The New York Times Company Reports 2018 Fourth-Quarter and Full-Year Results and Announces Dividend Increase

NEW YORK–(BUSINESS WIRE)–The New York Times Company (NYSE: NYT) announced today fourth-quarter
2018 diluted earnings per share from continuing operations of $.33
compared with a loss of $.35 in the same period of 2017. Adjusted
diluted earnings per share from continuing operations (defined below)
was $.32 in the fourth quarter of 2018 compared with $.38 in the fourth
quarter of 2017.


Operating profit decreased to $74.7 million in the fourth quarter of
2018 from $90.5 million in the same period of 2017 and adjusted
operating profit (defined below) decreased to $94.0 million in the
fourth quarter of 2018 from $105.9 million in the prior year,
principally due to the benefit from an extra week in the Company’s 2017
fiscal calendar and higher costs in 2018.


Mark Thompson, president and chief executive officer, The New York Times
Company, said, “A strong quarter capped a strong year for The New York
Times. We added 265,000 net new digital subscriptions in Q4, the biggest
gain since the months immediately following the 2016 election. Digital
subscription growth accelerated in the second half of 2018 and we ended
the year with 3.4 million digital subscriptions and 4.3 million total
subscriptions. We achieved digital advertising revenue growth of 23
percent year-over-year in Q4, or 32 percent on a like-for-like basis,
our best result for many years.


“We ended 2018 with $709 million in total digital revenue. This means
that after just three years, we are already three quarters of the way to
achieving our five-year goal of doubling digital revenue to $800 million
by 2020. As a result we are setting ourselves a new goal – to grow our
subscription business to more than 10 million subscriptions by 2025.


“Our appeal to subscribers – and to the world’s leading advertisers –
depends more than anything on the quality of our journalism. That is why
we have increased, rather than cut back, our investment in our newsroom
and opinion departments. We want to accelerate our digital growth
further, so in 2019, we will direct fresh investment into journalism,
product and marketing.


“We believe that a conservative approach to our balance sheet makes
sense as we navigate our digital transition. Nonetheless, in the light
of the progress we have made, our Board of Directors has approved a
dividend increase of $.01 per share to $.05 per share. The Board will of
course continue to keep the balance sheet and the best use of capital
under close review.”


ComparisonsUnless otherwise noted, all comparisons are for
the fourth quarter of 2018 to the fourth quarter of 2017.


Because of the Company’s fiscal calendar, the 2017 fourth quarter and
year included an additional week (14 weeks and 53 weeks, respectively)
compared with the 2018 fourth quarter and year (13 weeks and 52 weeks,
respectively). A reconciliation of revenues, excluding the estimated
impact of the additional week, to revenues including the additional
week, is included in the exhibits to this release.


In the first quarter of 2018, the Company adopted Accounting Standards
Update 2017-07 Compensation— Retirement Benefits (Topic 715): Improving
the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost (“ASU 2017-07”). The Company has recast its
fourth quarter and twelve months ended December 31, 2017, results to
reflect the impact of the adoption of ASU 2017-07 for comparability
purposes; there was no impact to net income as a result of the adoption.
Refer to the Condensed Consolidated Statements of Operations for more
details.


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.


In connection with the adoption of ASU 2017-07 in the first quarter of
2018, the Company modified its definitions of adjusted operating profit,
adjusted operating costs and non-operating retirement costs in response
to changes in the GAAP presentation of single employer pension and
postretirement benefit costs. For comparability purposes, the Company
has also presented each of its non-GAAP financial measures for the
fourth quarter and twelve months ended December 31, 2017, reflecting the
recast of its financial statements for such periods to account for the
adoption of ASU 2017-07 and the revised definitions of the non-GAAP
financial measures. Refer to Reconciliation of Non-GAAP Information in
the exhibits for more details. As disclosed in the Company’s first
quarter 2018 earnings release, in the revised full-year 2017
presentation of non-GAAP financial measures, the Company’s adjusted
diluted earnings per share from continuing operations decreased by $.04
from $.80 to $.76, its adjusted operating costs increased by $9.7
million, and its adjusted operating profit decreased by the same amount,
in each case compared with the previously reported amounts.


