Meredith Tops Zacks Consensus - Analyst Blog

Meredith Corporation (MDP), a leading media and marketing company, recently reported second-quarter 2010 results that exceeded Zacks' expectations on the heels of improved advertising performance at its National and Local Media groups, lower operating expenses, increased readership and online traffic.

The quarterly earnings of 49 cents a share outdid the Zacks Consensus Estimate of 45 cents, but remained in line with the prior-year quarter result. However, earnings surged 44% sequentially. On a reported basis, earnings came in at 42 cents a share, up 50% from 28 cents delivered in the year-earlier quarter.

Management now expects earnings for third-quarter 2010 in the range of 55 cents to 60 cents a share, and for fiscal year 2010 in the range of $1.90 to $2.05.

Total revenue for the quarter slipped 7% year-on-year to $336.9 million, reflecting a 7% fall in total advertising revenue, a 12% drop in other revenue, partially offset by a 1% rise in circulation revenue. Total operating expenses (excluding one-time items) dipped 7% to $294.2 million.

Meredith’s National Media Group posted a 6% decline in revenue to $261.2 million, which was hurt by a 2% fall registered in advertising revenue, but partially offset by a 1% rise in circulation revenue. Although advertising revenue fell, it marked the fourth consecutive quarter of improvement. Management expects advertising revenue to remain flat or up slightly for third-quarter 2010.

Meredith publishes magazines for women focusing on the home and family. Advertising revenue at Meredith magazine, Better Homes and Gardens rose 7% in the quarter. Advertising growth was also registered at More and Fitness magazines. According to the data from the Publishers Information Bureau, the company’s share in overall magazine industry advertising revenue rose to 11.7% in the quarter from 9.4% in the prior-year. Monthly average unique visitors to the National Media Group websites also jumped more than 35% in the quarter.

Despite a mid-single digit fall in revenue, operating profit at the National Media Group (excluding one-time items) climbed 27% to $37.2 million driven by a 10% drop in operating expenses.

Local Media Group’s revenue fell 10% to $75.7 million due to lower political advertising revenue, partially offset by a 4% rise in non-political advertising. Management expects non-political advertising revenue to be up in the mid-teens in third-quarter 2010.

Operating profit at Local Media Group, (excluding one-time items) dropped 30% to $17.1 million, whereas operating expenses declined 2%.

Meredith ended the quarter with cash and cash equivalents of $23.9 million, long-term debt of $175 million, and shareholders’ equity of $634.8 million.

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