Good day, and thank you for standing by. Welcome to the Meredith fiscal 2021 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mike Lovell, Meredith’s Investor Relations.

Good morning, everyone, and thanks for joining the call. I hope you’ve had the opportunity to access the press release and presentation posted to Meredith’s website. We’ll use the presentation to structure our remarks this morning. We will begin with comments from Chairman and Chief Executive Officer, Tom Harty, followed by Chief Financial Officer, Jason Frierott. Certain financial measures that we are discussing on this call are expressed on a non-GAAP basis and have been adjusted to exclude the impact of special items. Reconciliations of these non-GAAP measures are included in our slide presentation which is available in the Investor Relations section of Meredith.com. I also want to remind you that we will be discussing forward-looking information today and of our Safe Harbor disclaimer on Slide 2. Also as noted on Slide 3, we will be filing relevant materials with the Securities and Exchange Commission, including a proxy statement in connection with the announced sale of our Local Media Group to Gray Television. We encourage you to read these materials because they will contain important information about the company and proposed transaction. Finally, please note all figures refer to fiscal 2021 fourth quarter or full year and the comparable prior year period unless otherwise noted. And now, I’ll turn the call over to Tom, who will begin our prepared remarks starting on Slide 4.

Thank you, Mike and good morning. Since last reporting quarterly results on April 29, we are pleased to deliver strong progress on the strategy we’ve described in recent calls: net debt reduction, growth in digital advertising, and advancement of our consumer-focused capabilities, including performance marketing and paid products. First, as it relates to net debt reduction, we announced the sale of our Local Media Group to Gray Television in May and accepted an offer of $2.825 billion in June. We believe that the sale will unlock meaningful shareholder value and accelerates all of our top financial priorities, including materially reducing our debt. This will free up capital to invest in future high potential digital opportunities while also enabling capital returns to shareholders. Second, as it relates to advancing our digital advertising and consumer focus capabilities, digital advertising revenues were a fourth quarter record and surpassed magazine advertising for the third consecutive quarter. On the consumer side, licensing and digital consumer revenues continued to deliver record results, and the newsstand channel grew as well. In total, our business remains well balanced with half our revenues based on advertising and half from consumers. With that introduction, let’s dive deeper into the fourth quarter highlights, starting with digital advertising. Our team delivered strong performance, driven in part by strong pricing, partially offset by slight declines in traffic. We’re seeing market and consumer trends beginning to normalize, particularly compared to the year-ago period, which was heavily impacted by the onset of the COVID-19 pandemic. Our licensing and digital consumer-driven revenues also delivered double-digit growth and record fourth quarter results. Driving our digital performance is our trusted brands and large audience reach to 150 million consumers who visit our sites each month, our strong commercial partnerships, and our proprietary technology platform. As we’ve discussed on…

Thanks Tom. Starting on Slide 6, looking at fourth quarter ’21 consolidated performance, revenues were $718 million, up 17%. Advertising-related revenues were $338 million, up 30%. As Tom said, digital advertising was our strongest growth platform, followed by non-political spot advertising. While magazine advertising revenues declined 6%, that performance represented a sequential improvement compared to the third quarter. Consumer-related revenues were $355 million, up 7%. Growth was driven by newsstand, licensing, local media retransmission revenues, and digital consumer which includes performance marketing, ecommerce, and lead generation. These gains were partially offset by declines in affinity marketing revenues. Other revenue was $25 million, up 24%, which was primarily the result of gains related to custom polishing relationships partially offset by project-related declines. On a consolidated level, adjusted EBITDA grew 55% to $124 million. Stronger adjusted EBITDA performance reflects growing digital, non-political advertising and consumer revenues, partially offset by lower magazine advertising revenues. Fiscal ’21 fourth quarter free cash flow was $51 million. Our prior year period comparison was a tough one because collections significantly outpaced revenue in the COVID period. That said, our current quarter performance represents strong cash conversion driven by EBITDA improvement. Looking to full year fiscal ’21 consolidated performance, advertising-related revenues grew 9% driven by strong digital and political demand partially offset by magazine advertising. Adjusting for magazine portfolio changes announced early last year, total advertising revenues would have been up 11%. Consumer-related revenues grew 2% as retransmission, licensing and digital consumer driven revenues increased. This growth was partially offset by magazine subscription results that were impacted by portfolio changes and our ongoing strategy to shift from agent sources towards more profitable direct-to-publisher subscribers. Adjusting for magazine portfolio changes announced over the last year, total consumer revenues would have been up 3%. Other revenue was $81 million, down…

