Gannett Co Inc (GCI) 2017 Q3 法說會逐字稿

Good morning, thank you for standing by. At this time, we'd would like to welcome everyone to the New Media Third Quarter Earnings Conference Call. (Operator Instructions)

I'd now like to turn today's call over to Ashley Higgins, Investor Relations for New Media. Ashley, I hand the floor to you.

Great. Thank you, Holly. Good morning, everyone. I'd like to welcome you to New Media's Third Quarter 2017 Earnings Call. Joining us today are Mike Reed, New Media's CEO and President; Greg Freiberg, our CFO; Kirk Davis, COO of New Media; and Peter Newton, Chief Revenue Officer of GateHouse Media.

I would like to call your attention to the earnings supplement that was posted to New Media's website this morning. If you have not already done so, I would suggest that you download it now.

Before we begin, please let me remind you that statements made today are not historical facts and may be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. We encourage you to read the forward-looking statements disclaimer in the presentation, as well as the risk factors described in New Media's filings made with the SEC.

In addition, we will be discussing some non-GAAP financial measures during the call today, and the reconciliations of those measures to the most directly comparable GAAP measures can be found in the earnings supplement.

Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in New Media. The webcast and audio cast is copyrighted material of New Media and may not be duplicated, reproduced or rebroadcasted without our consent.

With that, I'd like to turn the call over to Mike.

Thanks, Ashley. Good morning, everyone, and thanks for joining our call this morning. I'm going to jump right into it. And if you have downloaded the presentation, let's flip to Slide 2.

New Media is a company that provides comprehensive locally-focused content to consumers and premier marketing and technology solutions to small and medium-sized businesses.

These are our B2C and B2B product offerings. We have a particular focus on operating in small to midsized communities across the country. Our content is award-winning local journalism distributed through our print and digital product portfolio, and we reach over 21 million consumers each week.

We leverage our long-standing strong local media assets and our market reach to provide product and service solutions to local businesses to help them grow. Most of our newspapers have been serving their respective communities for more than 100 years, in fact, many of them for almost 200 years, and they are the other dominant and trusted source of local news. And as a byproduct to that, we have become a trusted local business partner to small businesses.

The numbers reflected here on Slide 2 are as of the end of the quarter, therefore they do not include our recently closed Morris acquisition. That was a large acquisition for our company and will have a big uplift on audience and customer accounts displayed on this slide.

On the B2C side, our footprint is focused on small to midsized markets because we believe in the value our unique noncommoditized content brings to consumers. The content we create provides comprehensive hyperlocal news and information that our consumers value and desire, and that drives sustainable long-term revenues through our subscription fees.

We have over 1.4 million paid print subscribers to our daily newspapers, and we attract 39 million unique visitors to our website each month. Again, these audience numbers do not reflect the Morris acquisition.

We continue to leverage technology to find efficient opportunities to deliver our content through multiple platforms that meet the changing needs and demands of our consumers.

Our B2B business leverages our strong local media brands and in-market sales force to deliver products and services that help local businesses grow. Small- and medium-sized businesses, or SMBs, prefer to partner with other local businesses, which they can meet with face-to-face, developing a strong, trusted relationship. Our decades of operation in each of our markets positions us to be that strong local business partner. This portion of our business, particularly UpCurve, is growing rapidly with recurring sustainable revenue streams. We continue to be very excited about our opportunity with UpCurve. The SMB services space is massive, and we have over $5 million SMBs in our markets alone, making this a huge opportunity.

As mentioned, we are able to leverage our in-market sales force, which has maintained relationships with local businesses for years. And we bring these local businesses new products and services directly tailored to their needs and allowing them to better utilize technology. We believe this in-market relationship is one of the largest differentiators for New Media when thinking about growing our SMB services company.

And our SMB services company is fundamental or a key to our path -- on our path to organic growth and reinventing the newspaper business model. The company's scale allows us to offer our customers a national top-quality product offering, brought to them by a team who lives and works alongside them in that community, and that's important.

Let's flip to Slide 3 and discuss some of the highlights specifically from the third quarter. And I'll start my remarks by saying that we weren't satisfied with our financial performance in the quarter. The numbers weren't bad, they were -- in fact, they were okay. But we did face some increased challenges in the traditional business, and we were also impacted by the horrific hurricanes that battered both Florida and Texas. Despite the near-term challenges in the quarter, we did execute on many exciting things in the quarter, and that continues to give us great optimism about Q4 and our long-term future.

In getting into some of the specifics of the quarter, we reported total revenues this morning of $317.2 million, up 3.4% to prior year on a reported basis and down 6.4% to prior year on an organic same-store basis. That organic performance slipped a bit from the second quarter, but it's not a reflection of what we're seeing in the business and not a reflection of what we expect going forward.

The impact in the quarter was mainly driven by 2

things, the impact of the hurricanes definitely had a slightly worsening impact on our trend, and then we saw some pressure on the traditional business mid-quarter. In fact, August was our weakest month of the quarter, but we rebounded in September. And again, we don't view the slippage from Q2 to Q3 as a reflection of what you should expect going forward, we view it as more of an anomaly related to the softening we experienced a little bit in August that bounced back in September, and then, of course, the hurricane impact we saw in September.

We were excited to see continued strengthening in our digital revenue during the quarter, and that's, obviously, very important. That strengthened to growth of 11.1% over prior year, an improvement from 9% growth in the category in the second quarter. This also helped to move our stable and growing revenue categories as a percentage of total revenues to 55% over the LTM period. That's up from 52% for the full year of 2016.

