Meredith Corporation (MDP), a leading media and marketing company, recently posted third-quarter 2010 results that exceeded the Zacks Estimate on the heels of improved advertising performance at its National and Local Media groups, increased readership and online traffic.
The quarterly earnings of 69 cents a share outpaced the Zacks Consensus Estimate of 63 cents, and rose 25% from 55 cents delivered in the prior-year quarter. On a reported basis, earnings came in at 73 cents a share, up approximately 30% from 56 cents posted in the year-earlier quarter.
Management now expects earnings for fourth-quarter 2010 in the range of 61 cents to 66 cents a share, and for fiscal year 2010 in the range of $2.13 to $2.18. The current Zacks Consensus Estimate for fourth-quarter and fiscal year 2010 are 65 cents and $2.10 per share, respectively.
Total revenue for the quarter jumped 5% year-on-year to $353.3 million, reflecting an 8% increase in total advertising revenue, and a 2% rise in circulation revenue, partially offset by a 1% drop in other revenue.
Meredith’s National Media Group posted a 2% increase in revenue to $284.6 million, aided by a 4% jump in advertising revenue, and a 2% rise in circulation revenue. Management expects advertising revenue to remain flat or up slightly for fourth-quarter 2010. Operating profit grew 6% to $50.9 million.
Meredith publishes magazines for women focusing on the home and family. Advertising revenue at Meredith magazines — Better Homes and Gardens, Family Circle and Parents — led the growth in advertising revenue. Online advertising revenue at Meredith Interactive soared 20% during the quarter. Monthly average unique visitors to the National Media Group websites also jumped by over 30% to 20 million, and monthly page views averaged over 230 million.
The sluggish economy prompted Meredith to diversify and add significant revenue streams beyond traditional advertising by leveraging its brands through strategic alliances. Meredith Integrated Marketing revenue climbed 10%, whereas Brand Licensing revenue surged about 50% led by a rise in sales of Better Homes and Gardens’ branded products at Wal-Mart Stores Inc. (WMT).
Local Media Group’s revenue soared 20% to $68.8 million due to a rise in political and non-political advertising revenue. Political advertising was $1.5 million versus $245,000 in the year-ago quarter. Non-political advertising revenue rose 16% to $60.3 million, reflecting strength across automotive, professional services and retail categories. Management expects non-political advertising revenue to be up in the high-teens in fourth-quarter 2010.
Operating profit at Local Media Group was $12.8 million compared to $1.3 million in the prior-year quarter.
Meredith ended the quarter with cash and cash equivalents of $23.7 million, total long-term debt of $315 million, and shareholders’ equity of $659.9 million. The company’s leverage ratio (debt to EBITDA) was 1.4 to 1 at the end of the quarter.
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