Thanks Jason. Our consumers today continue to focus on celebrity and entertainment news, house and home, food, style, health, fitness and parenting, as well as news and information about their local communities. These fundamental lifestyle categories are Meredith’s cornerstone and are even more relevant in today’s market. In closing, I want to leave you with four key thoughts. First, our digital advertising and consumer related activities continue to deliver revenue growth driven by our trusted and powerful brands focused on women, proprietary technology platform, strong commercial partnerships, and our large audience reach. These assets are unique in the marketplace and form the basis for our differentiation. Second, consumer demand for our magazines in the fourth quarter was stable even as advertising performance is uncertain. In addition to showcasing our beautiful photography and long form storytelling, the magazine platform plays an important consumer awareness and marketing role for our powerful brands, including People, All Recipes, Better Homes and Gardens, and Southern Living. Consider our presence in the home with 36 million active subscriptions and our position at retail with 2 million newsstand pockets nationwide. While advertising demand is variable and uncertain, our connection to the individual consumer remains stable and durable. Third, we are on track to close the Local Media Group transaction in the fourth quarter of calendar 2021, as expected. We believe the sale will accelerate all of our top financial priorities, including materially reducing debt and freeing capital to invest in future high potential digital opportunities while also enabling capital returns to shareholders. Fourth, from an expense standpoint, we’ve seen evidence of inflation over the last six months consistent with others in our industry and across the broader economy, particularly paper, postage and employee-related expenses. Additionally, we anticipate incremental spending on strategic investments focus on fueling continued digital…

[Operator instructions] Your first question comes from the line of John Janedis with Wolfe Research.

Thanks. Good morning, Tom.

Good morning.

You talked about the funnel, so can you give more color on the magazine business? It’s going up against easy, or easier comps, and it looks like you’re expecting some weakness still here, so what are you hearing from advertisers in key verticals? Is there any line of sight for that advertising bucket to improve to flattish or even possibly grow at some point? Or does the growth really come from the mix shift to digital? And then maybe big picture, when you talk about M&A and digital opportunities, can you give us more color on the types of things you find interesting and do they need to be accretive in the short-term?

Yes. Great, John. Good morning. What we’re - obviously, there’s always a lot of things that go into performance, but what we’re hearing from clients on the print side, print is a great format for branding and longer-term brand building. And with the uncertainty of the pandemic and looking for quicker results, there’s been a shift, a significant shift to digital, which is more bottom of the funnel, transactional in nature, and that’s why you’re seeing a lot of growth in our performance marketing and it’s happening across the industry. So we’re cautiously optimistic that print is going to be recovering. We are seeing in certain categories, in our travel, in our luxury, we’re seeing signs of growth year-over-year coming up, but there are other areas where we hear – we still hear supply chain issues, commodity price increases from some of our bigger packaged good clients. So it is a little slower than we expected on the recovery, but we do expect a print recovery, because we’re down so far. But the digital performance has been outstanding. We continue to believe and are bullish on our portfolio of digital brands and the growth that we see there. I think what we’re looking is, on the digital side, I’m going to ask Catherine to make some comments. When we look at acquisitions and growth, we are really focused - laser-focused on the consumer side of our digital business and looking to grow consumer revenue in our digital space. So I think that we’re kind of focused on both internally and looking for acquisitions in that area. Catherine, you might make some comments on that.

Hi. Yes, Tom said it, so a balance of our revenue streams on the digital side of the business, so that would be anything that has consumer revenue associated with it, that could be subscription-based, it could be performance marketing-based, so in that area. Video, we’re growing our video nicely right now, but we could accelerate that through acquisitions in that area. And the third area may be around different categories or audiences, so those are really the three areas that we look at. And from that perspective, anything that we would add that’s around audiences would fit right into our strategic flywheel.

Great. All right. Thank you very much.

Thanks, John.

Your next question comes from the line of Dan Kurnos with The Benchmark Company.

Great. Thanks. Good morning. Let me press a little bit on the digital side here. Your September guide actually relative to the backdrop and what we’ve heard from other digital publishers is actually pretty impressive. A lot of other guys, including one of our favorites that we like to talk to you about, guided down sequentially from the June to the September quarter, given obviously increased mobility and a change in some of the trends. So can you just talk about, obviously, People had a tremendous quarter, continues to be strong. Can you just talk about what you’re seeing and how we should think about digital relative to some of the COVID tailwinds starting to come out? Do you feel comfortable that this is a good base, even as we see increased mobility from here?

Yes, I’m going to ask Catherine to dig a little deeper. But, Dan, to your point, I think, obviously, our fourth quarter performance in digital, 80% growth was off a lower base related to COVID. But when you start looking at our Q1, we were up last year. I think we were in the high 20s last year and now we’re predicting again, so strong year-over-year growth. Catherine, you want to make some comments?

Yes, it’s a combination of our brands and a flight to quality from that perspective, pricing. So we are still seeing significant increase in pricing year-over-year across the board between all of our products. And then of course our data and platform is really driving a lot of significant scale and results right now. So we’re able with our diverse ad product portfolio to deliver a variety of different solutions for advertisers.

And while we look at our guide on advertising, while print is a little softer, the strength of digital, we will be up in overall advertising year-over-year.

Great. And then maybe just one for Jason, or Tom if you want to pitch in too, just on the margin loss here, some of the cost inflation commentary, obviously, some of the COVID costs coming back in as well. You had a really good June quarter, 18% in NMG. I want to focus on NMG, obviously. Directionally, how do we think about kind of margins over the balance of this year relative to kind of how you finished off 2021, understanding obviously that there is going to be seasonality in there, too?

