NEW YORK--(BUSINESS WIRE)--The New York Times Company (NYSE: NYT) announced today fourth-quarter 2020 diluted earnings per share from continuing operations of $.06 compared with $.41 in the same period of 2019. Adjusted diluted earnings per share from continuing operations (defined below) was $.40 in the fourth quarter of 2020 compared with $.43 in the fourth quarter of 2019.

Operating profit increased to $80.5 million in the fourth quarter of 2020 from $78.0 million in the same period of 2019 and adjusted operating profit (defined below) increased to $97.7 million from $96.3 million in the prior year, as higher digital-only subscription revenues more than offset lower advertising and other revenues.

Meredith Kopit Levien, president and chief executive officer, The New York Times Company, said, “2020 was a seismic year for news. The need for quality, independent journalism was as acute as ever in my lifetime, and my colleagues across The Times rose to meet that need with the energy and rigor our mission demands.

“Our work, which was consumed at historic levels, led to a year of strong business results, including a record 2.3 million net new digital-only subscription additions, with 627,000 total net additions in the fourth quarter, 425,000 to our news product. At the end of 2020, The Times had 7.5 million total subscriptions across our digital and print products.

“In 2020, we reached two key milestones, both of which we expect to be enduring: digital revenue overtook print for the first time, and digital subscription revenue, long our fastest growing revenue stream, is also now our largest. Those two milestones, and our best year on record for subscriptions, mark the end of the first decade of The Times’s transformation into a digital-first, subscription-first company. They also mark the beginning of a new decade. The last ten years were about proving our strategy of journalism worth paying for; the next ten will be about scaling that idea. With a billion people reading digital news, and an expected 100 million willing to pay for it in English, it’s not hard to imagine that, over time, The Times’s subscriber base could be substantially larger than where we are today.”

Comparisons

Unless otherwise noted, all comparisons are for the fourth quarter of 2020 to the fourth quarter of 2019.

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, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit); and operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs). Refer to Reconciliation of Non-GAAP Information in the exhibits for a discussion of management’s reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.

The Company changed the expense captions on its Condensed Consolidated Statement of Operations effective for the first quarter of 2020. These changes were made in order to reflect how the Company manages its business and to communicate where the Company is investing resources and how this aligns with the Company’s strategy. The Company reclassified expenses for the prior period in order to present comparable financial results. Refer to Reconciliation of GAAP Information in the exhibits for more details.

Fourth-quarter 2020 results included the following special items:

• A $5 million gain ($3.1 million or $0.02 per share after tax and net of noncontrolling interest) reflecting our proportionate share of a distribution from the sale of assets by Madison Paper Industries (“Madison”), in which the Company has an investment through a subsidiary.
• $80.6 million in pension settlement charges ($58.9 million after tax or $0.35 per share) in connection with the transfer of certain pension benefit obligations to an insurer.

There were no special items in the fourth quarter of 2019.

Results from Continuing Operations

RevenuesTotal revenues for the fourth quarter of 2020 increased 0.2 percent to $509.4 million from $508.4 million in the fourth quarter of 2019. Subscription revenues increased 14.7 percent to $315.8 million, advertising revenues decreased 18.7 percent to $139.3 million and other revenues decreased 12.1 percent to $54.3 million.

Subscription revenues in the fourth quarter of 2020 rose due to growth in the number of subscriptions to the Company’s digital-only products, which include our news product, as well as our Games (previously Crossword), Cooking and audio products. Revenue from digital-only products increased 36.8 percent, to $167.0 million. Print subscription revenues decreased 2.9 percent to $148.8 million, largely due to lower retail newsstand revenue, while revenue from our domestic home delivery subscription products grew 2.2 percent.

The Company ended the fourth quarter of 2020 with approximately 7,523,000 subscriptions across its print and digital products. Paid digital-only subscriptions totaled approximately 6,690,000, a net increase of 627,000 subscriptions compared with the end of the third quarter of 2020 and a net increase of 2,295,000 subscriptions compared with the end of the fourth quarter of 2019. Of the 627,000 total net additions, 425,000 came from the Company’s digital news product, while 202,000 came from the Company’s Cooking, Games and audio products.

Fourth-quarter 2020 digital advertising revenue decreased 2.3 percent, while print advertising revenue decreased 37.9 percent. Digital advertising revenue was $90.1 million, or 64.7 percent of total Company advertising revenues, compared with $92.2 million, or 53.8 percent, in the fourth quarter of 2019. Digital advertising revenue decreased primarily as a result of lower creative services revenues, which were partially offset by higher direct-sold and open market programmatic advertising. Print advertising revenue decreased as the COVID-19 pandemic further accelerated secular trends, largely impacting the entertainment, media and luxury categories.

Other revenues decreased 12.1 percent in the fourth quarter, primarily as a result of fewer episodes of our television series as well as lower revenues from live events and commercial printing. These declines were partially offset by higher Wirecutter affiliate referral revenues.

