Board Declares Cash Dividend of $0.06 per
share
Journal Media Group, Inc. (NYSE:JMG) today announced results for
its third quarter ended September 30, 2015, and the declaration of
a cash dividend of $0.06 per share, payable on December 4, 2015, to
shareholders of record as of the close of business on November 23,
2015.
“I’m pleased with the ongoing commitment of our team to deliver
quality local journalism and build local media brands that matter,
especially in light of the challenging revenue environment our
industry is facing,” said Tim Stautberg, president and CEO of
Journal Media Group. “We’re eager to bring our commitment to
serving local markets to our new and larger family in the future,
while continuing to realize operating efficiencies that will enable
us to deliver on our promise to strengthen lives and
communities.”
Gannett and Journal Media Group announced on October 7, 2015,
that they have entered into a definitive merger agreement under
which Gannett will acquire all of the outstanding common stock of
Journal Media Group for approximately $280 million, net of acquired
cash. Journal Media Group shareholders will receive $12.00 per
share in cash, which represents a premium of 44.6% based on the
closing price of Journal Media Group stock on October 7, 2015. The
transaction is expected to close in the first quarter of 2016.
The third quarter results reflect the operations of the newly
combined Journal Media Group, with the Journal Communications,
Inc.’s newspaper business (“Journal”) presented using the
acquisition method effective April 1, 2015. First quarter and
prior-year reported GAAP financials in the attached tables and in
the Form 10-Q, which will be filed later today, have been prepared
on a “carve-out” basis derived from the financial statements of The
E. W. Scripps Company (“Scripps”). The Journal newspaper business
is reflected only in the third quarter and year-to date results
from April 1, 2015 to September 30, 2015.
In order to enhance investors’ understanding of the expected
financial performance of the company’s business as a stand-alone
entity, non-GAAP information has been provided in this release to
reflect the merger of the Scripps newspaper business with Journal
(the “newspaper mergers”) as if the merger had occurred January 1,
2014. Please note that the Merged Company results may not be
indicative of results that may occur in the future. Any discussions
of Merged Company results can be referenced in Table No. 2 and
Table No. 3 below.
Results Summary
(dollars in thousands)
GAAP Results
3Q
2015
3Q
2014
Revenue $110,306 $84,543 Operating Loss ($598 ) ($8,441 ) Net Loss
($488 ) ($9,053 )
Non-GAAP Results
3Q
2015
3Q
2014
(Merged
Company)
Revenue $110,306 $120,226 EBITDA $5,336 $123 Adjusted EBITDA $8,177
$5,985
See “Use of Non-GAAP Financial Measures” below and the
reconciliations of these non-GAAP measures to the most comparable
GAAP measures in Table No. 2 and Table No. 3
Third Quarter 2015 GAAP Reported Results
Note that unless otherwise indicated, all comparisons are to the
third quarter ended September 30, 2014.
In the third quarter, revenue of $110 million increased 31
percent, with the increase in revenue from the acquisition of the
Journal newspapers partially offset by revenue declines at the
former Scripps newspapers. Expenses increased 19 percent driven by
the acquisition of the Journal newspapers, partially offset by
declines in payroll, benefits and variable costs at the former
Scripps newspapers. There was a net loss of $0.5 million compared
to a loss attributable to parent of $9.1 million.
Third Quarter 2015 Non-GAAP Merged Company Results
All discussions of Merged Company Revenue, EBITDA, Merged
Company EBITDA, Adjusted EBITDA and Adjusted Merged Company EBITDA
can be referenced in Table No. 2 and Table No. 3. These Merged
Company numbers are intended to enhance investors’ understanding of
the historic financial performance of the company’s business as a
stand-alone company, adjusted to give effect to the newspaper
mergers. Please note that the Merged Company results may not be
indicative of results that may occur in the future. Note that
unless otherwise indicated, all comparisons are to the Merged
Company quarterly information ended September 30, 2014.
