Market Overview

The New York Times Company Reports 2017 Third-Quarter Results

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The New York Times Company (NYSE:NYT) announced today third-quarter 2017
diluted earnings per share from continuing operations of $.20 compared
with $.00 in the same period of 2016. Adjusted diluted earnings per
share from continuing operations (defined below) was $.13 in the third
quarter of 2017 compared with $.06 in the third quarter of 2016.

Operating profit was $33.0 million in the third quarter of 2017 compared
with $9.0 million in the same period of 2016, largely due to higher
digital subscription revenues and lower severance costs, which more than
offset lower print advertising revenues. Adjusted operating profit
(defined below) was $56.5 million in the third quarter of 2017 compared
with $39.2 million in the third quarter of 2016, principally driven by
strong digital subscription revenues, which were partially offset by
lower print advertising revenues.

Mark Thompson, president and chief executive officer, The New York Times
Company, said, "We had a strong quarter once again, with solid growth in
digital subscriptions, digital advertising and subscription revenue and
overall profitability.

"Total revenue for the Company grew by 6 percent in the quarter and we
added 154,000 net digital-only subscriptions, a 14 percent increase in
the number of net subscription additions compared with the same quarter
last year, driven by strong growth across our products. Of note, our
digital news product added 105,000 subscriptions and Cooking, which
launched as a paid digital product early in the quarter, added 23,000
subscriptions.

"These results reflect the ongoing strength of our digital strategy and
continued demand for quality, in-depth journalism."

Comparisons
Unless otherwise noted, all comparisons are for
the third quarter of 2017 to the third quarter of 2016.

This release presents certain non-GAAP financial measures, including
diluted earnings per share from continuing operations excluding
severance, non-operating retirement costs and special items (or adjusted
diluted earnings per share from continuing operations); operating profit
before depreciation, amortization, severance, non-operating retirement
costs and special items (or adjusted operating profit); and operating
costs before depreciation, amortization, severance and non-operating
retirement costs (or adjusted operating costs). The exhibits include a
discussion of management's reasons for the presentation of these
non-GAAP financial measures and reconciliations to the most comparable
GAAP financial measures, as well as an explanation of non-operating
retirement costs.

Third-quarter 2017 results included the following special items:

  • A $30.1 million gain ($16.1 million after tax and net of
    noncontrolling interest or $.10 per share) from joint ventures related
    to the sale of the remaining assets of Madison Paper Industries, in
    which the Company has an investment through a subsidiary.
  • A $2.5 million charge ($1.5 million after tax or $.01 per share) in
    connection with the ongoing redesign and consolidation of space in our
    headquarters building.

Third-quarter 2016 results included the following special items:

  • A $2.9 million charge ($1.8 million after tax or $.01 per share) in
    connection with the streamlining of the Company's international print
    operations (consisting of severance costs).
  • A $5.0 million gain ($3.0 million after tax or $.02 per share) in
    connection with an arbitration matter related to a multiemployer
    pension plan.

The Company had severance costs (in addition to those associated with
the third quarter 2016 streamlining of the Company's international print
operations) of $2.1 million ($1.3 million after tax or $.01 per share)
and $13.0 million ($7.8 million after tax or $.05 per share) in the
third quarters of 2017 and 2016, respectively.

Results from Continuing Operations

Revenues
Total revenues for the third quarter of 2017
increased 6.1 percent to $385.6 million from $363.5 million in the third
quarter of 2016. Subscription revenues increased 13.6 percent, while
advertising revenues decreased 9.0 percent and other revenues increased
17.7 percent.

Subscription revenues in the third quarter of 2017 rose primarily due to
significant growth in recent quarters in the number of subscriptions to
the Company's digital-only products, as well as the 2017 increase in
home-delivery prices for The New York Times newspaper, which more than
offset a decline in print copies sold. Revenue from the Company's
digital-only subscription products (which includes our news product, as
well as our Crossword and Cooking products) increased 46.3 percent
compared with the third quarter of 2016, to $85.7 million.

