UBS 46 th Annual Global Media and Communications Conference

Transcription

1 UBS 46 th Annual Global Media and Communications Conference

2 FORWARD-LOOKING STATEMENTS This presentation contains certain forward-looking statements that are subject to risks and uncertainties. These statements are based on management s current knowledge and estimates of factors affecting the Company and its operations. Statements in this presentation that are forward-looking include, but are not limited to, the expected benefits of the acquisition of Time Inc., including the expected synergies from the transaction and the combined company s prospects for growth and increasing shareholder value. Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, downturns in national and/or local economies; a softening of the domestic advertising market; world, national or local events that could disrupt broadcast television; increased consolidation among major advertisers or other events depressing the level of advertising spending; the unexpected loss or insolvency of one or more major clients or vendors; the integration of acquired businesses; changes in consumer reading, purchasing and/or television viewing patterns; increases in paper, postage, printing, syndicated programming or other costs; changes in television network affiliation agreements; technological developments affecting products or methods of distribution; changes in government regulations affecting the Company s industries; increases in interest rates; the consequences of acquisitions and/or dispositions; the risks associated with the Company s recent acquisition of Time Inc., including: (1) litigation challenging the acquisition; (2) the Company s ability to retain key personnel; (3) competitive responses to the acquisition; (4) unexpected costs, charges or expenses resulting from the acquisition; (5) adverse reactions or changes to business relationships resulting from the acquisition; (6) the Company s ability to realize the benefits of the acquisition of Time Inc.; (7) delays, challenges and expenses associated with integrating the businesses; and (8) the Company s ability to comply with the terms of the debt and equity financings entered into in connection with the acquisition; and the risk factors contained in the Company s most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, which are available on the SEC s website at The Company undertakes no obligation to update any forwardlooking statement, whether as a result of new information, future events or otherwise. 2

3 TODAY S AGENDA Meredith Overview National Media Group Growth Strategies Local Media Group Growth Strategies Financial Strategy Q&A 3

4 THE NEW MEREDITH > Unparalleled portfolio of iconic, trusted brands, reaching 175 million Americans across channels digital and print to social and TV > Engaging, inspiring and activating 110 million U.S. adult women including 80% of all millennial women and 65% of all Latinas > Readership of 120 million and paid subscriptions of more than 40 million > Top digital company with 140 million unique visitors, 9 billion video views annually and 265 million social followers > Strong, highly-profitable local TV portfolio with 11% U.S. reach > Data powerhouse with 175 million direct consumer relationships > World s second-largest brand licensor, led by consumer powerhouse Better Homes & Gardens brand 4

5 Balanced and Diversified Revenue Mix Consolidated Basis Segment Basis NMG Consumer Advertising Consumer NMG Print Advertising ~30% 55% 40% ~22% ~18% LMG Advertising 5% NMG Digital Advertising ~15% ~5% ~10% LMG Consumer Other Other Fiscal 2019 Expected Revenue: $3.0-$3.2 billion (1) (1) Unchanged from the guidance originally communicated on August 10,

6 EXECUTIVE SUMMARY Time Inc. acquisition is a positive catalyst for growth Consumers drive 40% of revenue, with many growth opportunities Asset sale process proceeding well and meeting expectations Synergy work exceeding expectations Local Media Group delivering record results, driven by political and digital On track to pay down $500 million of debt in 1 st half fiscal 2019 Meredith is positioned on a growth path not previously achievable 6

7 MEREDITH S NEAR-TERM FINANCIAL GOALS Debt Reduction EBITDA Generation $1 Billion $1 Billion in Fiscal 2019 in Fiscal

8 TODAY S AGENDA Meredith Overview National Media Group Growth Strategies Local Media Group Growth Strategies Financial Strategy Q&A 8

9 THE #1 OWNER OF PREMIUM NATIONAL MEDIA BRANDS ENTERTAINMENT & FASHION FOOD PARENTING HOME LUXURY & TRAVEL HEALTH & WELLNESS

10 PEOPLE: THE WORLD S #1 ENTERTAINMENT BRAND PRINT DIGITAL PLATFORMS MOBILE SOCIAL VIDEO 40 MILLION READERS +7% 80 MILLION MONTHLY UNIQUE VISITORS +50% YOY 45 MILLION MONTHLY UNIQUE VISITORS +58% YOY 35 MILLION SOCIAL FOLLOWERS +18% YOY 375 MILLION TOTAL VIDEO VIEWS IN % YOY 10

