Craig Forman, McClatchy's president and chief executive officer, said, "We are excited to have this opportunity to present and dive deeper into our business strategies at the J.P. Morgan Conference this year. At McClatchy, our goals are to move faster in our digital transformation, to quickly cross over to revenue growth, to stabilize results, and to reduce debt over time.
"To reach our goals we know we need to transform nearly every area of our business: from our sales structure to our newsrooms, to our business processes and cost structure, to the ways we develop and release new and better products that meet the changing needs of our customers. And we need to do it with increasing speed. We will expand on these business strategies and their 2017 impact during the conference, as well as throughout the year during our earnings updates to investors."
Elaine Lintecum, McClatchy's chief financial officer, will summarize the company's 2016 operating results and current real estate monetization efforts as well as the accompanying debt reduction strategy. In discussing the company's debt reduction strategy, Ms. Lintecum will speak to the company's successful track record in reducing and meeting its debt obligations. Ms. Lintecum said, "We have successfully reduced our debt obligations by more than half since the Great Recession, when debt was nearing $2 billion and is now just under $874 million. Since the beginning of our fiscal year 2013 alone, we have paid down $607 million of debt, realizing savings of $52 million in interest costs. These reductions are a direct reflection of our dedication and ability to succeed in de-levering the company."
Lintecum added, "In 2017 the company expects to realize approximately $100 million in pre-tax proceeds from real estate sales, inclusive of the sale-leaseback transactions announced earlier in the year for Sacramento and Columbia. We will continue our debt reduction strategy from monetized real estate sales as well as cash from operations. The financial outlook previously discussed in our February 9th release remains unchanged."
Management's expectations for 2017 are that digital-only advertising revenue will continue at a growth rate of double-digits and is expected to improve on the growth achieved in 2016, audience revenues will be stable, print advertising trends will likely remain unchanged and print is expected to be a smaller portion of total revenues in 2017. Operating expenses, adjusted and unadjusted, are expected to decline and will be monitored to achieve expense performance in line with revenue performance. The company expects to invest an estimated $10 million in exceleratetm throughout 2017, providing it with a larger sales force and with tools to drive revenue results in McClatchy's markets, as well as adjacent markets. Capital expenditures are expected to be between $12 million and $15 million in 2017 and the company does not expect to have a required contribution to its qualified pension plan.
The company has real estate that is being marketed, under LOI's or currently under contract for sale, and management's focus will be on working towards monetizing as many of those assets as possible in 2017. The proceeds achieved from the real estate transactions and cash from operations will be utilized to de-lever the company through debt reductions and further investments in the business.
Reconciliations of non-GAAP amounts to GAAP amounts discussed herein and during the conference can be found at McClatchy's website.
McClatchy is a publisher of iconic brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News and Observer, and the (Fort Worth) Star-Telegram. McClatchy operates 30 media companies in 29 U.S. markets in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. McClatchy is headquartered in Sacramento, Calif., and listed on the New York Stock Exchange under the symbol MNI.
Statements in this press release regarding future financial and operating results, including our strategies for success and their effects, our real estate monetization efforts, revenues, and management's efforts with respect to cost reduction efforts and efficiencies, cash expenses, revenues, adjusted EBITDA, debt levels, interest costs and creation of shareholder value as well as future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: McClatchy may not generate cash from operations, or otherwise, necessary to reduce debt or meet debt covenants as expected; we may not be successful in the reducing debt whether through tenders offers, open market repurchase programs or other negotiated transactions; transactions, including sales of real estate properties or transactions related to strategic alternatives for its investments, may not close as anticipated or result in cash distributions in the amount or timing anticipated; McClatchy may not successfully implement audience strategies designed to increase audience revenues and may experience decreased audience volumes or subscriptions; McClatchy may experience diminished revenues from retail, classified, national and direct marketing advertising; McClatchy may not achieve its expense reduction targets including efforts related to legacy expense initiatives or may do harm to its operations in attempting to achieve such targets; McClatchy's operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; increases in the cost of newsprint; bankruptcies or financial strain of its major advertising customers; litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in printing and distribution costs from anticipated levels, including changes in postal rates or agreements; changes in interest rates; changes in pension assets and liabilities; changes in factors that impact pension contribution requirements, including, without limitation, the value of the company-owned real property that McClatchy has contributed to its pension plan; increased consolidation among major retailers in our markets or other events depressing the level of advertising; our inability to negotiate and obtain favorable terms under collective bargaining agreements with unions; competitive action by other companies; an inability to fully implement and execute its share repurchase plan; and other factors, many of which are beyond our control; as well as the 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 Dec. 27, 2015, filed with the U.S. Securities and Exchange Commission. McClatchy disclaims any intention and assumes no obligation to update the forward-looking information contained in this release.
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