Paid digital-only subscriptions totaled approximately 2,487,000 at the
end of the third quarter of 2017, a net increase of 154,000
subscriptions compared with the end of the second quarter of 2017 and a
59.1 percent increase compared with the end of the third quarter of
2016. Of the 154,000 additions, 105,000 came from the Company's digital
news products, while the remainder came from the Company's other digital
products.

Third-quarter print advertising revenue decreased 20.1 percent, while
digital advertising revenue increased 11.0 percent. Digital advertising
revenue was $49.2 million, or 43.3 percent of total Company advertising
revenues, compared with $44.4 million, or 35.5 percent, in the third
quarter of 2016. The decrease in print advertising revenues resulted
from a decline in display advertising, primarily in the luxury, travel,
real estate, media, technology and telecommunications categories. The
increase in digital advertising revenues primarily reflected increases
in revenue from smartphone, programmatic and branded content, partially
offset by a continued decrease in traditional website display
advertising.

Other revenues rose 17.7 percent in the third quarter largely due to
affiliate referral revenue associated with the product review and
recommendation website, The Wirecutter, which the Company acquired in
October 2016.

Operating Costs
Operating costs decreased in the third
quarter of 2017 to $350.1 million compared with $356.6 million in the
third quarter of 2016, largely due to lower severance, print production
and distribution costs and savings in international operations, which
were partially offset by higher costs following the acquisitions of The
Wirecutter and Fake Love and marketing costs. Adjusted operating costs
increased to $329.2 million from $324.4 million in the third quarter of
2016, largely due to higher costs from acquisitions and marketing costs,
which were partially offset by lower print production and distribution
costs and savings in international operations.

Non-operating retirement costs, which exclude special items, decreased
to $3.1 million from $3.8 million in the third quarter of 2017,
primarily due to lower multiemployer pension plan withdrawal expense.

Raw materials costs decreased to $15.7 million compared with $18.2
million in the third quarter of 2016, largely due to volume declines.

Other Data

Joint Ventures
During the third quarter of 2017, the
Company recognized a $30.1 million gain from joint ventures related to
the sale of the remaining assets at a paper mill previously operated by
Madison Paper Industries, in which the Company has an investment through
a subsidiary. The Company's proportionate share of the gain was $16.1
million after tax and adjusted for the allocation of the gain to the
noncontrolling interest.

Interest Expense, net
Interest expense, net decreased in
the third quarter of 2017 to $4.7 million compared with $9.0 million in
the third quarter of 2016 as a result of the repayment, at maturity, of
the Company's 6.625 percent senior notes in the fourth quarter of 2016.

Income Taxes
The Company had income tax expense of $23.4
million in the third quarter of 2017 compared with income tax expense of
$0.1 million in the third quarter of 2016. The increase was primarily
due to higher income from continuing operations in the third quarter of
2017.

Liquidity
As of September 24, 2017, the Company had cash
and marketable securities of approximately $822.9 million (excluding
restricted cash of approximately $17.9 million, substantially all of
which is set aside to collateralize certain workers' compensation
obligations). Total debt and capital lease obligations were
approximately $249.4 million.

Capital Expenditures
Capital expenditures totaled
approximately $39 million and $6 million in the third quarters of 2017
and 2016, respectively, and $67 million and $17 million in the nine
months ended 2017 and 2016, respectively. The increase in both periods
was primarily driven by the ongoing redesign and consolidation of space
in our headquarters building and improvements at our College Point
printing and distribution facility.

Outlook
The Company's fourth quarter of 2017 contains 14
weeks compared with 13 weeks in the fourth quarter of 2016. The
following outlook reflects both the inclusion and exclusion of the
impact of this additional week.

On a 14-week basis (including the impact of the additional week):

Total subscription revenues in the fourth quarter of 2017 are expected
to increase in the high-teens compared to the fourth quarter of 2016.

Total advertising revenues in the fourth quarter of 2017 are expected to
decrease in the high single-digits compared with the fourth quarter of
2016.