Fourth-quarter 2018 results included the following special items:


A $11.3 million gain ($7.1 million or $.04 per share after tax and net
of noncontrolling interest) reflecting our proportionate share of a
distribution from the sale of assets by Madison Paper Industries
(“Madison”), in which the Company has an investment through a
subsidiary.


A $1.4 million charge ($1.0 million after tax or $.01 per share) in
connection with the redesign and consolidation of space in our
headquarters building.


Fourth-quarter 2017 results included the following special items:


$102.1 million in pension settlement charges ($61.5 million after tax
or $.38 per share) in connection with the transfer of certain pension
benefit obligations to insurers.


A $37.1 million gain ($22.3 million after tax or $.14 per share) in
connection with the settlement of contractual funding obligations
primarily from a postretirement plan.


A $14.8 million loss ($8.3 million or $.05 per share after tax and net
of noncontrolling interest) reflecting (i) our proportionate share of
the loss recognized by Madison, resulting from Madison’s settlement of
pension obligations, and (ii) a loss resulting from the sale of our 49
percent equity interest in Donahue Malbaie Inc. (“Malbaie”), a
Canadian newsprint company.


A $3.2 million charge ($1.9 million after tax or $.01 per share) in
connection with the redesign and consolidation of space in our
headquarters building.


A $68.7 million charge ($.42 per share) primarily attributable to the
remeasurement of our net deferred tax assets required as a result of
recent tax legislation.


Results from Continuing Operations


RevenuesIncluding the impact of the additional week in
2017, total revenues for the fourth quarter of 2018 increased 3.8
percent to $502.7 million from $484.1 million in the fourth quarter of
2017. Subscription revenues decreased 2.2 percent, while advertising
revenues increased 5.0 percent and other revenues increased 47.7
percent. Excluding the impact of the additional week in 2017, estimated
total revenues increased 10.4 percent, with subscription and advertising
revenues up 5.0 percent and 11.0 percent, respectively.


Subscription revenues in the fourth quarter of 2018 declined primarily
due to the extra week in 2017. Revenue from the Company’s digital-only
subscription products (which include our news product, as well as our
Crossword and Cooking products) increased to $105.3 million, a rise of
9.3 percent compared with the fourth quarter of 2017, primarily due to
growth in recent years in the number of subscriptions. Excluding the
additional week, estimated revenue from the Company’s digital-only
subscription products increased 17.9 percent.


Paid digital-only subscriptions totaled approximately 3,360,000 at the
end of the fourth quarter of 2018, a net increase of 265,000
subscriptions compared with the end of the third quarter of 2018 and a
27.1 percent increase compared with the end of the fourth quarter of
2017. Of the 265,000 additions, 172,000 came from the Company’s digital
news product, while the remainder came from the Company’s Cooking and
Crossword products.


Fourth-quarter digital advertising revenue increased 22.8 percent, while
print advertising revenue decreased 10.2 percent. Digital advertising
revenue was $103.4 million, or 53.9 percent of total Company advertising
revenues, compared with $84.2 million, or 46.1 percent, in the fourth
quarter of 2017. Excluding the impact of the additional week, estimated
digital advertising revenue increased 31.5 percent, while print
advertising revenue decreased 6.2 percent. The increase in digital
advertising revenue primarily reflected growth in both direct-sold
advertising on our digital platforms and creative services.


Other revenues rose 47.7 percent in the fourth quarter primarily as a
result of growth in our commercial printing operations; affiliate
referral revenue associated with the product review and recommendation
website, Wirecutter; our live events business and five and a half
additional floors of rental income from our New York headquarters
building.


Operating CostsOperating costs increased in the fourth
quarter of 2018 to $426.7 million compared with $394.8 million in the
fourth quarter of 2017, while adjusted operating costs increased to
$408.7 million from $378.3 million in the fourth quarter of 2017 largely
due to higher marketing expenses, labor and raw material costs from
commercial printing, and costs related to our advertising business,
partially offset by lower print production and distribution costs
related to our newspaper.


Marketing expenses increased to $48.6 million in the fourth quarter of
2018 from $32.6 million in 2017 largely due to an increase in
subscription acquisition and brand marketing costs.


