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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2019 (May 2, 2019)

 

 

New Media Investment Group Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36097   38-3910250

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

1345 Avenue of the Americas

New York, NY 10105

212-479-3160

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock, par value $0.01 per share    NEWM    New York Stock Exchange

As of April 30, 2019, 60,529,861 shares of the registrant’s common stock were outstanding.

 

 

 


Section 2 – Financial Information

 

Item 2.02

Results of Operations and Financial Condition

On May 2, 2019, New Media Investment Group Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2019. A copy of the press release is furnished herewith as Exhibit 99.1, which is incorporated herein by reference.

The information furnished pursuant to this Current Report on Form 8-K (including the exhibit hereto) shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth by specific reference in such filing that such information is to be considered “filed” or incorporated by reference therein.

Section 9 – Financial Statements and Exhibits

 

Item 9.01

Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1    Press Release dated May 2, 2019


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    NEW MEDIA INVESTMENT GROUP INC.
Date:  May 2, 2019     By:    /s/ Michael E. Reed
    Michael E. Reed
    Chief Executive Officer and President
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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Exhibit 99.1

 

LOGO

New Media Announces Solid First Quarter 2019 Results

 

 

   

Total Revenues of $387.6 million

 

   

Operating loss of $1.4 million

 

   

As Adjusted EBITDA of $33.1 million*

 

   

Free Cash Flow of $21.0 million*

 

   

Declared first quarter dividend of $0.38

 

   

On January 31, 2019, completed purchase of the publishing arm of Schurz Communications

NEW YORK, N.Y. May 2, 2019 – New Media Investment Group Inc. (NYSE: NEWM) today reported its financial results for the first quarter ended March 31, 2019.

 

($ in million, except per share)              

GAAP Reporting

   Q1 2019      Q1 2018  

Revenues

   $  387.6      $  340.8  

Operating (loss) income

   $ (1.4    $ 7.1  

Net loss attributable to New Media

   $ (9.1    $ (0.7

Non-GAAP Reporting*

   Q1 2019      Q1 2018  

As Adjusted EBITDA

   $ 33.1      $ 32.5  

Free Cash Flow

   $ 21.0      $ 22.5  

 

*

For definitions and reconciliations of Non-GAAP Reporting measures, please refer to the Non-GAAP Financial Measures Note and reconciliations below.

“Our results this quarter reflect both solid performance in our growth businesses and continued progress in stabilizing our traditional print business. Our revenue of $387.6 million was up 13.7% over the prior year. Our growth businesses, UpCurve and GateHouse Live, accounted for $34.9 million of total revenue, an increase of 27.3% compared to last year. We are excited about the continued opportunity for growth in both of these businesses for 2019 and beyond,” said Michael E Reed, New Media President and Chief Executive Officer.    

He continued: “As Adjusted EBITDA and Free Cash Flow were strong in the quarter at $33.1 million and $21.0 million respectively. We have been proactive in taking new measures to grow As Adjusted EBITDA, which is reflected in our results. At the same time, these measures – which we believe are crucial to driving profitability – have prevented us from showing a positive same store revenue trend in recent quarters. In the first quarter, same store revenue was down 7.4%, or 80 bps lower than the fourth quarter. With the execution of planned As Adjusted EBITDA-enhancing measures in the first quarter, we do expect to show improvement in our same store revenue trend in the coming quarters.

Finally, in keeping with our goal to purchase strong assets that integrate well into our portfolio, we completed our purchase of the publishing arm of Schurz Communications on January 31, for $30.0 million.”

 

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First Quarter 2019 Financial Results

New Media recorded total revenues of $387.6 million for the quarter, up 13.7% compared to the prior year, and down 7.4% on an organic same store basis. The same store trend was marginally lower than the trend recorded in the fourth quarter of 2018, primarily as a result of internal initiatives undertaken to improve long term revenue growth opportunities and profitability. An encouraging point from the quarter was that same store revenue trends improved each month during the quarter. The company also expects to see overall same store revenue and profitably trends improve in Q2 and through 2019.

Traditional Print advertising revenue decreased 14.8% on an organic same store basis compared to the prior year period. This decline was consistent with the fourth quarter of 2018.

Digital revenue increased 23.8% on a reported basis from the prior year to $47.7 million, which represents 12.3% of total revenue in the first quarter. UpCurve generated $26.0 million in revenue, an increase of 34.0% as compared with the prior year on a reported basis.

Circulation revenue decreased 5.5% on an organic same store basis, due in large part to our shift away from pricing increases as we work to grow subscriber volumes. This strategic shift is working as demonstrated by total subscriber volumes growing for the second consecutive quarter, as compared to the prior year. Our digital-only subscription base grew to 174,000, an increase of 43.9% compared to the prior year.