Revenue, found in Table No. 2, was $110 million in the third
quarter, down 8 percent compared to non-GAAP Merged Company Revenue
in the prior-year period, primarily due to a nearly 10 percent
decline in advertising and marketing services revenue. Advertisers
continued to reduce their spending in the quarter, leading to a 6
percent decline in retail display revenue and, together with
declining volumes, contributed to an 11 percent decline in preprint
advertising. Digital revenue declined 13 percent in the quarter as
the continued audience shift to mobile consumption and programmatic
buying put pressure on digital ad inventory and rates,
respectively. Total classified was down 12 percent.
Subscription revenue of nearly $39 million declined 5 percent,
as lower volume more than offset price increases.
The loss of several large commercial printing customers in
Knoxville and Milwaukee led to an 11 percent decline in other
revenue.
Adjusted EBITDA, as defined in Table No. 3, was $8.2 million, up
37 percent versus the prior year period, benefited by a $1.4
million decrease in employee benefits resulting from favorable
medical claims experience and a reduction in the number of
employees.
Cash Flow
Our cash balance at the end of September was $23 million.
Year-to-date we have paid dividends totaling $0.10 per share, using
$2.5 million of cash. Year-to-date capital expenditures were $3
million, primarily related to production equipment replacements and
the purchase of information technology equipment.
We did not repurchase any shares in the third quarter of
2015.
Dividend Declared
The Board of Directors declared a cash dividend of $0.06 per
share, payable on December 4, 2015 to shareholders of record as of
the close of business on November 23, 2015.
2015 Merged Company Outlook
The company expects fourth quarter 2015 total revenue to be down
in the high-single-digits when compared to the quarterly Merged
Company Revenue in the prior-year period set forth in Table No.
2.
The company anticipates fourth quarter 2015 operating expenses,
excluding transition and integration-related costs and workforce
reduction charges, to decline at a high-single-digit rate compared
to the Merged Company Expenses in the prior-year period.
Finally, the company anticipates incurring fourth quarter
acquisition and integration-related activities for the Scripps and
Gannett transactions of approximately $3 million, net, primarily
driven by integration-related expenses for the Scripps
transaction.
About Journal Media Group
Journal Media Group (NYSE: JMG), headquartered in Milwaukee, is
a media company with print and digital publishing operations
serving 14 U.S. markets in nine states, including
the Milwaukee Journal Sentinel, the Naples Daily
News, The Commercial Appeal in Memphis, and Ventura
County Star in California. Formed in 2015 through a merger of
the newspaper operations of The E.W. Scripps Company and Journal
Communications, Inc., the company serves local communities with
daily newspapers, affiliated community publications, and a growing
portfolio of digital products that inform, engage and empower
readers and advertisers. Learn more
at www.journalmediagroup.com.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding
Journal Media Group, this press release includes references to
Merged Company Revenue, EBITDA, Merged Company EBITDA, Adjusted
EBITDA and Adjusted Merged Company EBITDA. These are not measures
presented in accordance with generally accepted accounting
principles in the United States (US GAAP), and Journal Media
Group’s use of the terms Merged Company Revenue, EBITDA, Merged
Company EBITDA, Adjusted EBITDA and Adjusted Merged Company EBITDA
may vary from that of others in the company’s industry. Merged
Company Revenue, Merged Company EBITDA and Adjusted Merged Company
EBITDA should not be considered as an alternative to net income
(loss), income from operations, revenues or any other performance
measures derived in accordance with US GAAP as measures of
operating performance. Further information regarding Journal Media
Group’s presentation of these measures, including a reconciliation
of Merged Company Revenue, EBITDA, Merged Company EBITDA, Adjusted
EBITDA and Adjusted Merged Company EBITDA to the most directly
comparable US GAAP financial measure, is included below in this
press release.
