Slide 1: Fourth Quarter 2014 Financial Results
Management Presentation February 2015 on and ourth Quarter 2014 Financial Results February 12, 2015
Slide 2: Disclaimer
2 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995; particularly statements regarding future financial and operating results of Time Inc. (the “Company”) and its business. These statements are based on management’s curre
Slide 3: Highlights of Transformation
3 • Reposition the company for its return to growth: Select growth and investment initiatives • Cost base transformation: Protect cash flows and free up resources to fund transformation • Strong cash performance: $519 million cash balance at year-end 2014 • Portfolio management: Continue to explore
Slide 4: Revenue Transformation
REVENUE TRANSFORMATION Timelne. 4
Slide 5: Revenue Transformation – Advertising
• In-house think-tank supports centrally-led sales • Brings custom solutions to our advertising partners • Collaborates with edit to integrate marketing across our brand portfolio Revenue Transformation – Advertising 5 • Reinvented central sales team to leverage collective strength of Time Inc. • El
Slide 6: Revenue Transformation – Consumer Marketing
Revenue Transformation – Consumer Marketing 6 • Move Time Inc. towards being a more data-driven organization • Invest in CRM technologies and data science competency • Personalize the audience experience; more effectively target consumers at all stages of the marketing funnel; and offer data and ins
Slide 7: Revenue Transformation – Adjacent Opportunities
7 Revenue Transformation – Adjacent Opportunities • E.G., Cooking Light Diet, Cozi, Keaton Row, Next Issue Media, The Snug, The Salon by InStyle (licensing partnership with JC Penney), UK Cycling Events New Products and Services • Time Inc. is bringing together a content, services and commerce platf
Slide 8: Financial Overview
FINANCIAL OVERVIEW Timelne. 8
Slide 9: 4Q14 Financial Highlights
9 Adjusted OIBDA was $203 million or essentially flat versus 2013; excluding the impact of Corporate Transactions1 Adjusted OIBDA would have increased 5% Growth of digital advertising revenues continued to accelerate – up 34% versus 2013 excluding the impact of Corporate Transactions Print & o
Slide 10: 4Q14 Total Revenues
10 4Q14 Total Revenues $MM Total revenues down 7% Down 4% excluding Corporate Transactions - 4Q represents the lowest rate of decline for all of 2014 $966 $895 4Q13 4Q14 Highlights
Slide 11: 4Q14 Advertising Revenues
11 4Q14 Advertising Revenues Total advertising revenues down 8%; down 2% excluding Corporate Transactions Print and other advertising down 10%; down 8% excluding Corporate Transactions - Continued to outperform the industry; Time Inc. domestic ad pages declined 9% versus 12% decline for the indu
Slide 12: 4Q14 Circulation Revenues
Other Circulation Revenue Newsstand Revenue Subscription Revenue 12 4Q14 Circulation Revenues Continued subscription and newsstand softness Subscription revenues down 7% - Excluding Corporate Transactions down 6% - Includes negative impact related to subscription acquisition activities vs. prior
Slide 13: 4Q14 Other Revenues
13 4Q14 Other Revenues Other revenues down 2% and flat excluding Corporate Transactions Book and bookazine business experienced year-over-year weakness Strong performance from higher marketing support services and Fortune’s Most Powerful Women Summit provided offset $MM $113 $111 Highlights 4Q
Slide 14: 4Q14 Operating Expenses
Costs of Revenues (COR) SG&A 14 4Q14 Operating Expenses Operating Expenses1 down 9% and down 6% excluding Corporate Transactions Cost of Revenues down 15%, down 12% excluding Corporate Transactions - Production down 20%, down 19% excluding Corporate Transactions - Editorial down 12% and down 6%
Slide 15: 4Q14 Adjusted OIBDA
1 2 15 4Q14 Adjusted OIBDA Adjusted OIBDA of $203 million was essentially flat YOY Excluding Corporate Transactions, Adjusted OIBDA would have been up 5% 2014 Full Year Adjusted OIBDA = $524 million - Excluding adverse impact of $30 million associated with the wholesaler transition which was a
Slide 16: 4Q14 Cash Flow Update
1 2 16 4Q14 Cash Flow Update $MM Free Cash Flow1 Highlights Cash Balance Walk $156 $100 4Q13 4Q14 4Q14 Free Cash Flow included: - Cash interest payments of $27 million Real estate cash proceeds of $131 million; other cash proceeds of $4 million As of 12/31/14, net leverage ratio of 1.7x - Targ
Slide 17: Outlook & Assumptions
OUTLOOK & ASSUMPTIONS Timelne. 7
Slide 18: Time Inc. Outlook for 2015
18 Time Inc. Outlook for 2015 $MM 2014 Actual Full Year 2015 Outlook Range Revenues – as reported (2.2%) (3%) to (6%) Revenues – ex. Corporate Transactions (5.3%) (1.5%) to (4.5%) Impact of 2014 wholesaler transition ($22) 70 bps Forecasted impact of stronger USD1 ------ (120 bps) Adjusted OIBDA2 $5
Slide 19: Q&A
Q&A Timelne.
Slide 20: Appendix
APPENDIX Timelne. 2
Slide 21: Schedule I: Reconciliation of Operating Income to Adjusted OIBDA
21 Schedule I TIME INC. RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA (Unaudited; in millions) ______________ (1) OIBDA is defined as Operating income (loss) less depreciation and amortization. (2) Pension settlement charges in connection with our domestic pension plan are included wit
Slide 22: Schedule II: Reconciliation of Net Income to Adjusted Net Income
22 Schedule II TIME INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (Unaudited; in millions) ______________ (1) Adjusted Net Income is defined as Net income adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; gains and l
Slide 23: Schedule III: Reconciliation of Diluted EPS to Adjusted Diluted EPS
23 Schedule III TIME INC. RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS (Unaudited) ______________ (1) Adjusted Diluted EPS is defined as Diluted EPS adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; gains and losses on operat
Slide 24: Schedule IV: Reconciliation of Cash from Operations to Free Cash Flow
24 Schedule IV TIME INC. RECONCILIATION OF CASH PROVIDED BY OPERATIONS TO FREE CASH FLOW (Unaudited; in millions) ______________ (1) Free Cash Flow is defined as Cash provided by (used in) operations, less Capital expenditures. (2) Free Cash Flow for the year ended December 31, 2014 includes a $50 m
Slide 25: Schedule V: Reconciliation to Adjusted OIBDA - 2015 Outlook
25 Schedule V TIME INC. RECONCILIATION OF OPERATING INCOME TO ADJUSTED OIBDA - 2015 OUTLOOK (Unaudited; in millions) _____________ (1) OIBDA is defined as Operating income (loss) less Depreciation and Amortization. (2) Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangib