Martha Stewart Living Omnimedia Reports Second Quarter 2014 Results

29 Jul, 2014, 07:30 ET from Martha Stewart Living Omnimedia, Inc.

NEW YORK, July 29, 2014 /PRNewswire/ -- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the second quarter ended June 30, 2014. The Company reported revenue for the second quarter of $37.6 million, and basic and diluted net income of $0.03 per share.

Dan Dienst, Chief Executive Officer, said, "For the past several months, we have been focused on managing our costs and expenses without in any way sacrificing our high quality content and designs.  We saw the efforts of many of our talented staff pay off this quarter, which is the first profitable second quarter our Company has achieved since 2008.  With the business stabilized, our business unit realignments behind us, and efficiencies and productivity measures being rigorously monitored, we are now keenly focused on the many growth opportunities ahead of us across all verticals and all geographies.  As I have said on several recent occasions, the best years for MSLO are indeed ahead of us."

Second Quarter 2014 Summary

Revenues totaled $37.6 million in the second quarter of 2014, compared to $42.2 million in the second quarter of 2013 due to lower print and merchandising revenue partially offset by higher digital advertising revenue.      

Total operating income for the second quarter of 2014 was $2.2 million compared to a loss of $(0.6) million in the prior-year period.   

Basic and diluted net income per share was $0.03 for the second quarter of 2014 compared to a loss of $(0.02) for the second quarter of 2013.

Second Quarter 2014 Results by Segment

Three Months Ended June 30 (unaudited, in thousands)

2014

2013

REVENUES

Publishing

$         22,229

$        24,190

Merchandising

14,719

16,116

Broadcasting

672

1,892

Total Revenues

$         37,620

$        42,198

 

OPERATING (LOSS) / INCOME

Publishing

$         (1,750)

$        (5,744)

Merchandising

10,995

11,707

Broadcasting

(131)

1,065

Corporate

(6,870)

(7,664)

Total Operating Income / (Loss)

$           2,244

$           (636)

Recent Business Highlights

  • Traffic to our websites via mobile devices continues to grow as our mobile unique visitors were up 18% over the prior year's second quarter.
  • Last month, the Company announced its third annual "Martha Stewart American Made" program, with sponsors including The UPS Store and Hyatt House. The nationally recognized awards program celebrates new rising stars of the growing maker culture that have turned their passions into small businesses. The program will culminate in a two-day celebration in New York City on November 7-8, 2014.
  • The third season of Martha Bakes just finished airing on PBS and the fourth season of Martha Stewart's Cooking School is scheduled to premiere on PBS in the fall.
  • MSLO will publish its 82nd book, One Pot: 120+ Easy Meals from Your Skillet, Slow Cooker, Stockpot, and More, in September.

Publishing

Revenues in the second quarter of 2014 were $22.2 million, compared to $24.2 million in the prior year due to lower print advertising revenue.  Digital revenue grew to $5.9 million – an increase of 9% over last year's second quarter.

Operating loss was $(1.8) million for the second quarter of 2014, compared to $(5.7) million in the prior year.

Merchandising

Revenues in the second quarter were $14.7 million compared to $16.1 million in the prior year's second quarter primarily due to the timing of recognition of royalty revenue from our commercial agreement with J.C. Penney. Operating income was $11.0 million for the second quarter of 2014 as compared to $11.7 million in the second quarter of 2013.

Broadcasting

Revenue in the second quarter of 2014 was $0.7 million, compared to $1.9 million in the second quarter of 2013. Last year's second quarter included revenue from the second season of Martha Stewart's Cooking School with higher sponsorship rates with no comparable revenue in this year's second quarter. 

Operating loss was $(0.1) million for the second quarter of 2014 compared to operating income of $1.1 million in the prior year's quarter.

Corporate

Corporate expenses were $(6.9) million in the second quarter of 2014 compared to $(7.7) million in the prior year's quarter due largely to lower litigation expenses.   

The Company will host a conference call with analysts and investors on July 29, 2014 at 8:30am EDT that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through August 12, 2014.

About Martha Stewart Living Omnimedia, Inc.

Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original "how-to" information, inspiring and engaging consumers with unique lifestyle content and well-designed, high-quality products. MSLO is organized into the following business segments: Publishing, Merchandising and Broadcasting. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.

Forward-Looking Statements

This press release may contain certain statements that we believe are, or may be considered to be, "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as "anticipate," "estimate," "expect," "intend," "believe," "continue," "potential" or similar words or phrases and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed in or implied by such forward-looking statements.

Such forward-looking statements include:  the continued success of our brands and the reputation and popularity of Martha Stewart and Emeril Lagasse; adverse reactions to publicity relating to Ms. Stewart or Mr. Lagasse by consumers, advertisers and business partners; loss of the services of Ms. Stewart or Mr. Lagasse; continued management turnover; our ability to successfully implement our growth strategies; our ability to develop new or expand existing merchandising and licensing programs or the loss or failure of existing programs, including as a result of financial instability of or disputes with our partners; failure to predict, respond to and influence trends in consumer taste; our inability to successfully and profitably develop or introduce new products and services; softening of or increased competition for advertising revenues, including increased competitive pressure on digital display advertising rates as a result of programmatic buying of advertising inventory; inability to successfully capitalize on digital, mobile and video initiatives, including establishing relationships with additional distribution partners; our ability to drive and retain visitors to our digital platforms and to effectively monetize our digital platforms;  disruption in the industries in which our publishing and digital third-party vendors operate;  continued weak and uncertain worldwide economic conditions;  increases in paper, postage, freight or printing costs; weakening in circulation, particularly in newsstand sales;  failure to protect our intellectual property; and failure to realize expected efficiencies and benefits from our restructuring activities.

Certain of these and other factors are discussed in more detail in the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, especially under the heading "Risk Factors," which may be accessed through the SEC's website at http://www.sec.gov/.

 

Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Three Months Ended June 30,

(unaudited, in thousands, except share and per share amounts)

REVENUES

2014

2013

Publishing

$ 22,229

$ 24,190

Merchandising

14,719

16,116

Broadcasting

672

1,892

Total revenues

37,620

42,198

Production, distribution and editorial

(15,296)

(19,139)

Selling and promotion

(10,165)

(12,296)

General and administrative

(9,086)

(10,156)

Depreciation and amortization

(829)

(1,126)

Restructuring charges

(152)

Gain on sale of subscriber list, net

35

OPERATING INCOME / (LOSS)

2,244

(636)

Interest income / (expense) and other, net

(133)

(168)

INCOME / (LOSS) BEFORE INCOME TAXES

2,111

(804)

Income tax provision

(344)

(376)

NET INCOME / (LOSS)

$ 1,767

$ (1,180)

INCOME / (LOSS) PER SHARE - BASIC AND DILUTED

Net Income / (Loss) - Basic

$ 0.03

$ (0.02)

Net Income / (Loss) - Diluted

$ 0.03

$ (0.02)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic

56,964,079

67,371,869

Diluted

57,729,551

67,371,869

 

Martha Stewart Living Omnimedia, Inc.

Consolidated Statements of Operations

Six Months Ended June 30,

(unaudited, in thousands, except share and per share amounts)

REVENUES

2014

2013

Publishing

$               41,735

$          48,672

Merchandising

27,803

27,623

Broadcasting

1,350

3,127

Total revenues

70,888

79,422

Production, distribution and editorial

(30,709)

(39,753)

Selling and promotion

(18,262)

(21,947)

General and administrative

(17,995)

(21,359)

Depreciation and amortization

(3,868)

(2,093)

Restructuring charges

(675)

Gain on sale of subscriber list, net

2,724

OPERATING INCOME / (LOSS)

54

(3,681)

Interest income / (expense) and other, net

(565)

(34)

LOSS BEFORE INCOME TAXES

(511)

(3,715)

Income tax provision

(325)

(738)

NET LOSS

$                  (836)

$          (4,453)

LOSS PER SHARE - BASIC AND DILUTED

Net loss

$                 (0.01)

$            (0.07)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic and diluted

56,823,235

67,302,986

 

Martha Stewart Living Omnimedia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

June 30, 2014 (unaudited)

December 31, 2013

ASSETS

CURRENT ASSETS

          Cash and cash equivalents

$                  14,052

$                21,884

          Short-term investments

47,637

19,268

          Restricted cash and investments

5,072

          Accounts receivable, net

23,225

39,694

          Paper inventory

999

2,901

          Other current assets

2,773

3,876

                                            Total current assets

88,686

92,695

PROPERTY AND EQUIPMENT, net

4,579

7,961

GOODWILL

850

850

OTHER INTANGIBLE ASSETS, net

45,200

45,200

OTHER NONCURRENT ASSETS

1,537

1,661

                                             Total assets

$                140,852

$              148,367

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

          Accounts payable and accrued liabilities

$                  12,511

$                12,464

          Accrued payroll and related costs

5,677

8,665

          Current portion of deferred subscription revenue

6,412

7,632

          Current portion of other deferred revenue

17,673

17,227

                                             Total current liabilities

42,273

45,988

DEFERRED SUBSCRIPTION REVENUE

2,306

3,587

OTHER DEFERRED REVENUE

13,481

17,307

DEFERRED INCOME TAX LIABILITY

7,333

7,094

OTHER NONCURRENT LIABILITIES

3,634

3,916

                                             Total liabilities

69,027

77,892

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

          Class A Common Stock, $0.01 par value, 350,000,000 shares

          authorized: 31,641,859 and 30,704,491 shares issues in 2014 and

          2013, respectively; 31,582,459 and 30,645,091 shares outstanding

          in 2014 and 2013, respectively

316

307

          Class B Common Stock, $0.01 par value, 150,000,000 shares

          authorized: 25,484,625 and 25,984,625 shares issued and 

          outstanding in 2014 and 2013, respectively

255

260

          Capital in excess of par value

343,926

342,213

          Accumulated deficit

(271,887)

(271,051)

          Accumulated other comprehensive loss

(10)

(479)

72,600

71,250

          Less: Class A treasury stock - 59,400 shares at cost

(775)

(775)

                                              Total shareholders' equity

71,825

70,475

                                              Total liabilities and shareholders' equity

$                140,852

$              148,367

 

SOURCE Martha Stewart Living Omnimedia, Inc.



RELATED LINKS

http://www.marthastewart.com