Martha Stewart Living Omnimedia Reports Second Quarter 2014 Results

PR Newswire

NEW YORK, July 29, 2014 /PRNewswire/ -- Martha Stewart Living Omnimedia, Inc. (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








 

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