Forward-Looking Statements
This press release contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of JMG and certain plans and objectives of JMG with
respect thereto, including certain matters relating to the proposed
merger with Gannett Co., Inc. These forward-looking statements can
be identified by the fact that they do not relate only to
historical or current facts. Forward-looking statements often use
words such as “anticipate”, “target”, “expect”, “estimate”,
“intend”, “plan”, “goal”, “believe”, “hope”, “aim”, “continue”,
“will”, “may”, “would”, “could” or “should” or other words of
similar meaning or the negative thereof. There are several factors
which could cause actual plans and results to differ materially
from those expressed or implied in forward-looking statements. Such
factors include, but are not limited to, (i) relating to the
proposed merger with Gannett: uncertainties as to the expected
closing date of the proposed merger; potential disruption from the
proposed merger making it more difficult to maintain business and
operational relationships; the risk that unexpected costs will be
incurred; the risk of litigation and other legal proceedings
related to the proposed merger; changes in economic, business or
political conditions, licensing requirements or tax matters; risks
related to the timing (including possible delays) of the expiration
or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
the possibility that the proposed merger does not close, including,
but not limited to, due to the failure to obtain shareholder
approval or the failure to satisfy the other closing conditions;
and the risk that the merger agreement may be terminated in certain
circumstances that require us to pay Gannett a termination fee of
$9 million; and (ii) relating to JMG’s business: competition
in the markets JMG serves; the possibility that expected synergies
and value creation from the newspaper mergers will not be realized,
or will not be realized in the expected time period; the risks that
Journal’s and Scripps’ respective newspaper businesses will not be
integrated successfully; inability to retain and attract qualified
personnel; disruption from the newspaper mergers making it more
difficult to maintain business and operational relationships; the
risk that unexpected costs will be incurred; JMG’s expectations
regarding the period during which it qualifies as an “emerging
growth company” under the Jumpstart our Business Startups Act; and
changes in economic, business or political conditions, or licensing
requirements or tax matters. These forward-looking statements are
based on numerous assumptions and assessments made by JMG in light
of its experience and perception of historical trends, current
conditions, business strategies, operating environment, future
developments and other factors that it believes appropriate. By
their nature, forward-looking statements involve known and unknown
risks and uncertainties because they relate to events and depend on
circumstances that will occur in the future. The factors described
in the context of such forward-looking statements in this press
release could cause actual results, performance or achievements,
industry results and developments to differ materially from those
expressed in or implied by such forward-looking statements.
Although it is believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct and
persons reading this press release are therefore cautioned not to
place undue reliance on these forward-looking statements which
speak only as at the date of this press release. JMG does not
assume any obligation to update the information contained in this
press release (whether as a result of new information, future
events or otherwise), except as required by applicable law. A
further list and description of risks and uncertainties can be
found in JMG’s Annual Report on Form 10-K for the year ended
December 31, 2014 and in its reports filed on Form 10-Q and Form
8-K during 2015.
Additional Information and Where to Find It
The proposed merger involving JMG and Gannett Co., Inc. will be
submitted to the shareholders of JMG for their consideration. In
connection with the proposed merger, JMG will prepare a proxy
statement for the shareholders of JMG to be filed with the
Securities and Exchange Commission (the “SEC”), and JMG will mail
the proxy statement to its shareholders and file other documents
regarding the proposed merger with the SEC. JMG urges investors
and shareholders to read the proxy statement when it becomes
available, as well as other documents filed with the SEC, because
they will contain important information. Investors and security
holders will be able to receive the proxy statement and other
documents (when they are available) free of charge at the SEC’s web
site, http://www.sec.gov or from JMG upon request to Jason R.
Graham, Senior Vice President, Chief Financial Officer and
Treasurer, at 414-224-2440 or jason.graham@jmg.com.
Participants in the Merger Solicitation
This communication is not a solicitation of a proxy from any
investor or shareholder. However, JMG and certain of its directors
and executive officers and other members of management and
employees may be deemed to be participants in the solicitation of
proxies in connection with the proposed merger under the rules of
the SEC. Information regarding the persons who may, under the rules
of the SEC, be deemed participants in the solicitation of the
shareholders of JMG in connection with the proposed merger will be
set forth in the proxy statement when it is filed with the SEC. You
can find information about JMG’s directors and executive officers
in its Registration Statement on Form S-4 (Registration No.