Other Data


Other Components of Net Periodic Benefit CostsOther
components of net periodic benefit costs decreased in the fourth quarter
of 2018 to $2.0 million compared with $67.8 million in the fourth
quarter of 2017. The fourth quarter of 2017 included pension settlement
charges related to the transfer of certain pension benefit obligations
to insurers, partially offset by a gain related to the settlement of
contractual funding obligations, primarily from a post retirement plan.


Interest Expense and Other, netInterest expense and other,
net decreased in the fourth quarter of 2018 to $3.1 million compared
with $4.7 million in the fourth quarter of 2017 as a result of higher
interest income from cash and marketable securities.


Income TaxesThe Company had income tax expense of $23.3
million in the fourth quarter of 2018 compared with $63.1 million in the
fourth quarter of 2017. The decrease was primarily due to a one-time
charge of $68.7 million in the fourth quarter of 2017 attributable to
the remeasurement of our net deferred tax assets required as a result of
federal tax reform legislation, which was partially offset by a tax
benefit from pension settlement charges in the fourth quarter of 2017.


LiquidityAs of December 30, 2018, the Company had cash and
marketable securities of $826.4 million (excluding restricted cash of
$18.3 million, substantially all of which is set aside to collateralize
certain workers’ compensation obligations). We have an option,
exercisable in 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 $48 million of letters of credit issued by
the Company in connection with the leasing of floors in our headquarters
building. Total debt and capital lease obligations were $253.6 million.


DividendsThe Company’s Board of Directors declared a $.05
dividend per share on the Company’s Class A and Class B common stock, an
increase of $.01 from the previous quarter. The dividend is payable on
April 18, 2019, to shareholders of record as of the close of business on
April 3, 2019.


Capital ExpendituresCapital expenditures totaled
approximately $8 million in the fourth quarter of 2018 compared with $37
million in the fourth quarter of 2017. The expenditures were primarily
related to improvements at our College Point printing and distribution
facility and the redesign and consolidation of space in our headquarters
building.


OutlookTotal subscription revenues in the first quarter of
2019 are expected to increase in the low to mid-single digits compared
with the first quarter of 2018, with digital-only subscription revenue
expected to increase in the mid-teens.


Total advertising revenues in the first quarter of 2019 are expected to
decrease in the low to mid-single digits compared with the first quarter
of 2018, with digital advertising revenue expected to increase in the
mid-teens.


Other revenues in the first quarter of 2019 are expected to increase
approximately 50 percent compared with the first quarter of 2018.


Operating costs and adjusted operating costs are expected to increase
approximately 10 percent in the first quarter of 2019 compared with the
first quarter of 2018 as a result of continued investment into 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: $45 million to $55 million.


Conference Call InformationThe Company’s fourth-quarter and
full-year 2018 earnings conference call will be held on Wednesday,
February 6, at 11:00 a.m. E.T.


Participants can pre-register for the telephone conference at dpregister.com/10127485,
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, February 20. The passcode is
10127485.


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 31, 2017. 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)




 


Fourth Quarter


 


Twelve Months






2018


 


2017


 


% Change




2018


 


2017


 


% Change






(13 weeks)




(14 weeks)








(52 weeks)




(53 weeks)






Revenues


























Subscription(a)



$


263,553




$


269,381




(2.2%)




$


1,042,571




$


1,008,431




3.4%


Advertising(b)



191,728




182,618




5.0%




558,253




558,513




*


Other(c)



47,463




32,127




47.7%




147,774




108,695




36.0%


Total revenues




502,744




484,126




3.8%




1,748,598




1,675,639




4.4%


Operating costs


























Production costs


























Wages and benefits




99,990




93,773




6.6%




380,678




363,686




4.7%


Raw materials




22,052




17,843




23.6%




76,542




66,304




15.4%


Other production costs




58,502




51,581




13.4%




196,956




186,352




5.7%


Total production costs(d)



180,544




163,197




10.6%




654,176




616,342




6.1%


Selling, general and administrative costs(d)



231,127




216,698




6.7%




845,591




815,065




3.7%


Depreciation and amortization




15,042




14,910




0.9%




59,011




61,871




(4.6%)


Total operating costs(d)



