Market Overview

The New York Times Company Reports 2019 First-Quarter Results

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The New York Times Company (NYSE:NYT) announced today first-quarter
2019 diluted earnings per share from continuing operations of $.18
compared with $.13 earnings per share in the same period of 2018.
Adjusted diluted earnings per share from continuing operations (defined
below) was $.20 in the first quarter of 2019 compared with $.17 in the
first quarter of 2018.

Operating profit was $34.6 million in the first quarter of 2019, flat
compared with $34.1 million in the same period of 2018 as higher
digital-only subscription and other revenues were offset by higher
operating costs. Adjusted operating profit (defined below) decreased to
$52.4 million in the first quarter of 2019 from $55.5 million in the
prior year as higher revenues were more than offset by higher adjusted
operating costs.

Mark Thompson, president and chief executive officer, The New York Times
Company, said, "We had another strong quarter and we're continuing to
optimize our business to deliver on our goal of reaching 10 million
total subscriptions by 2025. For the quarter, we added 223,000 net new
digital-only subscriptions, of which 144,000 were to our core news
product, for a total of 4.5 million subscriptions.

"The breadth and depth of our news report have allowed us to spin out
two highly successful digital products beyond core news, NYT Cooking and
Crossword. This quarter, our Crossword product passed the 500,000 total
subscription mark, which makes it, in its own right, the 5th largest
digital subscription product from a U.S. news provider. And today, we
launched our newest product, Parenting, in beta.

"We saw very good year-over-year growth in digital advertising while
total advertising was flat. Subscription revenues made up two-thirds of
the Company's revenues and for the first time, digital-only subscription
revenue was more than a quarter of total Company revenue. We will
continue to invest in our journalism, product and marketing at elevated
levels to attract and retain large numbers of new subscribers to The
Times."

Comparisons
Unless otherwise noted, all comparisons are for
the first quarter of 2019 to the first quarter of 2018.

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, multiemployer pension plan
withdrawal costs and special items (or adjusted operating profit); and
operating costs before depreciation, amortization, severance and
multiemployer pension plan withdrawal costs (or adjusted operating
costs). Refer to Reconciliation of Non-GAAP Information in the exhibits
for a discussion of management's reasons for the presentation of these
non-GAAP financial measures and reconciliations to the most comparable
GAAP financial measures.

There were no special items in the first quarter of 2019.

First-quarter 2018 results included the following special item:

  • A $1.9 million charge ($1.4 million after tax or $.01 per share) in
    connection with the redesign and consolidation of space in our
    headquarters building.

Results from Continuing Operations

Revenues
Total revenues for the first quarter of 2019
increased 6.1 percent to $439.1 million from $413.9 million in the first
quarter of 2018. Subscription revenues increased 3.9 percent, while
advertising revenues decreased 0.4 percent and other revenues increased
55.8 percent.

Subscription revenues in the first quarter of 2019 rose primarily due to
growth in recent years in the number of subscriptions to the Company's
digital-only products. Revenue from the Company's digital-only
subscription products (which include our news product, as well as our
Crossword and Cooking products) increased 15.1 percent compared with the
first quarter of 2018, to $109.9 million.

Paid digital-only subscriptions totaled approximately 3,583,000 at the
end of the first quarter of 2019, a net increase of 223,000
subscriptions compared with the end of the fourth quarter of 2018 and a
28.7 percent increase compared with the end of the first quarter of
2018. Of the 223,000 additions, 144,000 came from the Company's digital
news product, while the remainder came from the Company's Cooking and
Crossword products.

First-quarter digital advertising revenue increased 18.9 percent, while
print advertising revenue decreased 11.9 percent. Digital advertising
revenue was $55.5 million, or 44.4 percent of total Company advertising
revenues, compared with $46.7 million, or 37.2 percent, in the first
quarter of 2018. The increase in digital advertising revenue primarily
reflected growth in direct-sold advertising on our digital platforms,
including podcasts.

Other revenues rose $15.5 million, or 55.8 percent in the first quarter
primarily as a result of growth in our commercial printing operations
and rental revenue from our New York headquarters building.

Operating Costs
Operating costs increased in the first
quarter of 2019 to $404.5 million compared with $378.0 million in the
first quarter of 2018, while adjusted operating costs increased to
$386.7 million from $358.5 million in the first quarter of 2018, in each
case largely due to higher marketing expenses, labor and raw material
costs from commercial printing and newsroom costs.

Marketing expenses increased to $47.5 million in the first quarter of
2019 from $31.6 million in 2018, largely due to an increase in
subscription acquisition and brand marketing costs.

Other Data

Interest Expense and Other, net
Interest expense and other,
net decreased in the first quarter of 2019 to $1.3 million compared with
$4.9 million in the first quarter of 2018 as a result of higher interest
income from cash and marketable securities, as well as fair value
adjustments related to non-marketable equity securities.