333-201540) originally filed with the SEC on January 16, 2015 and
declared effective on February 6, 2015 and JMG’s subsequently filed
reports with the SEC, including its Annual Report on Form 10-K for
the year ended December 31, 2014 filed with the SEC on March 31,
2015. These documents can be obtained free of charge from the
sources indicated above.
Tables Follow
Table No. 1 JOURNAL MEDIA GROUP
INC. Condensed Consolidated and Combined Statements of
Operations (unaudited) (dollars and shares in thousands)
Three Months Ended Nine Months Ended
September 30, 2015 September 30, 2014 % Change
September 30, 2015 September 30, 2014 % Change
Operating revenue: Advertising and marketing services $
63,021 $ 51,160 23.2 $ 185,524 $ 168,020 10.4 Subscriptions 38,658
28,738 34.5 109,201 90,736 20.4 Other 8,627 4,645
85.7 22,873 16,474 38.8
Total revenue
110,306 84,543 30.5 317,598
275,230 15.4 Operating costs and expenses:
Cost of sales (exclusive of items shown below) 60,030 50,551 18.8
169,250 153,967 9.9 Selling, general and administrative 44,782
37,271 20.2 132,121 124,409 6.2 Defined pension and benefit plan
expense 158 673 (76.5) 1,616 6,119 (73.6) Depreciation and
amortization 5,934 4,489 32.2 15,183 12,888
17.8 Total operating costs and expenses 110,904 92,984 19.3
318,170 297,383 7.0
Operating loss (598
) (8,441 ) 92.9 (572 )
(22,153 ) 97.4 Other expense, net (550
) (415 ) (32.5) (399 ) (1,082 ) 63.1 Loss before income
taxes (1,148 ) (8,856 ) 87.0 (971 ) (23,235 ) 95.8 Provision
(benefit) for income taxes (660 ) 197 F (264 ) 213 F
Net loss $ (488 ) $
(9,053 ) 94.6 $ (707 )
$ (23,448 ) 97.0 Weighted
average number of shares* Basic 24,408 14,450 21,120 14,450 Diluted
24,408 14,450 21,120 14,450 Loss per share: Basic $ (0.02 )
$ (0.63 ) $ (0.05 ) $ (1.62 ) Diluted $ (0.02 ) $ (0.63 ) $ (0.05 )
$ (1.62 ) Dividends declared per share $ 0.06 $ — $ 0.10 $ —
F Greater than 100% favorable variance *The weighted
average number of common shares outstanding assumes the 14,450
shares of Journal Media Group common stock issued to Scripps
shareholders were outstanding as of January 1, 2014.
Table No. 2 JOURNAL MEDIA GROUP INC.
Revenues and Merged Company Revenues,
Non-GAAP Information (unaudited)
(dollars in thousands)
Three Months Ended Nine Months
Ended Merged Company Merged Company Merged Company
September 30, 2015 September 30, 2014 % Change September 30, 2015
September 30, 2014 % Change Advertising and marketing
services $ 63,021 $ 69,633 (9.5) $ 200,897 $ 224,549 (10.5)
Subscriptions revenue * 38,658 40,858 (5.4) 120,397 126,399 (4.7)
Other revenue ** 8,627 9,735 (11.4) 29,007
33,202 (12.6)
Total revenue $ 110,306
$ 120,226 (8.3) $
350,301 $ 384,150 (8.8)
Three Months Ended Merged Company Merged Company
Trailing Twelve months ended September 30, 2015 June 30, 2015 March
31, 2015 December 31, 2014 September 30, 2015 Advertising
and marketing services $ 63,021 $ 67,397 $ 70,479 $ 81,258 $
282,155 Subscriptions revenue * 38,658 39,267 42,472 43,550 163,947
Other revenue ** 8,627 9,150 11,230 10,196
39,203
Total revenue $ 110,306
$ 115,814 $ 124,181
$ 135,004 $ 485,305
Merged Company Revenue, a non-GAAP financial
measure, takes into account the newspaper mergers by adjusting the
performance of all periods prior to the date of the newspaper
mergers (April 1, 2015) to include the financial results as if the
company had owned the Journal Communications newspaper business for
the entire period. * Includes $341 and $1,076 purchase price
revenue reduction for deferred revenue valuation at Journal
Newspapers for the three months and nine months ended September 30,
2015, respectively. ** Includes $407 and $907 of revenue for
services provided to Scripps under TSA agreements for the three
months and nine months ended September 30, 2015, respectively.