Commercial Print, Distribution and Events revenue increased 1.4% compared to the prior year on an organic same store basis.

Operating loss was $1.4 million and Net loss attributable to New Media was $9.1 million. These were burdened by $8.3 million in one-time expenses, $4.2 million of which were non-cash expenses. Excluding these one-time expenses, results would have been Operating income of $6.9 million and a Net loss attributable to New Media of $0.8 million.

As Adjusted EBITDA and Free Cash Flow were $33.1 million and $21.0 million, respectively.

First Quarter 2019 Dividend

New Media’s Board of Directors declared a first quarter 2019 cash dividend of $0.38 per share of common stock. The dividend is payable on May 22, 2019 to shareholders of record as of the close of business on May 13, 2019.

The declaration and payment of any dividends are at the sole discretion of the Board of Directors, which may decide to change the Company’s dividend policy at any time.

Earnings Conference Call

New Media’s management will host a conference call on Thursday, May 2, 2019 at 9:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Media’s website, www.newmediainv.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-855-319-1124 (from within the U.S.) or 1-703-563-6359 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “New Media First Quarter Earnings Call” or access code “2378656.”

 

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A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newmediainv.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available approximately two hours following the call’s completion through 11:59 P.M. Eastern Time on Thursday, May 6, 2019 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “2378656.”

About New Media Investment Group Inc.

New Media supports small to mid-size communities by providing locally-focused print and digital content to its consumers and premier marketing and technology solutions to our small and medium business partners. The Company is one of the largest publishers of locally based print and online media in the United States as measured by our 156 daily publications. As of March 31, 2019, New Media operates in over 615 markets across 39 states reaching over 22 million people on a weekly basis and serves over 200,000 business customers.

For more information regarding New Media and to be added to our email distribution list, please visit www.newmediainv.com.

Same Store and Organic Same Store Revenues

Same store results take into account material acquisitions and divestitures of the Company by adjusting prior year performance to include or exclude financial results as if the Company had owned or divested a business for the comparable period. The results of several acquisitions (“tuck-in acquisitions”) were funded from the Company’s available cash and are not considered material. Organic same store revenues are same store revenues adjusted to remove non-material acquisitions and non-material divestitures, and to adjust for Commercial Print revenues that are now intercompany.

Non-GAAP Financial Measures

The Company strongly urges stockholders and other interested persons not to rely on any single financial measure to evaluate its business. In addition, because Adjusted EBITDA, As Adjusted EBITDA, and Free Cash Flow are not measures of financial performance under GAAP and are susceptible to varying calculations, these non-GAAP measures, as presented in this press release, may differ from and may not be comparable to similarly titled measures used by other companies.

Adjusted EBITDA, As Adjusted EBITDA, and Free Cash Flow

The Company defines Adjusted EBITDA as net income (loss) from continuing operations before income tax expense (benefit), interest/financing expense, depreciation and amortization, and non-cash impairments. The Company defines As Adjusted EBITDA as Adjusted EBITDA before transaction and project costs, merger and acquisition related costs, integration and reorganization costs, gain/loss on sale or disposal of assets, non-cash items such as non-cash compensation, and Adjusted EBITDA from non-wholly owned subsidiaries. The Company defines Free Cash Flow as As Adjusted EBITDA less capital expenditures, cash taxes, interest paid, and pension payments.

Management’s Use of Adjusted EBITDA, As Adjusted EBITDA, and Free Cash Flow

Adjusted EBITDA, As Adjusted EBITDA, and Free Cash Flow are not measures of financial performance under GAAP and should not be considered in isolation or as alternatives to income from operations, net income (loss), cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. New Media’s management believes these non-GAAP measures, as defined above, are useful to investors for the following reasons:

 

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Evaluating performance and identifying trends in day-to-day performance because the items excluded have little or no significance on the Company’s day-to-day operations; and

 

   

Providing assessments of controllable expenses that afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance.

We use Adjusted EBITDA, As Adjusted EBITDA, and Free Cash Flow as measures of our deployed revenue generating assets between periods on a consistent basis. We believe As Adjusted EBITDA and Free Cash Flow measure our financial performance and help identify operational factors that management can impact in the short term, mainly our operating cost structure and expenses. We exclude mergers and acquisition, transaction, and project related costs such as diligence activities and new financing related costs because they represent costs unrelated to the day-to-day operating performance of the business that management can impact in the short term. We consider the loss on early extinguishment of debt to be financing related costs associated with interest expense or amortization of financing fees, which by definition are excluded from Adjusted EBITDA. Such charges are incidental to, but not reflective of our day-to-day operating performance of the business that management can impact in the short term.

