With 12 days of LIN and barely a full year of Young numbers included in 4Q and year-end results, Media General’s been tweaking historical numbers in an effort to give analysts an apples-to-apples comparison and enable them to build forecast models. For some analysts, including Wells Fargo’s Marci Ryvicker, the numbers aren’t adding up.
New Media General got analysts’ attention with this morning’s fourth-quarter financial results conference call, but probably not in the way it hoped.
With 12 days of LIN and barely a full year of Young included in results, Media General’s been tweaking historical numbers in an effort to give analysts an apples-to-apples comparison and enable them to build forecast models.
For Marci Ryvicker, Wells Fargo analyst, the numbers aren’t adding up.
After expressing her concerns to Vincent Sadusky, Media General CEO-president, and James Woodward, CFO, during the call, Ryvicker put out a highlights note that detailed the issues.
“There was clearly frustration today as the Street still is uncertain about the financial profile of this company as we do not have reliable historical pro forma figures from which to forecast off of,” Ryvicker wrote. “From a high level, it does appear that the Q1 guide is more a function of the wrong Q1 2014 [pro-forma] revenue figures than anything truly disastrous going on in the underlying business.”
Ryvicker noted that she was expecting $324 million in first-quarter 2015 net revenue versus the company’s guidance of $295 million to $301 million.
During the call, the company noted that its comparable first-quarter 2014 revenue number was actually $292 million in contrast to the $310 million Ryvicker had used for her analysis. That skewed the rest of Media General’s reported results for 2014 and disrupted the models Ryvicker and others had developed.
She wasn’t alone in expressing her frustration.
David Cohen of Midwood Capital used the conference call format not to ask a question but to offer advice.
“Given the ambiguity around what this company looks like and the inability for very, very experienced and knowledgeable analysts to hone in on the financial profile of the company near term, you need to take a very hard look at how you communicate what the profile of the company really is,” he said.
“There’s some potential for very compelling free cash flow here,” Cohen said. “But it
really can’t be business as usual. You need to set some guideposts for investors to understand the cash flow generating power of this company.”
Media General is set to conduct an “investor day” on March 12.
“We are expecting to have a much better feel for what this company looks like then,” Ryvicker wrote in her notes from the call. “While it certainly does not feel very good right now, we don’t think this company is broken — we just need more communication and better historical numbers.”
Confusion surrounding historical results, plus the company’s projections for low single digit core ad revenue growth in the first quarter, had a palpable impact on share prices.
Media General shares were trading down a little more than 5% around midday, rebounding slightly after being down close to 6%.