Table No. 3
Journal Media Group Inc.
Non-GAAP EBITDA and Adjusted EBITDA
(unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended
Merged
Company Merged Company Merged Company
September 30, 2015 September 30, 2014 % Change
September 30, 2015 September 30, 2014 % Change
Net loss $ (488 ) $ (7,445 ) $ (23 ) $ (20,222 ) Provision
(benefit) for income taxes (660 ) 1,040 189 2,058 Total other
expense, net 550 428 394 1,174 Depreciation and amortization 5,934
6,100 16,761 17,870
EBITDA
$ 5,336 $ 123 F
$ 17,321 $ 880 F
Pension adjustments (a) (b) — 1,010 1,813 7,132 Historical
corporate expenses — 16,600 20,800 59,800 Estimated future
corporate and shared service expenses, net of expected synergies —
(12,328 ) (12,328 ) (36,984 ) Transition and integration costs, net
2,620 — 6,372 — Impairment of long-lived assets — — 265 — Workforce
reduction charges 221 580 1,139 1,391
Adjusted EBITDA $ 8,177 $
5,985 36.6 $ 35,382
$ 32,219 9.8 Three Months Ended
Merged Company Merged Company Trailing Twelve
months ended September 30, 2015 June 30, 2015
March 31, 2015 December 31, 2014 September 30,
2015 Net earnings (loss) $ (488 ) $ 3,323 $ (2,858 ) $
(55 ) $ (78 ) Provision (benefit) for income taxes (660 ) 296 553
1,656 1,845 Total other (income) and expense, net 550 125 (281 )
384 778 Depreciation and amortization 5,934 5,378
5,449 5,616 22,377
EBITDA $
5,336 $ 9,122 $
2,863 $ 7,601 $
24,922 Pension adjustments (a) (b) — — 1,813
992 2,805 Historical corporate expenses — — 20,800 18,400 39,200
Estimated future corporate and shared service expenses, net of
expected synergies — — (12,328 ) (12,328 ) (24,656 ) Transition and
integration costs, net 2,620 3,752 — — 6,372 Impairment of
long-lived assets — 265 — — 265 Workforce reduction charges 221
355 563 3,669 4,808
Adjusted
EBITDA $ 8,177 $ 13,494
$ 13,711 $ 18,334
$ 53,716 (a) - Reflects an adjustment
to eliminate the expense related to the defined benefit pension
plans of the Memphis and Knoxville newspaper operations, the
allocation of the Scripps pension expense and the allocation of
Journal pension expense, all of which defined benefit plans were
retained by Scripps as part of the master transaction agreement.
(b) - In the second quarter of 2014, unions ratified our
plan to withdraw from the Graphics Communication International
Union (GCIU) Employer Retirement Fund. Upon ratification of the
agreement, we estimated the undiscounted liability to be
approximately $6.5 million and in the second quarter of 2014
recorded a liability of $4.1 million for the present value of the
withdrawal liability. The withdrawal liability was retained by
Scripps in the transactions. We define EBITDA as net
earnings (loss) excluding earnings from discontinued operations,
net, provision (benefit) for income taxes, total other (income)
expense, net, depreciation and amortization. Our management uses
EBITDA, among other things, to evaluate our operating performance.