Income Taxes
The Company had income tax expense of $1.3
million in the first quarter of 2019 compared with $5.3 million in the
first quarter of 2018. The Company received a tax benefit in both
periods from stock price appreciation on stock-based awards that settled
in the quarters, resulting in a lower than statutory tax rate. We expect
the annual effective income tax rate for 2019 will be between 20 percent
and 25 percent.

Liquidity
As of March 31, 2019, the Company had cash and
marketable securities of $808.8 million (excluding restricted cash of
$16.8 million, substantially all of which is set aside to collateralize
certain workers' compensation obligations). We have an option,
exercisable in the fourth quarter of 2019, to repurchase the condo
interest in our headquarters building for $250.0 million, and we have
provided notice of our intent to exercise this option. We expect to fund
the repurchase of the condo interest from our existing cash and
marketable securities. Included within marketable securities are
securities used to collateralize approximately $46 million of letters of
credit issued by the Company in connection with the leasing of floors in
our headquarters building. The majority of these letters of credit will
expire upon the repurchase of the condo interest in the fourth quarter
of 2019. Total debt and finance lease obligations were $254.5 million as
of March 31, 2019.

Capital Expenditures
Capital expenditures totaled
approximately $11 million in the first quarter of 2019 compared with $19
million in the first quarter of 2018. The expenditures in the first
quarter of 2019 were primarily related to improvements at our College
Point, N.Y. printing and distribution facility and investments in
technology. The decrease in capital expenditures was primarily driven by
higher expenditures in the first quarter of 2018 related to the redesign
and consolidation of space in our headquarters building.

Outlook
Total subscription revenues in the second quarter of
2019 are expected to increase in the low- to mid-single digits compared
with the second quarter of 2018, with digital-only subscription revenue
expected to increase in the mid-teens. As in previous years, in the
second quarter of 2019 we expect seasonally slower growth in the number
of paid digital-only subscriptions.

Total advertising revenues in the second quarter of 2019 are expected to
be approximately flat compared with the second quarter of 2018, with
digital advertising revenue expected to increase in the mid-teens.

Other revenues in the second quarter of 2019 are expected to increase
approximately 35 percent compared with the second quarter of 2018.

Operating costs and adjusted operating costs are expected to increase
approximately 8 percent to 10 percent in the second quarter of 2019
compared with the second quarter of 2018 as a result of continued
investment in the drivers of digital subscription growth: marketing,
product and journalism; as well as in commercial printing operations.

The Company expects the following on a pre-tax basis in 2019:

  • Depreciation and amortization: $60 million to $65 million,
  • Interest expense and other, net: $10 million to $12 million, and
  • Capital expenditures: $50 million to $60 million.

Conference Call Information
The Company's first-quarter 2019
earnings conference call will be held on Wednesday, May 8, at 11:00 a.m.
E.T.

Participants can pre-register for the telephone conference at dpregister.com/10130535,
which will generate dial-in instructions allowing participants to bypass
an operator at the time of the call. Alternatively, 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, May 22. The passcode is 10130535.

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 30, 2018. 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 @NYTimesPR.

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)
      First Quarter
2019     2018       % Change
Revenues
Subscription(a) $ 270,810 $ 260,593 3.9%
Advertising(b) 125,088 125,647 (0.4)%
Other(c) 43,164 27,708   55.8%
Total revenues 439,062 413,948 6.1%
Operating costs
Production costs
Wages and benefits 102,908 91,993 11.9%
Raw materials 19,838 16,692 18.8%
Other production costs 45,337 45,656   (0.7)%
Total production costs 168,083 154,341 8.9%
Selling, general and administrative costs 221,463 208,623 6.2%
Depreciation and amortization 14,918 15,041   (0.8)%
Total operating costs 404,464 378,005 7.0%
Headquarters redesign and consolidation(d) 1,888   *
Operating profit 34,598 34,055 1.6%
Other components of net periodic benefit costs 1,835 2,028 (9.5)%
Gain from joint ventures 15 *
Interest expense and other, net 1,303 4,877   (73.3)%
Income from continuing operations before income taxes 31,460 27,165 15.8%
Income tax expense 1,304 5,251   (75.2)%
Net income 30,156 21,914 37.6%
Net income attributable to the noncontrolling interest (2 ) *
Net income attributable to The New York Times Company common
stockholders
$ 30,156 $ 21,912   37.6%
Average number of common shares outstanding:
Basic 165,674 164,094 1.0%
Diluted 167,129 166,237 0.5%
Basic earnings per share attributable to The New York Times
Company common stockholders
$ 0.18 $ 0.13   38.5%
Diluted earnings per share attributable to The New York Times
Company common stockholders
$ 0.18 $ 0.13   38.5%
Dividends declared per share $ 0.05 $ 0.04   25.0%
* 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 first quarters of 2019 and 2018:

 
  First Quarter
        2019   2018   % Change
Digital-only subscription revenues:
News product subscription revenues(1) $ 102,346 $ 90,577 13.0%
Other product subscription revenues(2) 7,513   4,835   55.4%
Total digital-only subscription revenues $ 109,859   $ 95,412   15.1%

(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 for the
first quarters of 2019 and 2018:
       
First Quarter
        2019   2018   % Change
Digital-only subscriptions:
News product subscriptions(1) 2,857 2,330 22.6%
Other product subscriptions(2) 726   453   60.3%
Total digital-only subscriptions 3,583   2,783   28.7%

(1) 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.

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

(b) The following table summarizes advertising revenues by
category for the first quarters of 2019 and 2018:

 
    First Quarter 2019 First Quarter 2018 % Change
Advertising revenues: Print   Digital   Total Print   Digital   Total Print Digital   Total
Display $ 62,342 $ 42,112 $ 104,454 $ 70,805 $ 38,700 $ 109,505 (12.0)% 8.8% (4.6)%
Other 7,203   13,431   20,634   8,139   8,003   16,142   (11.5)% 67.8% 27.8%
Total advertising $ 69,545   $ 55,543   $ 125,088   $ 78,944   $ 46,703   $ 125,647   (11.9)% 18.9% (0.4)%
 

(c) Other revenues primarily consist of revenues from licensing,
commercial printing, building rental revenue, affiliate referrals,
NYT Live (our live events business) and retail commerce.

 

(d) In the first quarter of 2018, the Company recognized a $1.9
million pre-tax expense related to the redesign and consolidation
of space in our headquarters building.

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, multiemployer pension plan withdrawal costs
and special items (or adjusted operating profit); and operating
costs before depreciation, amortization, severance and multiemployer
pension withdrawal 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 multiemployer pension plan
withdrawal 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 (i) interest cost, expected
return on plan assets, amortization of actuarial gains and loss
components and amortization of prior service credits of single
employer pension expense, (ii) interest cost, amortization of
actuarial gains and loss components and amortization of prior
service credits of retirement medical expense and (iii) all
multiemployer pension plan withdrawal costs. These non-operating
retirement costs are primarily tied to financial market performance
including changes in market interest rates and investment
performance. Management considers non-operating retirement costs to
be outside the performance of the business and believes that
presenting adjusted diluted earnings per share from continuing
operations excluding non-operating retirement costs and presenting
adjusted operating results excluding multiemployer pension plan
withdrawal costs, in addition to the Company's GAAP diluted earnings
per share from continuing operations and GAAP operating results,
provide 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.

THE NEW YORK TIMES COMPANY

RECONCILIATION OF NON-GAAP INFORMATION

(Dollars in thousands, except per share data)

 

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)

 
First Quarter
2019   2018   % Change
Diluted earnings per share from continuing operations $ 0.18 $ 0.13 38.5%
Add:
Severance 0.01 0.01 *
Non-operating retirement costs:
Multiemployer pension plan withdrawal costs 0.01 0.01 *
Other components of net periodic benefit costs 0.01 0.01 *
Special items:
Headquarters redesign and consolidation 0.01 *
Income tax expense of adjustments   (0.01 ) (0.01 ) *

Adjusted diluted earnings per share from continuing operations(1)

  $ 0.20   $ 0.17   17.6%
 
* Represents a change equal to or in excess of 100% or not
meaningful.
(1) Amounts may not add due to rounding.
 

Reconciliation of operating profit before
depreciation & amortization, severance, multiemployer pension plan


withdrawal costs and special items (or adjusted operating profit)

 
First Quarter
2019 2018 % Change
Operating profit $ 34,598 $ 34,055 1.6%
Add:
Depreciation & amortization 14,918 15,041 (0.8)%
Severance 1,403 2,389 (41.3)%
Multiemployer pension plan withdrawal costs 1,450 2,104 (31.1)%
Special items:
Headquarters redesign and consolidation     1,888   *
Adjusted operating profit   $ 52,369   $ 55,477   (5.6)%
 
* Represents a change equal to or in excess of 100% or not
meaningful.
 

Reconciliation of operating costs before
depreciation & amortization, severance and multiemployer pension
plan

withdrawal costs (or adjusted operating costs)

 
  First Quarter
  2019 2018 % Change
Operating costs $ 404,464 $ 378,005 7.0%
Less:
Depreciation & amortization 14,918 15,041 (0.8)%
Severance 1,403 2,389 (41.3)%
Multiemployer pension plan withdrawal costs   1,450   2,104   (31.1)%
Adjusted operating costs $ 386,693   $ 358,471   7.9%
 
* Represents a change equal to or in excess of 100% or not
meaningful.

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