426,713




394,805




8.1%




1,558,778




1,493,278




4.4%


Headquarters redesign and consolidation(e)



1,364




3,161




(56.8%)




4,504




10,090




(55.4%)


Multiemployer pension and other contractual gains(f)(g)



—




(4,320)




*




(4,851)




(4,320)




12.3%


Operating profit(d)



74,667




90,480




(17.5%)




190,167




176,591




7.7%


Other components of net periodic benefit costs (d)(g)



2,048




67,805




(97.0%)




8,274




64,225




(87.1%)


Gain/(Loss) from joint ventures(h)



10,773




(12,823)




*




10,764




18,641




(42.3%)


Interest expense and other, net




3,127




4,665




(33.0%)




16,566




19,783




(16.3%)


Income from continuing operations before income taxes




80,265




5,187




*




176,091




111,224




58.3%


Income tax expense (i)



23,289




63,083




(63.1%)




48,631




103,956




(53.2%)


Income from continuing operations




56,976




(57,896)




*




127,460




7,268




*


Loss from discontinued operations, net of income taxes (j)



—




57




*




—




(431)




*


Net income (loss)




56,976




(57,839)




*




127,460




6,837




*


Net (income)/loss attributable to the noncontrolling interest




(1,777)




1,026




*




(1,776)




(2,541)




(30.1%)


Net income/(loss) attributable to The New York Times Company
common stockholders




$


55,199




$


(56,813)




*




$


125,684




$


4,296




*


Average number of common shares outstanding:


























Basic




165,154




162,311




1.8%




164,845




161,926




1.8%


Diluted




167,249




162,311




3.0%




166,939




164,263




1.6%


Basic earnings per share attributable to The New York Times
Company common stockholders




$


0.33




$


(0.35)




*




$


0.76




$


0.03




*


Diluted earnings per share attributable to The New York Times
Company common stockholders




$


0.33




$


(0.35)




*




$


0.75




$


0.03




*


Dividends declared per share




$


0.04




$


0.04




*




$


0.16




$


0.16




*


* 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 fourth quarters and twelve months of 2018 and 2017:








 












Fourth Quarter


 


Twelve Months






 


 


2018


 


2017


 


% Change


 


2018


 


2017


 


% Change










(13 weeks)


 


(14 weeks)


 




 


(52 weeks)


 


(53 weeks)


 








Digital-only subscription revenues:






























News product subscription revenues(1)



$


98,791




$


91,722




7.7%




$378,484




$


325,956




16.1%






Other product subscription revenues(2)



6,467




4,577




41.3%




22,136




14,387




53.9%






Total digital-only subscription revenues




$


105,258




$


96,299




9.3%




$400,620




$


340,343




17.7%






(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 2018 and 2017:










 




 








 


December 30,2018


 


December 31,2017


 


% Change








(52 weeks)




(53 weeks)










Digital-only subscriptions:
















News product subscriptions(1)

2,713




2,231




21.6%






Other product subscriptions(2)

647




413




56.7%






Total digital-only subscriptions


3,360




2,644




27.1%






(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 fourth quarters and twelve months of 2018 and 2017:


















 










Fourth Quarter 2018




Fourth Quarter 2017




% Change










(13 weeks)




(14 weeks)




 










Print




Digital




Total




Print




Digital




Total




Print




Digital




Total






Display




$


80,306




$


78,168




$


158,474




$


88,843




$


69,650




$


158,493




(9.6)%




12.2%




—%






Other




8,038




25,216




33,254




9,576




14,549




24,125




(16.1)%




73.3%




37.8%






Total advertising




$


88,344




$


103,384




$


191,728




$


98,419




$


84,199




$


182,618




(10.2)%




22.8%




5.0%










































 










Twelve Months 2018




Twelve Months 2017




% Change










(52 weeks)




(53 weeks)




 










Print




Digital




Total




Print




Digital




Total




Print




Digital




Total






Display




$


269,160




$


202,038




$


471,198




$


285,679




$


198,658




$


484,337




(5.8)%




1.7%




(2.7)%






Other




30,220




56,835




87,055




34,543




39,633




74,176




(12.5)%




43.4%




17.4%






Total advertising




$


299,380




$


258,873




$


558,253




$


320,222




$


238,291




$


558,513




(6.5)%




8.6%




—%






 


(c)




Other revenues primarily consist of revenues from affiliate
referrals, commercial printing, news services/syndication, building
rental income, digital archive licensing, NYT Live (our live events
business) and retail commerce. Digital other revenues, which consist
primarily of affiliate referral revenue and digital archive
licensing revenue, totaled $15.5 million and $49.4 million for the
fourth quarter and full year 2018, respectively.