Operating costs and adjusted operating costs are expected to increase in
the high-single digits in the fourth quarter of 2017 compared with the
fourth quarter of 2016.

On a comparable 13-week basis (excluding the impact of the additional
week):

Total subscription revenues in the fourth quarter of 2017 are expected
to increase approximately 10 percent compared to the fourth quarter of
2016.

Total advertising revenues in the fourth quarter of 2017 are expected to
decrease in the low double-digits compared with the fourth quarter of
2016.

The Company expects the following on a pre-tax basis in 2017:

  • Depreciation and amortization: $60 million to $65 million,
  • Interest expense, net: $18 million to $20 million, and
  • Capital expenditures: $90 million to $95 million.

Conference Call Information
The Company's third-quarter
2017 earnings conference call will be held on Wednesday, November 1 at
11:00 a.m. E.T. Participants can pre-register for the telephone
conference at dpregister.com/10112220.
To access the call without pre-registration, dial 844-413-3940 (in the
U.S.) or 412-858-5208 (international callers). Online listeners can link
to the live webcast at investors.nytco.com.

An archive of the webcast will be available beginning about two hours
after the call at investors.nytco.com.
The archive will be available for approximately three months. An audio
replay will be available at 877-344-7529 (in the U.S.) and 412-317-0088
(international callers) beginning approximately two hours after the call
until 11:59 p.m. E.T. on Wednesday, November 15. The passcode is
10112220.

Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve risks and uncertainties, and actual results could differ
materially from those predicted by such forward-looking statements.
These risks and uncertainties include changes in the business and
competitive environment in which the Company operates, the impact of
national and local conditions and developments in technology, each of
which could influence the levels (rate and volume) of the Company's
subscriptions and advertising, the growth of its businesses and the
implementation of its strategic initiatives. They also include other
risks detailed from time to time in the Company's publicly filed
documents, including the Company's Annual Report on Form 10-K for the
year ended December 25, 2016. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.

The New York Times Company is a global media organization dedicated to
enhancing society by creating, collecting and distributing high-quality
news and information. The Company includes The New York Times, NYTimes.com
and related properties. It is known globally for excellence in its
journalism, and innovation in its print and digital storytelling and its
business model. Follow news about the company at @NYTimesComm or
investor news at @NYT_IR.

Exhibits:   Condensed Consolidated Statements of Operations
Footnotes
Reconciliation of Non-GAAP Information
 

This press release can be downloaded from www.nytco.com

 
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in thousands, except per share data)
      Third Quarter   Nine Months
2017   2016   % Change 2017   2016   % Change
Revenues
Subscription (a) $ 246,638 $ 217,099 13.6% $ 739,050 $ 654,573 12.9%
Advertising(b) 113,633 124,898 (9.0%) 375,895 395,733 (5.0%)
Other(c) 25,364 21,550 17.7% 76,568 65,386 17.1%
Total revenues 385,635 363,547 6.1% 1,191,513 1,115,692 6.8%
Operating costs
Production costs 149,920 156,616 (4.3%) 452,441 467,195 (3.2%)
Selling, general and administrative costs 184,483 184,596 (0.1%) 595,491 534,911 11.3%
Depreciation and amortization 15,677 15,384 1.9% 46,961 46,003 2.1%
Total operating costs 350,080 356,596 (1.8%) 1,094,893 1,048,109 4.5%
Headquarters redesign and consolidation (d) 2,542 * 6,929 *
Restructuring charge (e) 2,949 * 14,804 *
Multiemployer pension plan withdrawal expense (f) (4,971) * 6,730 *
Operating profit 33,013 8,973 * 89,691 46,049 94.8%
Gain/(loss) from joint ventures (g) 31,557 463 * 31,464 (41,845) *
Interest expense, net 4,660 9,032 (48.4%) 15,118 26,955 (43.9%)
Income/(loss) from continuing operations before income taxes 59,910 404 * 106,037 (22,751) *
Income tax expense/(benefit) 23,420 121 * 40,873 (8,956) *
Income/(loss) from continuing operations 36,490 283 * 65,164 (13,795) *
Loss from discontinued operations, net of income taxes (h) 488 * 488 *
Net income/(loss) 36,002 283 * 64,676 (13,795) *
Net (income)/loss attributable to the noncontrolling interest (3,673) 123 * (3,567) 5,719 *
Net income/(loss) attributable to The New York Times Company
common stockholders
$ 32,329 $ 406 * $ 61,109 $ (8,076) *
Average number of common shares outstanding:
Basic 162,173 161,185 0.6% 161,798 161,092 0.4%
Diluted 164,405 162,945 0.9% 164,005 161,092 1.8%
 
