are diluted. Both basic and diluted earnings per share can be found in the attached Condensed Consolidated Statements of Earnings. All fiscal first quarter 2015 comparisons are against the comparable prior-year period unless otherwise stated.

OUTLOOK

Meredith continues to expect full year fiscal 2015 earnings per share to range from $3.00 to $3.25.

Looking more closely at the second quarter of fiscal 2015 compared to the year-ago period:


-- Total company revenues are expected to be up in the low teens.
-- Total Local Media Group revenues are expected to be up 45 to 50 percent.
This includes expected political advertising revenues of between $22
million and $25 million.
-- Total National Media Group revenues are expected to be down in the low-
to mid-single digits.
-- Meredith expects fiscal 2015 second quarter earnings per share to range
from $0.95 to $1.00, compared to $0.67 in the prior-year period.
A number of uncertainties remain that may affect Meredith's outlook as stated in this press release for the second quarter and full year fiscal 2015. These and other uncertainties are referenced below under "Safe Harbor" and in certain filings with the U.S. Securities and Exchange Commission.

CONFERENCE CALL WEBCAST

Meredith will host a conference call on October 23, 2014 at 11 a.m. EDT to discuss fiscal 2015 first quarter results. A live webcast will be accessible to the public on the Company's website, www.meredith.com, and a replay will be available for two weeks. A transcript will be available within 48 hours of the call at www.meredith.com.

RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS

Management uses and presents GAAP and non-GAAP results to evaluate and communicate its performance. Non-GAAP measures should not be construed as alternatives to GAAP measures. EBITDA and EBITDA margin are common supplemental measures of performance used by investors and financial analysts. Management believes that EBITDA provides an additional analytical tool to clarify the Company's results from core operations and delineate underlying trends. Management does not use EBITDA as a measure of liquidity or funds available for management's discretionary use because it includes certain contractual and non-discretionary expenditures.

Results excluding the acquisitions are supplemental non-GAAP financial measures. While these adjusted results are not a substitute for reported results under GAAP, management believes this information is useful as an aid in better understanding Meredith's current performance, performance trends and financial condition. Reconciliations of non-GAAP to GAAP measures are attached to this press release and available at www.meredith.com.

SAFE HARBOR

This release contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management's current knowledge and estimates of factors affecting the Company and its operations. Statements in this release that are forward-looking include, but are not limited to, the Company's revenue and earnings per share outlook for second quarter and full year fiscal 2015.

Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients or vendors; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company's industries; increases in interest rates; and the consequences of acquisitions and/or dispositions. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

ABOUT MEREDITH CORPORATION

Meredith Corporation (NYSE: MDP; www.meredith.com) has been committed to service journalism for more than 110 years. Today, Meredith uses multiple distribution platforms - including broadcast television, print, digital, mobile, tablets and video - to provide consumers with content they desire and to deliver the messages of its advertising and marketing partners.

Meredith's Local Media Group includes 15 owned or operated television stations reaching more than 10 percent of U.S. households. Meredith's portfolio is concentrated in large, fast-growing markets, with seven stations in the nation's Top 25 - including Atlanta, Phoenix and Portland - and 13 in Top 50 markets. Meredith's stations produce approximately 550 hours of local news and entertainment content each week, and operate leading local digital destinations. Additionally, Meredith Video Studios produces The Better Show, a syndicated daily lifestyle television program reaching 80 percent of U.S. TV households.

Meredith's National Media Group reaches an audience of 180 million consumers monthly, including 100 million unduplicated women and 60 percent of American millennial women. Meredith is the leader in creating content across media platforms in key consumer interest areas such as food, home, parenthood and health through well-known brands such as Better Homes and Gardens, Parents and Allrecipes. The National Media Group features robust brand licensing activities, including over 3,000 SKUs of branded products at 4,000 Walmart stores across the U.S. Meredith Xcelerated Marketing is a leader at developing and delivering custom content and customer relationship marketing programs for many of the world's top brands, including Kraft, Lowe's and Chrysler.

Meredith's balanced portfolio consistently generates substantial free cash flow, and the Company is committed to growing Total Shareholder Return through dividend payments, share repurchases and strategic business investments. Meredith's current annualized dividend of $1.73 per share yields approximately 4 percent. Meredith has paid a dividend for 67 straight years and increased it for 21 consecutive years.



Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)


Three months ended
September 30, 2014 2013
------------------ ---- ----

(In thousands except per share data)

Revenues

Advertising $218,031 $198,547

Circulation 65,885 75,734

All other 87,268 82,171
--------- ------ ------

Total revenues 371,184 356,452
-------------- ------- -------

Operating expenses

Production,
distribution, and
editorial 141,887 140,777

Selling, general, and
administrative 163,676 161,072

Depreciation and
amortization 12,769 11,795
---------------- ------ ------

Total operating expenses 318,332 313,644
------------------------ ------- -------

Income from operations 52,852 42,808

Interest expense, net (4,242) (2,713)
--------------------- ------ ------

Earnings before income
taxes 48,610 40,095

Income taxes (19,245) (16,054)
------------ ------- -------

Net earnings $29,365 $24,041
------------ ------- -------


Basic earnings per share $0.66 $0.54
------------------------ ----- -----

Basic average shares
outstanding 44,459 44,648
-------------------- ------ ------


Diluted earnings per
share $0.65 $0.53
-------------------- ----- -----

Diluted average shares
outstanding 45,157 45,432
---------------------- ------ ------


Dividends paid per share $0.4325 $0.4075
------------------------ ------- -------




Meredith Corporation and Subsidiaries

Segment Information (Unaudited)


Three months ended September 30, 2014 2013
-------------------------------- ---- ----

(In thousands)

Revenues

National media

Advertising $125,232 $133,684

Circulation 65,885 75,734

Other revenues 55,209 57,481
------ ------

Total national media 246,326 266,899
-------------------- ------- -------

Local media

Non-political advertising 79,836 64,352

Political advertising 12,963 511

Other revenues 32,059 24,690
------ ------

Total local media 124,858 89,553

Total revenues $371,184 $356,452
-------------- -------- --------


Operating profit

National media $28,895 $28,076

Local media 36,312 25,676

Unallocated corporate (12,355) (10,944)
------- -------

Income from operations $52,852 $42,808
---------------------- ------- -------


Depreciation and amortization

National media $3,625 $4,950

Local media 8,715 6,433

Unallocated corporate 429 412
--- ---

Total depreciation and amortization $12,769 $11,795
----------------------------------- ------- -------


EBITDA (1)

National media $32,520 $33,026

Local media 45,027 32,109

Unallocated corporate (11,926) (10,532)
------- -------

Total EBITDA 1 $65,621 $54,603
-------------- ------- -------



1 EBITDA is net earnings before
interest, taxes, depreciation,
and amortization.




Meredith Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)


Assets September 30, June 30,
2014 2014
--- ---- ----

(In thousands)

Current assets

Cash and cash
equivalents $30,337 $36,587

Accounts receivable,
net 263,624 257,644

Inventories 22,220 24,008

Current portion of
subscription
acquisition costs 92,789 96,893

Current portion of
broadcast rights 14,333 4,551

Assets held for sale 32,900 32,900

Other current assets 19,821 17,429
-------------------- ------ ------

Total current assets 476,024 470,012
-------------------- ------- -------

Property, plant, and
equipment 502,287 501,216

Less accumulated
depreciation (304,548) (296,168)
---------------- -------- --------

Net property, plant,
and equipment 197,739 205,048

Subscription
acquisition costs 104,739 101,533

Broadcast rights 3,052 3,114

Other assets 87,408 86,935

Intangible assets, net 832,868 835,531

Goodwill 840,760 841,627
-------- ------- -------

Total assets $2,542,590 $2,543,800
------------ ---------- ----------


Liabilities and
Shareholders' Equity
---------------------

Current liabilities

Current portion of
long-term debt $62,500 $87,500

Current portion of
long-term broadcast
rights payable 14,315 4,511

Accounts payable 77,285 81,402

Accrued expenses and
other liabilities 116,701 136,047

Current portion of
unearned subscription
revenues 165,448 173,643
---------------------- ------- -------

Total current
liabilities 436,249 483,103

Long-term debt 659,375 627,500

Long-term broadcast
rights payable 4,440 4,327

Unearned subscription
revenues 151,684 151,533

Deferred income taxes 284,159 277,477

Other noncurrent
liabilities 105,484 108,208
---------------- ------- -------

Total liabilities 1,641,391 1,652,148
----------------- --------- ---------

Shareholders' equity

Common stock 37,157 36,776

Class B stock 7,294 7,700

Additional paid-in
capital 40,665 41,884

Retained earnings 824,022 814,050

Accumulated other
comprehensive loss (7,939) (8,758)
------------------- ------ ------

