New Media Investment Group Inc. (NEWM)

[Enterprising Investor]

New Media Announces Third Quarter 2015 Results and Dividend of $0.33 per Common Share (10/29/15)

NEW YORK--(BUSINESS WIRE)--New Media Investment Group Inc. (“New Media” or the “Company”, NYSE:NEWM) today reported its financial results for the third quarter ended September 27, 2015.

Financial Summary

• New Media declares a cash dividend of $0.33 per common share

• Total revenues of $312.1 million, an increase of 89.1% to prior year, and a decrease of 5.7% on a same store basis*

• Digital revenue of $29.1 million, an increase of 13.1% to prior year on a same store basis*

• Operating income of $14.6 million, an increase of $10.1 million to prior year

• Net income of $6.1 million, an improvement from a loss of $(4.7) million in the prior year

• As Adjusted EBITDA of $40.1 million, an increase of 84.8% to prior year*

• Free cash flow of $30.3 million, an increase of 90.3% to prior year*

• Free cash flow per basic share of $0.68, an increase of 29.8%, or $0.16, to prior year despite a 46.6% increase to weighted average shares outstanding*

• Liquidity, consisting of cash on the balance sheet and undrawn revolver, of $55.3 million

Business Highlights

• Completed the acquisition of substantially all of the assets of the Monroe Publishing Company, including the daily newspaper, the Monroe News, for 4.1x the seller’s 2014 As Adjusted EBITDA

• Postmedia Network Inc. (“Postmedia”), one of the largest Canadian news media companies representing more than 200 brands across multiple print, online, and mobile platforms, became a reseller of Propel’s products and services across Canada

[tables deleted]

Michael E. Reed, New Media President and Chief Executive Officer, commented, “Our performance in Q3 marks another strong quarter for the Company with total revenues, As Adjusted EBITDA, and free cash flow increasing 89.1%, 84.8%, and 90.3% vs. the prior year, respectively. On a same store basis, Q3 total revenues decreased 5.7% vs. prior year driven primarily by declines in our Local Print Advertising and Preprints categories. Same store sequential revenue trends were also impacted by two of our tuck-in acquisitions, ACM Southwest and The Progress-Index, cycling out of our quarterly numbers. We are pleased to report that excluding tuck-in acquisitions, revenue at businesses we have owned for over one year performed much better, decreasing 3.7%, highlighting the operational improvements we are able to make once we have time to execute on our strategy.

“During the quarter, New Media also completed the acquisition of the 190 year old daily newspaper, the Monroe News. The longtime newspaper of record in Monroe County is located near our cluster in Michigan, making it an ideal tuck-in acquisition to integrate into our current operations. Given the fragmented nature of the local media market, we believe there are many similar compelling acquisition opportunities for us in the future. Since inception, New Media has remained committed to being a disciplined buyer of local media assets completing nearly $600 million of acquisitions at an average multiple of 4.1x the seller’s LTM As Adjusted EBITDA. After factoring in estimated net synergies, the multiple reduces to 3.2x and we generate levered yields of over 40%.

“In addition to inorganic growth through acquisition, we are thrilled to report that Postmedia has become a reseller of Propel’s products and services across Canada. Given their well-known brands and reach, we see a tremendous opportunity for Postmedia to grow their digital business. We continue to believe our established local newspaper brands, in-market salesforce, and strong relationships with local businesses will lead to new revenue streams to offset topline declines by the end of 2017. Furthermore, with our LTM annualized dividend payout at approximately 40% of pro-forma LTM free cash flow, the majority of our cash flow is used to fund highly accretive acquisitions and organic growth initiatives. We see an opportunity to grow our dividend as we continue to execute on our organic and inorganic growth initiatives, and looking ahead, we believe New Media remains an attractive total return vehicle that will drive substantial future shareholder returns.”

Third Quarter 2015 Financial Results

New Media recorded total revenues of $312.1 million for the quarter, an increase of 89.1% when compared to the prior year, and a decrease of 5.7% on a same store basis. Excluding the benefit from tuck-in acquisitions, total revenues owned for more than one year decreased 3.7% to prior year.

Total Print Advertising decreased 10.4% on a same store basis primarily driven by Preprints and Local Print Advertising, which decreased 12.3% and 11.9%, respectively. The decline in preprints is driven by major retailers decreasing their volume and numerous store closures in our markets. Classified Print revenue decreased 6.2% on a same store basis; however, obituaries and legals revenue continue to be stable subcategories, and currently comprise over 35% of total Classified Print revenue.

New Media’s Digital revenue contributed $29.1 million to the quarter, a double digit revenue increase of 13.1% on a same store basis. Propel, our digital marketing services business, continued to perform well and its revenue increased 78.8% to the prior year on a same store basis.

Circulation, our largest individual revenue category at nearly one-third of total revenues, continues to be a relatively stable revenue category for the Company, and decreased 1.1% on a same store basis. Finally, on a same store basis, Commercial Print and Other revenue decreased 10.2% to the prior year with over 67% of the decline driven by recent acquisitions shifting from external print relationships to intercompany revenue, as they are now part of New Media.

Total expenses decreased 7.1% to the prior year, on a same store basis, totaling $272.0 million, after adjusting for non-recurring and non-cash items. As the Company continues to realize synergies from our acquisitions, we are able to leverage our scale, centralized back office platform, and buying power to drive lower expenses for the total Company.

As Adjusted EBITDA of $40.1 million increased $18.4 million, or 84.8%, over the prior year. Free cash flow of $30.3 million increased 90.3% over the prior year to $0.68 per basic share.

Third Quarter 2015 Dividend

New Media’s Board of Directors declared a third quarter 2015 cash dividend of $0.33 per share of common stock. The dividend is payable on November 19, 2015 to shareholders of record as of the close of business on November 12, 2015.

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 29, 2015 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 12, 2015 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 “55617542.”

About New Media Investment Group Inc.

New Media is focused primarily on investing in a high quality, diversified portfolio of local media assets, and on growing existing advertising and digital marketing businesses. The Company is one of the largest publishers of locally based print and online media in the United States as measured by our 125 daily publications. As of September 27, 2015, the Company operates in over 490 markets across 32 states. New Media’s portfolio of products, as of September 27, 2015, include over 575 community publications and over 490 related websites, serve more than 215,000 business advertising accounts and reach over 22 million people on a weekly basis.

For more information regarding New Media and to be added to our email distribution list, please visit www.newmediainv.com.

http://www.businesswire.com/news/home/20151029005500/en/Media-Announces-Quarter-2015-Results-Dividend-0.33