NEW YORK--(BUSINESS WIRE)--The New York Times Company (NYSE: NYT) announced today a second-quarter 2016 diluted loss per share from continuing operations of $.00 compared with diluted earnings per share of $.10 in the same period of 2015. Adjusted diluted earnings per share from continuing operations (defined below) were $.11 in the second quarter of 2016 compared with $.13 in the second quarter of 2015.

Operating profit decreased to $9.1 million in the second quarter of 2016 from $38.1 million in the same period of 2015. The decline was driven by costs incurred in connection with the streamlining of the Company’s international print operations, a charge for a partial withdrawal obligation under a multiemployer pension plan and lower advertising revenues. Adjusted operating profit (defined below) was $54.5 million in the second quarter of 2016 compared with $64.4 million in the second quarter of 2015. The decline was driven by lower advertising revenues, which were partially offset by higher circulation revenues.

“We once again saw a robust quarter in terms of digital subscriber growth, with 51,000 net paid digital-only subscriptions to our news products added in Q2 and growth of 22 percent year-over-year. Much of our success in building our digital pay model is the result of a renewed effort to clearly communicate the value of Times journalism and our products through mission-related, native messaging to an expanding number of highly engaged readers,” said Mark Thompson, president and chief executive officer, The New York Times Company.

“Advertising was tougher in the quarter, particularly on the print side. In digital, we saw very strong growth in mobile, video and virtual reality, branded content and programmatic advertising. These were not enough to offset declines in traditional web display in Q2, which led to an overall decline in digital advertising. However, we expect that situation to improve in the second half of the year; in fact, we are already seeing a marked turnaround in July. We expect to deliver strong revenue growth from both digital advertising and our digital consumer business in Q3.

“And finally, in the quarter, we have undertaken a variety of steps to keep our cost base in line and will continue to maintain a mindful eye in this respect.”

Comparisons
Unless otherwise noted, all comparisons are for the second quarter of 2016 to the second quarter of 2015.

This release presents certain non-GAAP financial measures, including diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations); operating profit before depreciation, amortization, severance, non-operating retirement costs and special items (or adjusted operating profit); and operating costs before depreciation, amortization, severance and non-operating retirement costs (or adjusted operating costs). The exhibits include a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures, as well as an explanation of non-operating retirement costs.

Second-quarter 2016 results included the following special items:

• An $11.9 million ($7.1 million after tax or $.04 per share) charge in connection with the streamlining of the Company’s international print operations (primarily consisting of severance costs).
• An $11.7 million ($7.0 million after tax or $.04 per share) charge for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision.

There were no special items in the second quarter of 2015.

The Company had severance costs (in addition to those associated with the streamlining of the Company’s international print operations) of $1.7 million ($1.0 million after tax or $.01 per share) and $1.9 million ($1.1 million after tax or $.01 per share) in the second quarters of 2016 and 2015, respectively.

Results from Continuing Operations

Revenues
Total revenues for the second quarter of 2016 decreased 2.7 percent to $372.6 million from $382.9 million in the second quarter of 2015. Circulation revenues increased 3.0 percent, while advertising revenues declined 11.7 percent and other revenues increased 4.0 percent.

Circulation revenues rose as revenues from the Company’s digital subscription initiatives and the 2016 increase in home-delivery prices at The New York Times newspaper more than offset a decline in print copies sold. Circulation revenue from the Company’s digital-only subscriptions (which includes news product and Crossword product subscriptions) increased 15.3 percent compared with the second quarter of 2015, to $56.4 million. Circulation revenue from digital-only subscriptions to our news products increased 14.0 percent to $54.1 million.

Paid digital-only subscriptions totaled approximately 1,424,000 as of the end of the second quarter of 2016, a net increase of 67,000 subscriptions compared to the end of the first quarter of 2016 and a 25 percent increase compared to the end of the second quarter of 2015. Of the 67,000 net additions, 51,000 net additions came from the Company’s digital news products, while the remainder came from the Company’s Crossword product.

Second-quarter print advertising revenue decreased 14.1 percent while digital advertising revenue decreased 6.8 percent. Digital advertising revenue was $45.0 million, or 34.3 percent of total Company advertising revenues, compared with $48.3 million, or 32.5 percent, in the second quarter of 2015. The decrease in print advertising revenues resulted primarily from a decline in display advertising. The decrease in digital advertising revenues primarily reflected a decrease in traditional website display advertising, partially offset by increases in revenue from our mobile platform, our programmatic buying channels and branded content.

Operating Costs
Operating costs decreased in the second quarter of 2016 to $339.9 million compared with $344.8 million in the second quarter of 2015, largely due to lower non-operating retirement costs. Adjusted operating costs were relatively flat at $318.2 million as savings in print production and distribution were offset by higher costs in advertising and technology.

Non-operating retirement costs, which exclude special items, decreased to $5.0 million from $8.7 million in the second quarter, driven by a change in the methodology of calculating the discount rate applied to retirement costs. The exhibits in this release include the detail of non-operating retirement costs.

Raw materials costs decreased to $17.0 million from $18.3 million in the second quarter largely due to volume declines.

Other Data

Interest Expense, net
Interest expense, net decreased to $9.1 million in the second quarter of 2016 from $9.8 million in the second quarter of 2015 due to higher yielding investment income in the second quarter.

Income Taxes
The Company had income tax expense of $0.1 million in the second quarter of 2016 and $11.7 million in the second quarter of 2015. The decrease in income tax expense is due to lower income from continuing operations in the second quarter of 2016.

Liquidity
As of June 26, 2016, the Company had cash and marketable securities of approximately $915.4 million (excluding restricted cash of approximately $28.2 million, the majority of which is set aside to collateralize certain workers’ compensation obligations). Total debt and capital lease obligations were approximately $433.7 million.

Capital Expenditures
Capital expenditures totaled approximately $5 million in the second quarter of 2016.

Outlook
Total circulation revenues in the third quarter of 2016 are expected to increase at a rate similar to that of the second quarter of 2016.

Total advertising revenues in the third quarter of 2016 are expected to decrease in the mid-single digits compared with the third quarter of 2015.

Operating costs are expected to increase in the mid-single digits in the third quarter of 2016 compared with the third quarter of 2015, while adjusted operating costs are expected to increase in the low to mid-single digits. Our outlook on adjusted operating costs excludes severance and non-operating retirement costs, and in the third quarter of 2016, we expect severance costs to increase compared to the third quarter of 2015, partially offset by a decrease in non-operating retirement costs.

The Company expects the following on a pre-tax basis in 2016:

• Depreciation and amortization: $60 million to $65 million,
• Interest expense, net: $35 million to $40 million, and
• Capital expenditures: $35 million to $40 million.

The New York Times Company is a global media organization dedicated to enhancing society by creating, collecting and distributing high-quality news and information. The Company includes The New York Times, International New York Times,NYTimes.com, international.nytimes.com and related properties. It is known globally for excellence in its journalism, and innovation in its print and digital storytelling and its business model. Follow news about the company at @NYTimesComm or investor news at @NYT_IR.