11 NATIONAL MEDIA GROUP GROWTH STRATEGIES Successfully integrate Time Inc. acquisition by: Improving the advertising performance of acquired properties to Meredith s historical levels Aggressively growing revenue and raising profit margins on acquired digital properties to MDP s levels Completing the divestiture process of media assets not core to our business Fully realizing annual cost synergies of $550 million in the first two full years of operations Grow consumer-related revenue streams, including: Subscription Brand licensing Affinity marketing ecommerce 11

12 MEREDITH ACHIEVED TOTAL ADVERTISING REVENUE GROWTH IN FISCAL 2017 FUELED BY DIGITAL CHANNELS $492 $520 10% 31% 5-YEAR CAGR Digital: 27% % 69% FY 2012 FY 2017 Digital Print $ in millions. Based on as reported figures

13 TOP DIGITAL MEDIA COMPANY +140 million U.S. monthly unique visitors #1 network for women and millennials Depth and scale across all key content and ad categories, including lifestyle and food Achieve video scale with more than 9 billion annual views First party data drives unique/actionable insights/analytics Diversified digital advertising revenue streams Unparalleled suite of brands Proprietary advertising technology delivering strong results Unique Visitors in the U.S. 1 Google Sites Oath Facebook Microsoft Sites Amazon Sites Comcast NBCUniversal CBS Interactive Twitter Apple Meredith PayPal Turner Digital Snapchat Wikimedia Wal-Mart # s in millions. Source: comscore Dec

14 Total Audience (in millions) GROW CONSUMER-RELATED REVENUE STREAMS Audience Growth Revenue Streams CY2011 CY2013 CY2015 CY Subscription 2 Brand licensing 3 Affinity marketing 4 ecommerce Gross audience Print Digital 14

15 CONDUCT REVIEW OF MEDIA PORTFOLIO Transactions Completed Pending Held For Sale Time UK Brands Cash at Q1-19 results on Nov. 8, 2018: $400 Million Sale price: $150 Million 15

16 EXECUTE ON $550 MILLION OF COST SYNERGIES Category Public company and duplicative expenses ($300) Real estate and vendor contracts ($130) Circulation, fulfillment and other ($120) Total EBITDA opportunity Example Administrative/Central overhead Elimination of duplicate operating functions Elimination of public company expenses New scale to enable expense savings on physical costs, including paper and printing Combine offices, particularly in NY, LA and Chicago Leverage capacity in Des Moines where possible Circulation, consumer marketing to Des Moines Bundling to achieve promotion efficiencies Production management overhead, pre-media savings, and newsstand distribution Annual Savings $170 $110 $20 $60 $40 $30 $60 $40 $20 $550 million $ in millions. Source: Company management. 16

17 TODAY S AGENDA Meredith Overview National Media Group Growth Strategies Local Media Group Growth Strategies Financial Strategy Q&A 17

18 LOCAL BRANDS IN LARGE AND GROWING MARKETS 17 STATIONS IN PORTFOLIO 13 STATIONS IN TOP 50 MARKETS 5 DUOPOLY MARKETS #1 or 2 MORNING or LATE NEWS IN 10 MARKETS WEST & SOUTHWEST: PHOENIX: MKT 12, CBS + IND PORTLAND: MKT 22, FOX + MyTV LAS VEGAS: MKT 39, FOX MIDWEST: ST. LOUIS: MKT 21, CBS KANSAS CITY: MKT 32, CBS + MyTV SAGINAW: MKT 65, CBS EAST & SOUTHEAST: ATLANTA: MKT 10, CBS + IND NASHVILLE: MKT 27, NBC HARTFORD: MKT 33, CBS GREENVILLE: MKT 38, FOX MOBILE: MKT 58, FOX SPRINGFIELD: MKT 108, CBS + ABC 18

19 STRONG PERFORMANCE OVER TIME Revenues Operating Profit $693 15% CAGR $215 14% CAGR $534 $548 $630 $163 $158 $189 $403 $113 2 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 $ in millions. 19

20 LOCAL MEDIA GROUP GROWTH STRATEGIES Continue to evolve content creation and distribution Maximize political advertising Integrate and expand MNI Targeted Media Continue to grow retransmission revenue Increase collaboration with National Media Group 20

21 POLITICAL ADVERTISING PERFORMANCE IS STRONG Meredith Historical Political Ad Revenues Presidential Election Year Mid-term Election Year $95-$100 $63 $35 $39 $44 FY11 FY13 FY15 FY17 1HFY19 $ in millions. 21

22 MNI TARGETED MEDIA: GROWTH OPPORTUNITY A MEDIA PLANNING AND BUYING COMPANY WITH EXPERTISE IN TARGETED MARKETING MNI CLIENTS 50+ YEARS OF TARGETING over a decade in digital. 86 FULL-TIME SALES PROFESSIONALS 40 locations nationwide Serve over 1B DIGITAL AD IMPRESSIONS across multiple platforms, through thousands of premier publishing partners, with trusted media relationships. 22

23 RETRANSMISSION & AFFILIATION RENEWAL SCHEDULE 95% of Meredith Subscriber Households will Renew in FY19 and FY20 MVPD Renewal Schedule 35% 60% 5% Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Las Vegas Portland Greenville Mobile Springfield (FOX) Affiliation Renewal Schedule Springfield (ABC) St. Louis Hartford Springfield (CBS) Atlanta Phoenix Kansas City Saginaw (CBS) Nashville (NBC) 23

24 NATIONAL AND LOCAL COLLABORATION INITIATIVES Weekly video content sharing Monthly video content sharing Quarterly video by Joanna Gaines Planned content sharing for special events 24

25 TODAY S AGENDA Meredith Overview National Media Group Growth Strategies Local Media Group Growth Strategies Financial Strategy Q&A 25

26 FINANCIAL STRATEGY 1. Strong EBITDA, margin and cash flow growth 2. Strengthening financial profile, driven by de-levering Goal for leverage at 2x by Fiscal Year Commitment to ongoing dividend increases 26

27 EXPECTED STRONG GROWTH IN ADJUSTED EBITDA $1 Billion $720-$750 Adjusted EBITDA: $362 $421 Pre-Acquisition FY-17 5-Month Time Impact FY-18 Guidance¹ FY-19 Earnings from $189 $114 cont. operations: $191-$211 Goal FY-20 $ in millions (1) Unchanged from the guidance originally communicated on August 10, Adjusted EBITDA is defined as earnings before discontinued operations, interest, taxes, depreciation, amortization and special items. See Slide 32 for a reconciliation of net earnings from continuing operations to adjusted EBITDA. 27

28 HISTORICAL AND FORWARD-LOOKING USE OF CASH FY 2017 FY 2018 FY 2019¹ FY 2020¹ Interest $ 22 $ 66 $ 180 $ 150 Income taxes Capital expenditures Cost to achieve synergies Other uses Preferred dividends Expected Uses of Cash $ 178 $ 241 $ 520 $ 550 $ in millions (1) Fiscal 2019 and Fiscal 2020 represent management expectations 28

29 COMMITMENT TO AGGRESSIVE DEBT PAYDOWN $3,200 DEBT $2,200 $1,900 Debt-to- EBITDA: Repayments through Dec FY18 FY19 FY20 3.5x 2.2x 1.9x $400 $ in millions Adjusted EBITDA as defined in Meredith s debt agreements as earnings before discontinued operations, interest, taxes, depreciation, amortization, non-operating expense and special items 29

30 Priority COMMITMENT TO STRONG CAPITAL STEWARDSHIP AND DELIVERING TOP THIRD SHAREHOLDER RETURN Debt repayment and de-levering in the near-term, fueled by: Strong EBITDA growth Proceeds from asset sales Leverage target below 2x by FY2020 Continued commitment to returning cash to shareholders via dividends Accretive acquisitions at attractive valuations with strong synergies Selective share repurchases 30

31 UBS 46 th Annual Global Media and Communications Conference

32 Appendix: ADJUSTED EBITDA RECONCILIATION FY 2019¹ FY 2017 FY 2018 Low High Earnings from continuing operations $ $ $ $ Interest expense Net income tax (123.6) Depreciation & amortization Net special items (0.7) Other non-operating expenses 11.7 Adjusted EBITDA $ $ $ $ $ in millions (1) Fiscal 2019 represents management s expectations 32