Basic earnings/(loss) per share attributable to The New York
Times Company common stockholders
Income/(loss) from continuing operations $ 0.20 $ * $ 0.38 $ (0.05) *
Loss from discontinued operations, net of income taxes * *
Net income/(loss) $ 0.20 $ * $ 0.38 $ (0.05) *
Diluted earnings/(loss) per share attributable to The New York
Times Company common stockholders
Income/(loss) from continuing operations $ 0.20 * $ 0.37 $ (0.05) *
Loss from discontinued operations, net of income taxes * *
Net income/(loss) $ 0.20 $ * $ 0.37 $ (0.05) *
Dividends declared per share $ 0.08 $ 0.08 * $ 0.12 $ 0.12 *
* Represents a change equal to or in excess of 100% or not
meaningful.

See footnotes pages for additional information.

 

 
THE NEW YORK TIMES COMPANY
FOOTNOTES
(Amounts in thousands)
 
(a) The following table summarizes digital-only subscription revenues
for the third quarters and first nine months of 2017 and 2016:
           
Third Quarter Nine Months
(In thousands) 2017   2016

%
Change

2017   2016

%
Change

Digital-only subscription revenues:

News product subscription revenues(1)

$ 82,073 $ 56,144 46.2% $ 234,234 $ 162,344 44.3%
Other product subscription revenues(2) 3,610 2,408 49.9% 9,810 6,778 44.7%
Total digital-only subscription revenues $ 85,683 $ 58,552 46.3% $ 244,044 $ 169,122 44.3%

(1)

 

Includes revenues from subscriptions to the Company's news
product. News product subscription packages that include access to
the Company's Crossword and Cooking products are also included in
this category.

(2)

Includes revenues from standalone subscriptions to the
Company's Crossword and Cooking products.

 
The following table summarizes digital-only subscriptions as of the
end of the third quarters of 2017 and 2016:
         
September 24, September 25,
(In thousands)       2017   2016   % Change
Digital-only subscriptions(1):
News product subscriptions(2) 2,132 1,338 59.3%
Other product subscriptions(3) 355 225 57.8%
Total digital-only subscriptions 2,487 1,563 59.1%

(1)

 

Reflects certain immaterial prior-period corrections.

(2)

Includes subscriptions to the Company's news product. News
product subscription packages that include access to the Company's
Crossword and Cooking products are also included in this category.

(3)

Includes standalone subscriptions to the Company's Crossword
and Cooking products.

 

(b)   The following table summarizes advertising revenues by category for
the third quarters and first nine months of 2017 and 2016:
         
Third Quarter 2017 Third Quarter 2016 % Change
Print   Digital   Total Print   Digital   Total Print   Digital   Total
Display $ 56,710 $ 41,547 $ 98,257 $ 72,442 $ 38,447 $ 110,889 (21.7)% 8.1% (11.4)%
Classified and Other 7,679 7,697 15,376 8,102 5,907 14,009 (5.2)% 30.3% 9.8%
Total advertising $ 64,389 $ 49,244 $ 113,633 $ 80,544 $ 44,354 $ 124,898 (20.1)% 11.0% (9.0)%
                             
Nine Months 2017 Nine Months 2016 % Change
Print Digital Total Print Digital Total Print Digital Total
Display $ 196,836 $ 129,008 $ 325,844 $ 238,399 $ 114,957 $ 353,356 (17.4)% 12.2% (7.8)%
Classified and Other 24,966 25,085 50,051 26,156 16,221 42,377 (4.5)% 54.6% 18.1%
Total advertising $ 221,802 $ 154,093 $ 375,895 $ 264,555 $ 131,178 $ 395,733 (16.2)% 17.5% (5.0)%
(c)   Other revenues consist primarily of revenues from news
services/syndication, digital archives, rental income, our NYT Live
business, e-commerce and affiliate referrals.
 