Total shareholders'
equity 901,199 891,652
------------------- ------- -------

Total liabilities and
shareholders' equity $2,542,590 $2,543,800
--------------------- ---------- ----------




Meredith Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


Three months ended
September 30, 2014 2013
------------------ ---- ----

(In thousands)

Net cash provided by
(used in) operating
activities $11,146 $(6,428)
-------------------- ------- -------


Cash flows from investing activities

Acquisitions of and
investments in
businesses - (750)

Additions to property,
plant, and equipment (1,936) (3,786)

Net cash used in
investing activities (1,936) (4,536)
--------------------- ------ ------


Cash flows from financing activities

Proceeds from issuance of
long-term debt 45,000 91,000

Repayments of long-term
debt (38,125) (71,000)

Dividends paid (19,393) (18,314)

Purchases of Company
stock (17,012) (48,959)

Proceeds from common
stock issued 10,088 43,868

Excess tax benefits from
share-based payments 3,982 3,063
------------------------ ----- -----

Net cash used in
financing activities (15,460) (342)
--------------------- ------- ----

Net decrease in cash and
cash equivalents (6,250) (11,306)

Cash and cash equivalents
at beginning of period 36,587 27,674
------------------------- ------ ------

Cash and cash equivalents
at end of period $30,337 $16,368
------------------------- ------- -------




Table 1

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures


EBITDA

Consolidated EBITDA, which is reconciled to net earnings in the following tables, is defined as net earnings before interest, taxes, depreciation, and amortization.

Segment EBITDA is a measure of segment earnings before depreciation and amortization.

Segment EBITDA margin is defined as segment EBITDA divided by segment revenues.


Three months ended September 30, 2014
-------------------------------------

National Media Local Unallocated
Corporate Total

Media
---

(In thousands)

Revenues $246,326 $124,858 $ - $371,184
-------- -------- --- --- --------


Operating profit $28,895 $36,312 $(12,355) $52,852

Depreciation and
amortization 3,625 8,715 429 12,769
----- ----- --- ------

EBITDA $32,520 $45,027 $(11,926) 65,621
------- ------- --------

Less:

Depreciation and amortization (12,769)

Net interest expense (4,242)

Income taxes (19,245)
-------

Net earnings $29,365
-------


Segment EBITDA
margin 13.2% 36.1%
---- ----



Three months ended September 30, 2013
-------------------------------------

National Media Local Unallocated
Corporate Total

Media
---

(In thousands)

Revenues $266,899 $89,553 $ - $356,452
-------- ------- --- --- --------


Operating profit $28,076 $25,676 $(10,944) $42,808

Depreciation and
amortization 4,950 6,433 412 11,795
----- ----- --- ------

EBITDA $33,026 $32,109 $(10,532) 54,603
------- ------- --------

Less:

Depreciation and amortization (11,795)

Net interest expense (2,713)

Income taxes (16,054)
-------

Net earnings $24,041
-------


Segment EBITDA
margin 12.4% 35.9%
-------------- ---- ----




Table 2

Meredith Corporation and Subsidiaries

Supplemental Disclosures Regarding Non-GAAP Financial Measures


Three
months
ended
September
30, 2014 2013 Change
---------- ---- ---- ------


Local media non-
political
advertising
revenues

On a
comparable
basis
(1) $62,667 $64,352 (3)%

Acquisitions 17,169 -

Total $79,836 $64,352 24%
----- ------- ------- ---



1 Revenues on a comparable basis
exclude the revenues of KMOV
and KTVK, television stations
that were acquired by
Meredith in the second half
of fiscal 2014.


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SOURCE Meredith Corporation

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Meredith Corporation

CONTACT: Shareholder/Financial Analyst Contact: Mike Lovell, Director of Investor Relations, Phone: (515) 284-3622, E-mail: Mike.Lovell@meredith.com; or Media Contact: Art Slusark, Chief Communications Officer, Phone: (515) 284-3404, E-mail: Art.Slusark@meredith.com

Web Site: http://www.meredith.com


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