Forward-Looking Statements

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our ability to execute on our business plan, including stabilizing our print business, expected revenue trends, including expectations for same store revenue and growth in our UpCurve and GateHouse Live businesses, and our ability to grow subscriber volumes. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties, such as continued declines in advertising and circulation revenues, economic conditions in the markets in which we operate, including natural disasters, tariffs and other factors affecting economic conditions generally, competition from other media companies, the possibility of insufficient interest in our digital and other businesses, technological developments in the media sector, an ability to source acquisition opportunities with an attractive risk-adjusted return profile, inadequate diligence of acquisition targets, and difficulties integrating and reducing expenses, including at our newly acquired businesses. These and other risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Contact:

Ashley Higgins, Investor Relations

ir@newmediainv.com

(212) 479-3160

Source: New Media Investment Group Inc.

 

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NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share data)

 

     March 31, 2019     December 30, 2018  
Assets

 

Current assets:

    

Cash and cash equivalents

   $ 24,597     $ 48,651  

Restricted cash

     4,054       4,119  

Accounts receivable, net of allowance for doubtful accounts of $8,259 and $8,042 at March 31, 2019 and December 30, 2018, respectively

     153,222       174,274  

Inventory

     24,972       25,022  

Prepaid expenses

     30,155       23,935  

Other current assets

     21,149       21,608  
  

 

 

   

 

 

 

Total current assets

     258,149       297,609  

Property, plant, and equipment, net of accumulated depreciation of $229,268 and $219,256 at March 31, 2019 and December 30, 2018, respectively

     347,766       339,608  

Operating lease right-of-use assets

     102,583       —    

Goodwill

     316,208       310,737  

Intangible assets, net of accumulated amortization of $110,877 and $101,543 at March 31, 2019 and December 30, 2018, respectively

     485,026       486,054  

Other assets

     10,936       9,856  
  

 

 

   

 

 

 

Total assets

   $  1,520,668     $  1,443,864  
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity  

Current liabilities:

    

Current portion of long-term debt

   $ 11,296     $ 12,395  

Current portion of operating lease liabilities

     13,415       —    

Accounts payable

     28,219       16,612  

Accrued expenses

     90,290       113,650  

Deferred revenue

     116,521       105,187  
  

 

 

   

 

 

 

Total current liabilities

     259,741       247,844  

Long-term liabilities:

    

Long-term debt

     435,426       428,180  

Long-term operating lease liabilities

     96,248       —    

Deferred income taxes

     7,665       8,282  

Pension and other postretirement benefit obligations

     24,094       24,326  

Other long-term liabilities

     10,498       16,462  
  

 

 

   

 

 

 

Total liabilities

     833,672       725,094  
  

 

 

   

 

 

 

Redeemable noncontrolling interests

     1,298       1,547  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock, $0.01 par value, 2,000,000,000 shares authorized; 60,806,451 shares issued and 60,529,861 shares outstanding at March 31, 2019; 60,508,249 shares issued and 60,306,286 shares outstanding at December 30, 2018

     608       605  

Additional paid-in capital

     699,787       721,605  

Accumulated other comprehensive loss

     (6,911     (6,881

(Accumulated deficit) retained earnings

     (5,224     3,767  

Treasury stock, at cost, 276,590 and 201,963 shares at March 31, 2019 and December 30, 2018, respectively

     (2,562     (1,873
  

 

 

   

 

 

 

Total stockholders’ equity

     685,698       717,223  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

   $ 1,520,668     $ 1,443,864  
  

 

 

   

 

 

 

 

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NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (UNAUDITED)

(In thousands, except per share data)

 

     Three months ended  
     March 31, 2019     April 1, 2018  

Revenues:

    

Advertising

   $  178,694     $  163,259  

Circulation

     152,165       129,991  

Commercial printing and other

     56,740       47,515  
  

 

 

   

 

 

 

Total revenues

     387,599       340,765  
  

 

 

   

 

 

 

Operating costs and expenses:

    

Operating costs

     229,495       196,389  

Selling, general, and administrative

     131,508       118,819  

Depreciation and amortization

     20,923       19,247  

Integration and reorganization costs

     4,112       2,430  

Impairment of long-lived assets

     1,207        

Net loss (gain) on sale or disposal of assets

     1,789       (3,171
  

 

 

   

 

 

 

Operating (loss) income

     (1,435     7,051  

Interest expense

     10,134       8,352  

Other income

     (260     (520
  

 

 

   

 

 

 

Loss before income taxes

     (11,309     (781

Income tax benefit

     (1,954     (116
  

 

 

   

 

 

 

Net loss

     (9,355     (665

Net loss attributable to redeemable noncontrolling interests

     (249      
  

 

 

   

 

 

 