(d) In the third, second and first quarters of 2017, the Company
recognized $2.5 million, $2.0 million and $2.4 million of expenses,
respectively, related to the ongoing redesign and consolidation of
space in our headquarters building.
 
(e) In the third and second quarters of 2016, the Company recorded
charges of $2.9 million and $11.9 million, respectively, in
connection with the streamlining of its international print
operations (primarily consisting of severance costs).
 
(f) In the third quarter of 2016, the Company received $5.0 million in
connection with an arbitration matter related to a multiemployer
pension plan. In the second quarter of 2016, the Company recorded an
$11.7 million charge for a partial withdrawal obligation under a
multiemployer pension plan following an unfavorable decision in the
same arbitration matter.
 
(g) In the third quarter of 2017, the Company recorded a $30.1 million
gain from joint ventures related to the sale of the remaining assets
at a paper mill previously operated by Madison Paper Industries. In
the first nine months of 2016, the Company recorded a $43.5 million
loss from joint ventures related to the closure of the paper mill.
 
(h) In the third quarter of 2017, the Company recorded a charge of $0.8
million ($0.5 million after tax) in connection with the settlement
of litigation involving NEMG T&G, a subsidiary of the Company and a
part of the New England Media Group, which the Company sold in 2013.
 

THE NEW YORK TIMES COMPANY
RECONCILIATION OF NON-GAAP
INFORMATION

(Dollars in thousands, except per share data)

In this release, the Company has referred to non-GAAP financial
information with respect to diluted earnings per share from continuing
operations excluding severance, non-operating retirement costs and
special items (or adjusted diluted earnings per share from continuing
operations); operating profit before depreciation, amortization,
severance, non-operating retirement costs and special items (or adjusted
operating profit); and operating costs before depreciation,
amortization, severance and non-operating retirement costs (or adjusted
operating costs). The Company has included these non-GAAP financial
measures because management reviews them on a regular basis and uses
them to evaluate and manage the performance of the Company's operations.
Management believes that, for the reasons outlined below, these non-GAAP
financial measures provide useful information to investors as a
supplement to reported diluted earnings/(loss) per share from continuing
operations, operating profit/(loss) and operating costs. However, these
measures should be evaluated only in conjunction with the comparable
GAAP financial measures and should not be viewed as alternative or
superior measures of GAAP results.

Adjusted diluted earnings per share provides useful information in
evaluating the Company's period-to-period performance because it
eliminates items that the Company does not consider to be indicative of
earnings from ongoing operating activities. Adjusted operating profit is
useful in evaluating the ongoing performance of the Company's business
as it excludes the significant non-cash impact of depreciation and
amortization as well as items not indicative of ongoing operating
activities. Total operating costs include depreciation, amortization,
severance and non-operating retirement costs. Total operating costs
excluding these items provide investors with helpful supplemental
information on the Company's underlying operating costs that is used by
management in its financial and operational decision-making.

Management considers special items, which may include impairment
charges, pension settlement charges and other items that arise from time
to time, to be outside the ordinary course of our operations. Management
believes that excluding these items provides a better understanding of
the underlying trends in the Company's operating performance and allows
more accurate comparisons of the Company's operating results to
historical performance. In addition, management excludes severance
costs, which may fluctuate significantly from quarter to quarter,
because it believes these costs do not necessarily reflect expected
future operating costs and do not contribute to a meaningful comparison
of the Company's operating results to historical performance.