Operating Costs

Total operating costs decreased 0.4 percent in the fourth quarter of 2020 to $428.8 million compared with $430.4 million in the fourth quarter of 2019, while adjusted operating costs decreased 0.1 percent to $411.7 million from $412.0 million in the fourth quarter of 2019, in each case as a result of the factors discussed below.

Cost of revenue decreased 3.4 percent to $250.5 million compared with $259.4 million in the fourth quarter of 2019, largely due to lower print production and distribution and advertising servicing costs, which were partially offset by higher digital content delivery, subscriber servicing and journalism costs.

Sales and marketing costs decreased 8.9 percent to $65.0 million compared with $71.3 million in the fourth quarter of 2019, due primarily to lower advertising sales costs. Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, decreased 4.7 percent to $40.4 million in the fourth quarter of 2020 from $42.4 million in 2019.

Product development costs increased 23.2 percent to $36.8 million compared with $29.9 million in the fourth quarter of 2019, largely due to growth in the number of digital product development employees in connection with digital subscription strategic initiatives.

General and administrative costs increased 11.0 percent to $60.8 million compared with $54.7 million in the fourth quarter of 2019, largely due to growth in the number of employees, stock price appreciation on stock-based awards and higher consulting costs.

Other Data

Interest Income/(Expense) and Other, netInterest income/(expense) and other, net increased in the fourth quarter of 2020 to $3.2 million income compared with an expense of $0.2 million in the fourth quarter of 2019, primarily because the Company did not have any outstanding debt in 2020.

Income TaxesThe Company had an income tax benefit of $4.5 million in the fourth quarter of 2020 compared with an income tax expense of $7.7 million in the fourth quarter of 2019. The decrease in tax expense was primarily due to a tax benefit from pension settlement charges in the fourth quarter of 2020. Excluding the tax benefit generated from the pension settlement charge, tax expense in the fourth quarter of 2020 exceeded tax expense in the fourth quarter of 2019 largely due to lower benefits in the fourth quarter of 2020 from the reduced tax rate on foreign derived income and from federal tax credits for increasing research activities as compared to the fourth quarter of 2019.

LiquidityAs of December 27, 2020, the Company had cash and marketable securities of $882.0 million, an increase of $198.1 million from $683.9 million as of December 29, 2019. The increase is primarily due to the composition of revenues in 2020 with a larger percentage of revenues coming from digital subscriptions that pay cash upfront versus advertising revenues that typically result in a receivable balance.

The Company has a $250.0 million revolving line of credit through 2024. As of December 27, 2020, there were no outstanding borrowings under the credit facility, and the Company did not have other outstanding debt.

Dividends

The Company’s Board of Directors declared a $.07 dividend per share on the Company’s Class A and Class B common stock, an increase of $.01 from the previous quarter. The dividend is payable on April 22, 2021, to shareholders of record as of the close of business on April 7, 2021.

Pension ObligationsAs part of the Company’s continued effort to reduce the overall size and volatility of its pension plan obligations, and the associated administrative costs, the Company has transferred to an insurer the pension benefit obligations and annuity administration for certain pension plan participants. This transfer of obligations allowed the Company to reduce its qualified pension plan obligations by approximately $235 million. As a result of these arrangements, the Company recorded pension settlement charges of $80.6 million before tax in the fourth quarter of 2020.

As of December 27, 2020, the overfunded balance of our qualified pension plans was $36.2 million, an increase of $47.8 million from an underfunded balance of $11.6 million as of December 29, 2019. The increase is primarily a result of the pension assets performance partially offset by the impact of changes in the discount rate.

Capital ExpendituresCapital expenditures totaled approximately $5 million in the fourth quarter of 2020 compared with approximately $16 million in the fourth quarter of 2019. Prior year expenditures were primarily driven by the build out of additional office space in Long Island City, NY.

Outlook

Total subscription revenues in the first quarter of 2021 are expected to increase approximately 15 percent compared with the first quarter of 2020, with digital-only subscription revenue expected to increase approximately 35 percent to 40 percent.

Total advertising revenues in the first quarter of 2021 are expected to decline in the high-teens compared with the first quarter of 2020, with digital advertising revenue expected to increase in the low- to mid-single digits.

Other revenues in the first quarter of 2021 are expected to decrease approximately 10 percent to 15 percent compared with the first quarter of 2020.

Operating costs and adjusted operating costs in the first quarter of 2021 are expected to increase in the mid-single digits compared with the first quarter of 2020 as the Company continues to invest in the drivers of digital subscription growth.

The Company expects the following on a pre-tax basis in 2021:

• Depreciation and amortization: approximately $60 million,
• Interest income and other, net: $6 million to $8 million, and
• Capital expenditures: approximately $50 million.

Our outlook is based on our current knowledge and assumptions and could be impacted by the evolving COVID-19 pandemic.

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, NYTimes.com and related properties. It is known globally for excellence in its journalism, and innovation in its print and digital storytelling. Follow news about the company at @NYTimesPR.

This press release can be downloaded from www.nytco.com