Yes. I think, Dan, as you said, there’s some lumpiness in there in terms of some of the cost comments that Tom made. I’d say that we have investments in kind of strategic digital investments, it’ll probably most likely sit there in terms of roughly half the cost. In terms of print inflation, obviously, the U.S. Postal Service, inflation rates, those types of things, but we’re working to kind of offset that, so I wouldn’t expect that to have a material change in terms of rate. And then broadly across everybody, this past year, we had specific cost actions that we took that were temporary, that both were in the magazine business and the digital business, so I’d say that would kind of hit both businesses. But again, with top line growth in the advertising side, we shouldn’t be able to kind of hold that up. So we’re not giving guidance in terms of margin rates on the go-forward, but those would be the comments that I’d share.

Yes, I think, Dan, as you look at the -- we’re excited to come out when we report our first quarter with our new segments. And to Jason’s commentary in the script, around our - the digital side of the business now approximately representing two-thirds of the National Media Group EBITDA for the prior year, you can start thinking about the margins related to that. So you’re kind of thinking in the range of television margins related to our new digital segment as you go forward.

Awesome. Thanks for all the color, guys, this quarter. Way to finish the year strong.

Thanks.

[Operator Instructions] Your next question comes from the line of Jason Bazinet with Citi.

Thanks, good morning. I just have one question. At least relative to our estimates, the ads were about in line but it was really the consumer side on the national segment that really did very well. Do you think that stimulus played a role in the quarterly strength in terms of some of that healthy licensing and newsstand, and some of the other things that you highlighted, that will be difficult to replicate, or is your sense that stimulus was really a non-event?

You know, I’m sure stimulus obviously is helping the broader economy, but I think this has been a long-term strategy of ours to build up specifically our performance marketing and ecommerce activities on our digital side of the business. I think our comments kind of speak for themselves when you start thinking that we generated a billion dollars in retail sales from our activity associated with that, and now getting a piece of that action. We’re bullish on that side of the house, and then even on the magazine side, we’ve talked about in the prior year, the strength of the consumer demand for magazines. In our premium publishing area for the year, we were up 10% in revenue in our premium publishing, what we sell on the newsstand and sell close to 20 million copies, up a million copies. That was strong performance in the fourth quarter. Then when you start thinking about we’re looking to get more direct-to-publisher. We’ve been investing--you know, lifetime value of subscriptions on the magazine side, the highest value is our direct-to-publisher, where we have the direct relationship. When we look at our fourth quarter, direct-to-publisher renewals were up about 5%, and then direct-to-publisher new was up about 47%, so that really bodes well for magazine subscriptions longer term. The issues we’ve been having is related to advertising, but the consumer demand both on our digital side and on our magazine side are really kind of outstanding.

Okay, that’s great. Thank you.

Your next question comes from the line of Kyle Evans with Stephens.

Hi, thanks. Congrats on a very strong digital ad quarter. I think we’re all sitting here trying to figure out where it’s going to settle out with the 80% quarter going to a 20% guide, and Catherine, I know I’m not going to be able to trick you into guiding us, but maybe if you could just talk at a high level about where you think sessions will go over the next 12 months, where pricing will go over the next 12 months, where ad mix will go over the next 12 months, and then I’ve got a follow-up question. Thanks.

Sure. I think sessions will hover around a likelihood in that flat to slightly up range - could be slightly down a little, but I sort of focus on the flat because we had such a strong quarter or year last year. Pricing is up significantly for us, and that’s across the board in all of our ad businesses, so that goes from our direct business to our premium programmatic business to our open programmatic business, and that is again because of a lot of the investments we made over the years in data and our proprietary platform that’s able to deliver real specific audiences against real context with trusted content. I think there’s pricing opportunities. I also think our performance marketing business has got a lot of growth left in it. We’re making investments this year that return quite quickly for us, so I’d say those two big areas are the ones that I would look at. Finally, it’s our direct relationships with our clients that allow for a more multi-year, multi-million dollar, really integrated partnerships with large, large clients, from the ones that Tom has mentioned on the phone today to others that are utilizing these new integrated products that we have. Hope that’s helpful.

It is, thank you. I guess you’re not going to get a whole lot of TV questions going forward, but I think I’ll sneak one more in before it goes away. Just a quick update on your retrans sub count, please. Thank you.

Great. Patrick?

Yes, we’re seeing the sub counts continue. We lose more cable and satellite and pick up more OTT on a regular basis, and I think Jason, for the year, what were we at for subs - flat to down one?

Yes, I think it was down one, is the right ballpark.

Yes, and as a reminder, on our cadence, we have two major deals coming up at the end of the year.

While I’ve got you, do you have an OTT contribution for overall return subs?

I don’t have that breakout in front of me, but we can get that to you in the follow-ups.

Great, thank you.

Sure.

There are no further questions at this time.

Great. Again, I want to thank everyone for your time today and your continued support. We look forward to talking to everyone again soon next quarter. Thank you.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.