Meredith Corporation (MDP), a leading media and marketing company, recently posted fourth-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 70 cents a share outpaced the Zacks Consensus Estimate of 66 cents, and rose 27% from 55 cents delivered in the prior-year quarter. On a reported basis, including one-time items, earnings came in at 73 cents, reflecting a drastic improvement over a decline of $3.64 per share experienced in the year-earlier quarter.
Management now expects earnings for first-quarter 2011 in the range of 47 cents to 52 cents a share, and for fiscal year 2011 in the range of $2.40 to $2.75. The current Zacks Consensus Estimate for first-quarter and fiscal year 2011 are 51 cents and $2.52 per share, respectively.
Total revenue for the quarter jumped 6% year-on-year to $365.1 million, reflecting a 7% increase in total advertising revenue, a 2% rise in circulation revenue, and a 6% jump in other revenue. Meredith now expects total advertising revenue to increase between 6% and 7% in first-quarter 2011. Total revenue also comfortably surpassed the Zacks Consensus Revenue Estimate of $362 million.
Meredith’s National Media Group posted a 2% increase in revenue to $288 million, aided by a 1% jump in advertising revenue, and a 2% rise in circulation revenue. Management expects advertising revenue to remain flat or down slightly for first-quarter 2011. Operating profit of $47.5 million, excluding one-time items, remained almost flat compared with the prior-year quarter.
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. The company’s share in the overall magazine industry advertising revenue rose to 12.3% in fiscal 2010 from 9.5% two year ago.
During fiscal 2010, advertising revenue at Meredith Interactive Media soared 17% and both unique visitors and page views across Meredith’s 60 Web sites climbed about 20%.
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 5%, 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) in the second-half of fiscal 2010.
Local Media Group’s revenue soared 23% to $77.1 million due to a rise in political and non-political advertising revenue. Political advertising was $3.9 million versus $398,000 in the year-ago quarter. Non-political advertising revenue rose 15% to $64 million. Management expects non-political advertising revenue to be up in the mid-to-high teens in first-quarter 2011.Meredith expects to book net political advertising revenue at its television stations between $25 and $30 million, with the majority being generated in second-quarter 2011.
Excluding one-time items, operating profit at Local Media Group was $20.2 million compared to $6.2 million in the prior-year quarter.
Meredith ended the quarter with cash and cash equivalents of $48.6 million, total long-term debt of $300 million, and shareholders’ equity of $688.3 million. The company’s leverage ratio (debt to EBITDA) was under existing debt covenants at 1.3 to 1 at the end of the quarter. The company lowered its debt load by $80 million during fiscal 2010.
The company generated net cash flows from operating activities of $52 million in the quarter and $191.7 million during fiscal 2010. Meredith also has a revolving credit facility of $150 million, which can be doubled under special circumstances.