 


(d)




As a result of the adoption of the ASU 2017-07 during the first
quarter of 2018, the service cost component of net periodic
benefit costs/(income) from our pension and other postretirement
benefits plans will continue to be presented within operating
costs, while the other components of net periodic benefits
costs/(income) such as interest cost, amortization of prior
service credit and gains or losses from our pension and other
postretirement benefits plans will be separately presented outside
of “Operating costs” in the new line item “Other components of net
periodic benefits costs/(income)”. The Company has recast the
Condensed Consolidated Statement of Operations for the fourth
quarter and twelve months of 2017 to conform with the current
period presentation. This resulted in $0.2 million and $1.3
million of credits being reclassified from “Production costs” and
“Selling, general and administrative costs” to “Other components
of net periodic benefit costs/(income)” in the fourth quarter of
2017 and $0.9 million and $4.2 million of credits being
reclassified from “Production costs” and “Selling, general and
administrative costs” to “Other components of net periodic benefit
costs/(income)” in the twelve months of 2017. Additionally, in the
fourth quarter of 2017, the Company recorded a gain of $32.7
million in connection with the settlement of contractual funding
obligations primarily from a postretirement plan, as well as
pension settlement charges of $102.1 million in connection with
the transfer of certain pension benefit obligations to insurers
that were reclassified from “Postretirement benefit plan
settlement gain” and “Pension settlement expense”, respectively,
in “Operating profit”, to “Other components of net periodic
benefit costs/(income)”. This recast increased the fourth quarter
and twelve months of 2017 “Operating costs” by $1.6 million and
$5.1 million, respectively, while “Operating profit” increased by
$67.8 and $64.2, respectively. There was no impact to net income.






 


(e)




In the fourth quarter of 2018 and 2017, the Company recognized $1.4
million and $3.2 million pre-tax expenses related to the redesign
and consolidation of space in our headquarters building,
respectively and $4.5 million and $10.1 million pre-tax expenses in
the twelve months of 2018 and 2017, respectively.






 


(f)




In the third quarter of 2018, the Company recorded a $4.9 million
gain from a pension liability adjustment.






 


(g)




In the fourth quarter of 2017, the Company recorded a gain of $4.3
million in connection with the settlement of contractual funding
obligation. Prior to the adoption of ASU 2017-07 during the first
quarter of 2018 this gain was classified in the line
“Postretirement benefit plan settlement gain” within “Operating
Profit”.






 


(h)




In the fourth quarter of 2018, the Company recorded an $11.3 million
gain from joint ventures reflecting our proportionate share of a
distribution from Madison. In the fourth quarter of 2017, the
Company recorded (i) an $8.4 million loss from joint ventures
reflecting our proportionate share of the loss recognized by
Madison, resulting from Madison’s settlement of pension obligations
and (ii) a $6.4 million loss from joint ventures from the sale of
our 49% equity interest in Malbaie. In the third quarter of 2017,
the Company recorded a $30.1 million gain from joint ventures
reflecting our proportionate share of the gain related to the sale
of the remaining assets at a paper mill previously operated by
Madison.






 


(i)




In the fourth quarter of 2017, the Company recorded a $68.7 million
charge primarily attributable to the remeasurement of our net
deferred tax assets required as a result of recent tax legislation.






 


(j)




In the fourth and third quarters of 2017, the Company recorded a
gain of $0.1 million ($0.0 million after tax) and charge of $0.8
million ($0.5 million after tax), respectively, 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.






 


Contacts

The New York Times CompanyFor Media: Danielle Rhoades Ha,
212-556-8719; danielle.rhoades-ha@nytimes.comFor
Investors: Harlan Toplitzky, 212-556-7775; harlan.toplitzky@nytimes.com

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