EBITDA is not a measure of performance calculated in accordance
with accounting principles generally accepted in the United States.
EBITDA should not be considered in isolation of, or as a substitute
for, net earnings as an indicator of operating performance. EBITDA,
as we calculate it, may not be comparable to EBITDA reported by
other companies. We define Adjusted EBITDA as EBITDA before
transition and integration-related costs, non-cash impairment
charges and workforce reduction charges. Our management uses
Adjusted EBITDA, among other things, to evaluate our operating
performance. Adjusted EBITDA is not a measure of performance
calculated in accordance with accounting principles generally
accepted in the United States. Adjusted EBITDA should not be
considered in isolation of, or as a substitute for, net earnings as
an indicator of operating performance. Adjusted EBITDA as we
calculate it, may not be comparable to Adjusted EBITDA reported by
other companies. We define Merged Company EBITDA as net
earnings (loss) before income taxes, total other (income) and
expense, net and depreciation and amortization adjusted to give
effect to the newspaper mergers for all periods prior to April 1,
2015. Our management uses Merged Company EBITDA, among other
things, to evaluate our operating performance. Merged Company
EBITDA is not a measure of performance calculated in accordance
with accounting principles generally accepted in the United States.
Merged Company EBITDA should not be considered in isolation of, or
as a substitute for, net earnings as an indicator of operating
performance. Merged Company EBITDA, as we calculate it, may not be
comparable to EBITDA reported by other companies. We define
Adjusted Merged Company EBITDA as Merged Company EBITDA before
transition and integration-related costs, non-cash impairment
charges and workforce reduction charges further adjusted to reflect
the estimated corporate and shared service expenses as a
stand-alone company, net of expected future synergies. Our
management uses Adjusted Merged Company EBITDA, among other things,
to evaluate our operating performance. Adjusted Merged Company
EBITDA is not a measure of performance calculated in accordance
with accounting principles generally accepted in the United States.
Adjusted Merged Company EBITDA should not be considered in
isolation of, or as a substitute for, net earnings as an indicator
of operating performance. Adjusted Merged Company EBITDA as we
calculate it, may not be comparable to Adjusted EBITDA reported by
other companies. F Greater than 100% favorable variance
Table No. 4
Journal Media Group, Inc.
Condensed Consolidated and Combined
Balance Sheets
(dollars in thousands)
September 30, 2015 December 31, 2014
ASSETS
Current assets: Cash and cash equivalents $ 23,075 $ —
Receivables, net 44,498 36,958 Inventories 7,697 6,184 Prepaid
expenses and other current assets 10,821 1,937 Deferred income
taxes 2,318 —
Total current assets 88,409
45,079 Property, plant and equipment, net 248,490 185,548
Goodwill 9,030 — Other intangible assets, net 11,152 2,001 Other
assets 4,113 2,018
Total assets $
361,194 $ 234,646 LIABILITIES
AND EQUITY Current liabilities: Accounts payable $
15,417 $ 10,573 Accrued compensation and benefits 22,358 12,404
Deferred revenue 33,219 21,136 Other current liabilities 6,698
4,097
Total current liabilities 77,692
48,210 Accrued employee compensation and benefits 4,068
4,201 Accrued pension and retirement benefits 14,674 5,318 Deferred
income taxes 16,985 — Multi-employer plan withdrawal liability —
4,100 Other long-term liabilities 4,561 3,570 Stockholders' equity
240,760 166,793 Non-controlling interests 2,454 2,454
Total liabilities and equity $ 361,194
$ 234,646 Note: The September 30, 2015
balance sheet reflects the acquisition of Journal Newspapers.
View source
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Journal Media Group, Inc.Jason GrahamSenior Vice President, CFO
and Treasurer414-224-2363
Journal Media Grp., Inc. (NYSE:JMG)
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