The New York Times Company Q1 2010 Earnings Call Transcript

The New York Times Company Q1 2010 Earnings Call Transcript
By Seeking Alpha ,

The New York Times Company

(

NYT

)

Q1 2010 Earnings Call Transcript

April 22, 2010 11:00 am ET

Executives

Paula Schwartz – IR

Janet Robinson – President and CEO

Jim Follo – SVP and CFO

Scott Heekin-Canedy – President and General Manager

Analysts

John Janedis – Wells Fargo

Alexia Quadrani – JPMorgan

Craig Huber – Access 342

Edward Atorino – Benchmark

Presentation

Operator

Compare to:
Previous Statements by NYT
» The New York Times Company Q4 2009 Earnings Call Transcript
» The New York Times Company Q3 2009 Earnings Call Transcript
» The New York Times Company Q2 2009 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to The New York Times first quarter 2010 earnings conference call. Today's call is being recorded. A question-and-answer session will follow today's presentation. Instructions on how to queue for questions will be provided at that time.

And now for opening remarks and introductions, I'll turn the conference over to Ms. Paula Schwartz. Please go ahead.

Paula Schwartz

Thank you Delia, and welcome to our first quarter 2010 earnings conference call. We have several members of our senior management team here to discuss our results with you. They include Janet Robinson, President and CEO, Jim Follo, Senior Vice President and Chief Financial Officer, Scott Heekin-Canedy, President and General Manager of The Times and Martin Nisenholtz, Senior Vice President, Digital Operations.

All comparisons on this call will be for the first quarter of 2010 to the first quarter of 2009 unless otherwise stated. Our discussion will include forward-looking statements and our actual results may differ from those predicted. Some of the factors that may cause them to differ are included in our 2009 10-K.

Our presentation will also include non-GAAP financial measures and we have provided reconciliation to the most comparable GAAP measures in our earnings release, which is available on our corporate website at www.nytco.com. An archive of this call will be available on our website as will a transcript and a version that's downloadable to an MP3 player. With that, let me turn the call over to Janet Robinson.

Janet Robinson

Thank you, Paula and good morning everyone. We were very pleased to report continued strong improvement in our operating performance. In the first quarter, we experienced significant positive trending in both print and digital advertising relative to the fourth quarter.

As the quarter progressed, we saw acceleration in the rate of advertiser spending across our newspapers, websites and other platforms reflecting a firming of economic conditions. The company's continued progress in our long-term strategy to restructure our cost base and reposition our businesses also contributed to the growth in our operating profit.

Some of the actions that supported our successful efforts were securing strong performance on costs with a heightened emphasis on efficiency, diversifying our revenue streams with particular focus on increasing revenues from our digital sources, leveraging our brand strength to grow profitable circulation revenue where we believe that strong demand for high quality journalism as demonstrated by the Times's three newest surprises will inevitably lead to increased value and managing our asset portfolio to strengthen our core operations and enhance our digital presence.

We achieved strong growth in our operating profit, which excluding depreciation, amortization, severance and a special item in 2009 increased more than five fold to $83 million in the first quarter, from $16 million in the first quarter of 2009. On a GAAP basis, we reported operating profit from continuing operations of $53 million, compared with an operating loss of $62 million in the same period of 2009.

Diluted earnings per share from continuing operations, excluding severance expense and special items grew 132% to $0.11 per share compared with a loss per share of $0.34 in the same period of 2009. On a GAAP basis, we reported diluted EPS from continuing operations of $0.08, compared with a diluted loss per share of $0.52 in the first quarter of 2009. Our results include a couple of special items which Jim will review with you.

Once again, strong cost control was a leading contributor to our improved operating performance in the quarter. The aggressive actions we have taken to permanently reengineer our cost base in recent years are evidenced in the 18% decline in our operating expenses. While we will remain vigilant in managing our cost, we expect these saving trends to moderate during the remainder of the year.

Our liquidity position improved during the quarter as a result of strong cash from operations, which provided us with increased financial flexibility. Another one of our strategic focuses is managing our asset portfolio. Just after the close of the first quarter we completed the sale of about 7% of our interest in the New England Sports Ventures for a pretax gain of approximately $9 million.

We are pleased with the quality of the transaction and believe it speaks to the overall value of this asset. We continue to hold a 16.6% stake in NESV and we intend to keep exploring the sale of this asset in whole or in part. In January, we announced that we will be introducing a paid model of nytimes.com at the beginning of 2011 and in the first quarter we certainly made further progress in the areas of product design and development toward that launch.

This includes everything from defining exactly what content will count towards the meter to determining how to treat traffic coming through search or referred through other sources. We have not come to final conclusions on many of these fronts but we will aim to provide further updates as we move towards the launch of the new online model next year.

Now let me provide you with more detail on our revenues. Total revenues for the company declined 3%, a significant improvement from the fourth quarter decline of 12% with ad revenues down 6%, circulation revenues up 4% and other revenues down 16% Noteworthy growth in digital advertising revenues which rose 18% significantly offset a 12% decrease in print advertising revenues and held our total advertising revenue decline to approximately 6%, compared with the first quarter of 2009.

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