Net loss attributable to New Media

   $ (9,106   $ (665
  

 

 

   

 

 

 

Loss per share:

    

Basic:

    

Net loss attributable to New Media

   $ (0.15   $ (0.01
  

 

 

   

 

 

 

Diluted:

    

Net loss attributable to New Media

   $ (0.15   $ (0.01
  

 

 

   

 

 

 

Dividends declared per share

   $ 0.38     $ 0.37  
  

 

 

   

 

 

 

Comprehensive loss

   $ (9,385   $ (732

Comprehensive loss attributable to redeemable noncontrolling interests

     (249     —    
  

 

 

   

 

 

 

Comprehensive loss attributable to New Media

   $ (9,136   $ (732
  

 

 

   

 

 

 

 

6


NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

 

     Three months Ended  
     March 31, 2019     April 1, 2018  

Cash flows from operating activities:

    

Net loss

   $ (9,355   $ (665

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation and amortization

     20,923       19,247  

Non-cash compensation expense

     1,136       1,163  

Non-cash interest expense

     344       504  

Deferred income taxes

     (617     (92

Net loss (gain) on sale or disposal of assets

     1,789       (3,171

Impairment of long-lived assets

     1,207       —    

Pension and other postretirement benefit obligations

     (276     (369

Changes in assets and liabilities:

    

Accounts receivable, net

     24,684       19,409  

Inventory

     988       (3,169

Prepaid expenses

     (5,680     (3,888

Other assets

     (103,641     (1,289

Accounts payable

     10,803       3,030  

Accrued expenses

     (6,289     (17,573

Deferred revenue

     5,327       4,027  

Other long-term liabilities

     90,399       1,499  
  

 

 

   

 

 

 

Net cash provided by operating activities

     31,742       18,663  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisitions, net of cash acquired

     (37,953     (29,409

Purchases of property, plant, and equipment

     (2,242     (1,929

Proceeds from sale of real estate and other assets

     2,465       9,207  
  

 

 

   

 

 

 

Net cash used in investing activities

     (37,730     (22,131
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Payment of debt issuance costs

     —         (500

Borrowings under term loans

     —         49,750  

Repayments under term loans

     (2,197     (1,031

Borrowings under revolving credit facility

     54,400       —    

Repayments under revolving credit facility

     (46,400     —    

Purchase of treasury stock

     (689     (735

Payment of dividends

     (23,245     (20,046
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (18,131     27,438  
  

 

 

   

 

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

     (24,119     23,970  

Cash, cash equivalents and restricted cash at beginning of period

     52,770       46,162  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 28,651     $ 70,132  
  

 

 

   

 

 

 

 

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NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES

AS ADJUSTED EBITDA AND FREE CASH FLOW

(In thousands, except share data)

 

     Three months ended  
     March 31, 2019     April 1, 2018  

Net loss

   $ (9,355   $ (665

Income tax benefit

     (1,954     (116

Interest expense

     10,134       8,352  

Impairment of long-lived assets

     1,207       —    

Depreciation and amortization

     20,923       19,247  
  

 

 

   

 

 

 

Adjusted EBITDA

     20,955       26,818  

Non-cash compensation and other expense

     6,201       6,450  

Integration and reorganization costs

     4,112       2,430  

Net loss (gain) on sale or disposal of assets

     1,789       (3,171
  

 

 

   

 

 

 

As Adjusted EBITDA

     33,057       32,527  

Interest Paid(1)

     (9,567     (7,680

Net capital expenditures

     (2,242     (1,929

Pension payments

     (276     (369

Cash taxes(2)

     (13     —    
  

 

 

   

 

 

 

Free Cash Flow

   $ 20,959     $ 22,549  
  

 

 

   

 

 

 

Basic weighted average shares outstanding

     59,965,036       52,934,640  

Diluted weighted average shares outstanding

     59,965,036       52,934,640  

 

(1)

Average interest paid during 2019 for the three-month period.    

(2)

Cash paid, net of refunds.    

 

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NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES

SAME STORE AND ORGANIC SAME STORE REVENUES

(In thousands)

 

     Three months ended  
     March 31, 2019     April 1, 2018  

Total revenues from continuing operations

   $  387,599     $  340,765  

Revenue adjustment for material acquisitions

     —         —    
  

 

 

   

 

 

 

Same Store Revenues

     387,599       340,765  

Tuck-in Acquisitions(1)

     (73,059     (1,083
  

 

 

   

 

 

 

Organic Same Store Revenues

   $ 314,540     $ 339,682  
  

 

 

   

 

 

 

 

(1)

Tuck-in acquisitions are adjusted to remove non-material acquisitions and non-material divestitures, and to adjust for Commercial Print revenues that are now intercompany.

 

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