Fiscal 2020 Third Quarter Earnings Presentation May 14, 2020
Safe Harbor Statement and Non-GAAP Financial Measures CAUTIONARY STATEMENT REGARDING 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 Compan y’s successful implementation of its strategies; and the Company’s expectations with respect to profit, growth and increasing shareholder value. Forward-looking statements can be identified by words such as may , should , expects , provides , anticipates , assumes , can , will , meets , could , likely , intends , might , predicts , seeks , would , believes , estimates , plans , continues , guidance or outlook , or variations of these words or similar expressions. Actual results may differ materially from those currently anticipated. Factors that could adversely affect future results include, but are not limited to, the impact of the COVID-19 pandemic on the Company, its customers and its suppliers; downturns in global, 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 regulati ons affecting the Company’s industries; increases in interest rates; the consequences of acquisitions and/or dispositions; and the risk factors contained in the Company’s most recent Annual Report o n Form 10-K filed with the Securities and Exchange Commission (SEC), as well as the Current Report on Form 8- K filed on May 11, 2020, both of which are available on the SEC’s website at www.sec.gov. Such risk factors may be amplified by the COVID-19 pandemic and its potential impact on the Company’s business and the global economy. The Company undertakes no obligation to update any forward -looking statement, whether as a result of new information, future events or otherwise. RATIONALE FOR USE AND ACCESS TO NON-GAAP RESULTS Management uses and presents GAAP and non-GAAP results to evaluate and communicate its performance. Non-GAAP measures should not be construed as alternatives to GAAP measures. Free cash flow, earnings from continuing operations before special items, operating profit before special items, adjusted EBITDA, adjusted EBITDA margin, and comparable results are common supplemental measures of performance used by investors and financial analysts. Management believes that free cash flow, earnings from continuing operations before special items, operating profit before special items, adjusted EBITDA, adjusted EBITDA margin, and comparable results provide additional analytical tools. Free cash flow is defined as net cash provided by operating activities less capital expendi tures. This metric has been included as a measure of the Company’s liquidity and ability to fund its operations. Earnings from continuing operations before special items and operating profit before special items remove the impact of special items on earnings (loss) from continuing operations and operating profit (loss). Adjusted EBITDA is defined as earnings (loss) from continuing operations before interest expense, income taxes, depreciation, amortization, and special items. These special items have been removed as they have been deemed to be non-operational in nature. Comparable results remove the impact of portfolio changes in our magazine business to facilitate year-over-year comparisons. Management does not use adjusted EBITDA as a measure of liquidity or funds available for management’s discretionary use becau se it excludes certain contractual and nondiscretionary expenditures. Results before special items are supplemental non-GAAP financial measures. While these adjusted results are not a substitute for reported results under GAAP, management believes this information is useful as an aid to further understand Meredith’s current performance, performance trends and financial condition. Reconciliations of G AAP to non-GAAP measures are attached to this presentation and available at www.meredith.com. 2
3Q’20 Business Update • Top Priorities – Keeping our employees safe – Continuing to deliver trusted news and inspiration to our audience of nearly 200 million Americans, including 95 percent of U.S. women – Supporting our advertising and marketing partners – Strengthening liquidity and enhancing our financial flexibility • Business Operations – Company operations and employees have adapted seamlessly to COVID-19 environment, with no disruptions to production – All National Media Group content is being produced remotely, augmented by large asset library of evergreen content – All our television stations remain open to serve their communities. Our stations have increased news hours to meet consumer demands and fill programming holes created by the absence of live events • Advertising Experience – Revenue performance was in-line with expectations until mid-March when COVID-19 outbreak and subsequent government-mandated quarantine measures began to impact economies at the national and local levels – Since mid-March, we have been aggressively working to support advertising and marketing clients with new products and actionable insights – Advertising represents ~50% of total Company revenues. Impact is fairly balanced across National and Local media groups • Brand Awareness / Value Direct to Consumers – Given the current lifestyle changes with most Americans at home, we believe Meredith’s content is resonating more than ever – Meredith is seeing strong audience growth across all media platforms, including traffic across Meredith’s digital properties; ecommerce; television viewership and growth in high-value subscription solicitation channels – We believe this is strengthening long-term affinity for Meredith brands and services and increases opportunity to monetize into economic recovery 3
Consumer metrics strong post-COVID Building relationships/brand affinity with monetization expected at advertising recovery National Media Group Digital Impression Impression growth growth +6% +32% Impressions up sharply 3Q’20 vs April’20 vs 3Q’19 April’19 Apple News+ Revenue Licensing and other consumer growth +27% driven revenues 3Q’20 vs ecommerce Lead generation 3Q’19 Evening News Evening News Local Media Group viewership ratings growth ratings growth +14% +45% strongest in a decade 3Q’20 vs April’20 vs 3Q’19 April’19 High-value subscription solicitation ecommerce Third party PEOPLE direct mail (+43%) (+34% at 3/31 mailing ) (+74%) channels up strongly National Media Group monthly data source: comScore Local Media Group aggregate Evening News ratings across all markets source: Nielsen 4
COVID-19 Cash Conservation Actions Dividend Pause 1 – Dividend was paused as of 4/20/20 Expense Reductions 2 – Includes reductions in Board of Directors fees and officer, executive and most employee salaries Capital Expenditures 3 – Significant reductions to non-critical business investments Working Capital 4 – Working with customers and suppliers to optimize working capital Other Items 5 – Focusing on allocation of capital and its effect on costs and cash 5
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