Non-operating retirement costs include interest cost, expected return on
plan assets and amortization of actuarial gains and loss components of
pension expense; interest cost and amortization of actuarial gains and
loss components of retiree medical expense; and all expenses associated
with multiemployer pension plan withdrawal obligations. These
non-operating retirement costs are primarily tied to financial market
performance and changes in market interest rates and investment
performance. Non-operating retirement costs do not include service costs
and amortization of prior service costs for pension and retiree medical
benefits, which management believes reflect the ongoing service-related
costs of providing pension and retiree medical benefits to its
employees. Management considers non-operating retirement costs to be
outside the performance of the business and believes that presenting
operating results excluding non-operating retirement costs, in addition
to the Company's GAAP operating results, provides increased transparency
and a better understanding of the underlying trends in the Company's
operating business performance.

Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measures are set out in the tables below.

 

Reconciliation of diluted earnings per
share from continuing operations excluding severance,
non-operating retirement costs and special items (or adjusted
diluted earnings per share from continuing operations)

       
Third Quarter Nine Months
2017   2016   % Change 2017   2016   % Change
Diluted earnings/(loss) per share from continuing operations $ 0.20 $ * $ 0.37 $ (0.05) *
Add:
Severance 0.01 0.08 (87.5)% 0.14 0.11 27.3%
Non-operating retirement costs 0.02 0.02 * 0.06 0.08 (25.0)%
Special items:
Headquarters redesign and consolidation 0.02 * 0.04 *
Restructuring charge 0.02 * 0.09 *
Multiemployer pension plan withdrawal (income)/expense (0.03) * 0.04 *
(Gain)/loss in joint ventures, net of noncontrolling interest (0.16) * (0.16) 0.21 *
Income tax expense/(benefit) of adjustments 0.04 (0.04) * (0.03) (0.21) (85.7)%
Adjusted diluted earnings per share from continuing operations (1) $ 0.13 $ 0.06 * $ 0.42 $ 0.27 55.6%

(1)

 

Amounts may not add due to rounding.

*

Represents a change equal to or in excess of 100% or not
meaningful

 

 
THE NEW YORK TIMES COMPANY
RECONCILIATION OF NON-GAAP INFORMATION (continued)
(Dollars in thousands)
 

Reconciliation of operating profit before
depreciation & amortization, severance, non-operating retirement
costs and special items (or adjusted operating profit)

         
Third Quarter Nine Months
2017   2016   % Change 2017 2016 % Change
Operating profit $ 33,013 $ 8,973 * $ 89,691 $ 46,049 94.8%
Add:
Depreciation & amortization 15,677 15,384 1.9% 46,961 46,003 2.1%
Severance 2,123 13,006 (83.7)% 22,977 18,262 25.8%
Non-operating retirement costs 3,100 3,845 (19.4)% 9,642 13,349 (27.8)%
Special items:
Headquarters redesign and consolidation 2,542 * 6,929 *
Restructuring charge 2,949 * 14,804 *
Multiemployer pension plan withdrawal (income)/expense (4,971) * 6,730 *
Adjusted operating profit $ 56,455 $ 39,186 44.1% $ 176,200 $ 145,197 21.4%
 
* Represents a change equal to or in excess of 100% or not
meaningful
 

Reconciliation of operating costs before
depreciation & amortization, severance and non-operating
retirement costs (or adjusted operating costs)

 
Third Quarter Nine Months
2017 2016 % Change 2017 2016 % Change
Operating costs $ 350,080 $ 356,596 (1.8)% $ 1,094,893 $ 1,048,109 4.5%
Less:
Depreciation & amortization 15,677 15,384 1.9% 46,961 46,003 2.1%
Severance 2,123 13,006 (83.7)% 22,977 18,262 25.8%
Non-operating retirement costs 3,100 3,845 (19.4)% 9,642 13,349 (27.8)%
Adjusted operating costs $ 329,180 $ 324,361 1.5% $ 1,015,313 $ 970,495 4.6%
 
* Represents a change equal to or in excess of 100% or not
meaningful

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