New Media Investment Group Inc. (NEWM)

[Enterprising Investor]

New Media Announces Third Quarter 2014 Results and Dividend of $0.27 per Common Share (10/30/14)

NEW YORK--(BUSINESS WIRE)--New Media Investment Group Inc. (NYSE:NEWM; “New Media” or the “Company”) today reported its financial results for the third quarter ended September 28, 2014.

Financial Summary:

• New Media declares a cash dividend of $0.27 per share of common stock for the third quarter of 2014

• Total revenues of $165.1 million, an increase of 31.0% to prior year, and an increase of 2.3% on a same store basis*

• Digital revenue of $14.5 million, an increase of 6.3% on a same store basis*

• GAAP net (loss) of ($4.7) million and as adjusted net income was $4.2 million, or $0.14 per share*

• As Adjusted EBITDA of $21.7 million, an increase of 12.2% to prior year, or a decrease of 10.6% on a same store basis*

• Free cash flow of $15.9 million, or $0.52 per share, an increase of $7.9 million, or 99.1% on a same store basis*

• Operating income of $4.6 million

• Liquidity, consisting of cash on the balance sheet and undrawn revolver, was $145.1 million as of September 28, 2014

Business Highlights:

• Completed approximately $116.7 million equity raise, net of underwriting fees, increasing our liquidity position and opportunity to execute on our strategy

• Closed on three acquisitions with a total purchase price of $61.3 million

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Michael E. Reed, New Media President and Chief Executive Officer commented, “I’m very pleased with New Media’s financial performance in the third quarter. Our investments in our newspaper and digital businesses continue to positively impact our revenue trends. We believe our results support our view that local newspapers in smaller markets remain central to those communities, and that our evolving revenue mix, with a greater emphasis on stable or growing categories, is leading to stabilization of our business. Our third quarter revenue results were driven by strong growth in our Digital and Commercial Print businesses which were up 6.3% and 5.6%, respectively. Despite some seasonality we are now beginning to see in our Propel business during the summer months, our digital services business continues to see very strong growth with third quarter revenue up $2.9 million, or 167.5%, over the prior year. Our Circulation and Preprint revenue businesses continue to be stable, which contributes to our improving overall revenue trends.

“Our As Adjusted EBITDA was strong in the quarter at $21.7 million, while continuing to make investments in both our print and digital businesses. We believe these investments will drive future improvement in our overall revenue trends. New Media’s cash flow was also very strong with nearly 75% of our As Adjusted EBITDA converting to free cash flow. Free cash flow in the quarter was $15.9 million, or $0.52 per share. We are also pleased that the Board has authorized a dividend for the quarter of $0.27 per share of common stock.

“Lastly, I’m very excited to announce that New Media successfully completed an equity offering during the quarter raising approximately $116.7 million of net proceeds. The equity better positions the Company to be able to execute on its acquisition strategy, and importantly, move quickly on potential transactions. Our pipeline for acquisitions remains robust and as a reminder, during the third quarter, New Media acquired three local media assets for a total purchase price of $61.3 million. Overall, we remain excited about our ability to execute on both our organic and acquisition strategy, which together, we believe will continue to drive shareholder returns.”

Third Quarter 2014 Financial Results

New Media recorded revenues of $165.1 million for the quarter, which represents an increase of 31.0% when compared to the prior year, and an increase of 2.3% on a same store basis.

Total Print Advertising increased 1.2% on a same store basis driven by Classified Print and Preprints revenue which increased 2.8% and 3.9%, respectively, and Local Display which decreased 1.4% on a same store basis. Classified Print revenue trends continue to show improvement over prior quarters driven by growth in obituaries revenue, and more stable legals advertising. Strength in Preprint revenue is partially being driven by our successful Sunday Select program. New Media’s Digital and Commercial Printing and Other businesses also contributed to the Company’s strong revenue performance increasing 6.3% and 5.6%, respectively, from the prior year on a same store basis. Propel contributed $4.6 million to the third quarter Digital revenue, an increase of $2.9 million from the prior year.

Total expenses in the quarter of $143.4 million were up $6.3 million, or 4.6%, compared to the prior year on a same store basis after adjusting for non-recurring and non-cash items. Expense increases are driven partially by investments in our digital and print initiatives, which we believe are leading to improved revenue trends. Investments are being made in our businesses and products, such as Propel, BestRide and Sunday Select.

Net (loss) for the quarter was ($4.7) million, compared to ($129.2) million in the prior year. After adjusting for expenses related to the acquisitions, financing and restructuring, and reversing tax benefits recorded in the first half of the year, our as adjusted net income was $4.2 million, or $0.14 per share. The acquisition, financing and restructuring expenses incurred were $4.7 million, and the reversal of the tax benefit from the first half of the year was $4.2 million.

As Adjusted EBITDA for the quarter was $21.7 million, which increased $2.4 million or 12.2% over the prior year, and decreased $2.6 million or 10.6% on a same store basis. The decrease on a same store basis was driven by expense investments as noted above.

Free cash flow for the quarter was $15.9 million, or $0.52 per share, which increased $7.9 million, or 99.1% versus the prior year on a same store basis. Operating income of $4.6 million was an increase versus ($90.1) million in the prior year.

Liquidity at the end of the quarter was approximately $145.1 million comprised of $135.1 million of unrestricted cash on the balance sheet and $10.0 million of revolver available.

Third Quarter 2014 Dividend

New Media’s Board of Directors declared a third quarter 2014 cash dividend of $0.27 per share of common stock. The dividend is payable on November 20, 2014 to shareholders of record as of the close of business on November 12, 2014.

The declaration and payment of any dividends are at the sole discretion of the Board of Directors, which may decide to change the Company’s dividend policy at any time.

Additional Information

For additional information that management believes to be useful for investors, please refer to the presentation posted on the Investor Relations section of New Media’s website, www.newmediainv.com and the Company’s Quarterly Report on Form 10-Q, which will be available on the Company’s website. Nothing on our website is included or incorporated by reference herein.

Earnings Conference Call

New Media’s management will host a conference call on Thursday, October 30, 2014 at 11:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Media’s website, www.newmediainv.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-877-601-8827 (from within the U.S.) or 1-918-534-8645 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “New Media Third Quarter Earnings Call.”

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newmediainv.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available approximately two hours following the call’s completion through 11:59 P.M. Eastern Time on Thursday, November 13, 2014 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “19188142.”

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