UpCurve revenue grew in the quarter to $17.9 million, up 22% and that brings out UpCurve's trailing 12-month revenue to $66.3 million, up about 44% over the trailing 12-month similar period. In LTM, our UpCurve's revenue is now 5.2% of our total revenue.

While the ThriveHive business was affected by the seasonal slowdown of the summer for advertising campaigns, both our Software as a Service guided marketing platform and our UpCurve cloud products saw strengthening performance, and we were very encouraged by that. Importantly, the UpCurve cloud business saw an increase in the amount of recurring revenue as well as significant sequential growth in revenue. And our guided marketing platform is also on track to more than double its customers this year from 2016, to more than 1,200.

Although both of these businesses are smaller portions of total UpCurve revenue today, they are becoming more substantial, and we are very excited about their growth trends and the ability to create steady recurring revenues streams for the business over the long term with low churn. And I'll talk more about this -- these new developing businesses in a few minutes.

New Media was very active in the third quarter and subsequent weeks of the fourth quarter with acquisitions. We closed our previously announced deal for Calkins Media for $17.5 million, and we closed a small acquisition of a business publication in South Carolina that folds into our BridgeTower Media B2B business publications division. These acquisitions were made within our stated range of 3.5x to 4.5x the sellers' EBITDA.

Our largest acquisition for the year, the Morris Publishing Group, was acquired for $120 million, and we announced that in the third quarter and closed it on October 2. We're very excited to bring those newspapers into our business, and I'll discuss a little bit more on that transaction in a few minutes.

We closed on an amendment to our credit facility in the quarter that extended our term loan through July of 2022, and we upsized it by $20 million to $363 million. We also increased the availability of -- under the accordion in that credit facility to $80 million.

We closed the quarter with roughly $200 million in liquidity. However, we subsequently used $120 million of that to close the Morris transaction. Pro forma for that, we have roughly $80 million of deployable capital as we enter into the fourth quarter, plus $80 million available under our accordion.

Given the substantial free cash flow accretion we expect from the Calkins and Morris deals, we will now generate much greater free cash flow to put to work on highly accretive and attractive deals over the next 12 months.

Further, this gives us even greater confidence for the dividend, and we were very pleased to announce this morning that the board approved nearly 6% increase in the dividend to $0.37 for the quarter. This marks the fourth consecutive year since we went public that we have been able to raise the dividend. In fact, the dividend is now 37% higher than it was when originally put in place back in 2014.

Despite not being completely satisfied with our financial results, this was a very productive quarter for the company on many fronts, and we are positioned for a strong fourth quarter.

I want to turn to Slide 4 now and briefly review our investment thesis, especially for those of you that might be new to the story. At a summary level, there are 3 primary factors to the investment thesis: one, our business generates strong and consistent cash flows; two, we are committed to investing in growth; and three, we have a strong and proven commitment to returning capital to shareholders.

Let's delve into each of those. Our portfolio consists of strong brands with long, established track records in the communities, with most of our newspapers have been published from -- having been published for more than 100 years.

We have healthy EBITDA margins of over 12%, and that is net of the investments we are making into organic growth. We also convert over 74% of our EBITDA into free cash flow.

We are not a significant cash taxpayer, and have over $200 million of NOLs that could shield our future income for the next several years. And our CapEx requirements are minimal at only about 1% of revenue per year.

New Media is committed to growing our business, both organically and inorganically. We have invested significantly in expanding our B2B offerings, primarily through UpCurve, which has helped us to diversify our revenue streams away from traditional print advertising, where we are experiencing secular declines. We also supplement this organic investment growth by completing highly accretive acquisitions within the fragmented and out-of-favor newspaper sector. Not only do these acquisitions help to grow our free cash flow, but they importantly expand the number of markets we reach where we can sell our new UpCurve products and services.

We believe in a balanced capital-allocation strategy and having all levers available to us, and that includes delivering a substantial portion of our free cash flow back to shareholders in the form of a dividend as well as our share-repurchase program. The 3 segments of our investment thesis have provided New Media strong foundation for creating shareholder value.

Since our spin in February 2014, we believe we have been successful, executing at all facets of the strategy. We have diversified our revenue basis -- base away from traditional print revenue through the creation of new businesses like UpCurve, GateHouse Live and BridgeTower.

And I'm now flipping to Slide 5. UpCurve was created in late 2012 from scratch. It was just an idea. It produced $6.4 million in revenue in 2013, and that has now grown into a $66 million revenue business for the LTM period, and growing rapidly. GateHouse Live, our events business, also was an idea built from scratch ground-up in 2015, and we expect that business to generate $15 million in revenue this year, double what we generated last year. We expect substantial growth to continue for these businesses in the coming years.

As we enter 2018, the fourth quarter annualized revenue run rate for UpCurve and GateHouse Live combined, will be around $100 million. And again, these businesses were created organically from scratch through our internal investments. We are changing the old newspaper business model, and are confident it will lead to future organic growth.

On the acquisition front, we have completed 21 local media acquisitions since our spin, with a total purchase price of nearly $875 million at an average multiple of 4x the sellers' LTM as adjusted EBITDA. We are purchasing these assets at an average unlevered yield of 23% and an average levered yield of 28%, and that's before synergies.

The Morris Publishing Group acquisition is a great transaction that brings us a very strong portfolio of local media assets. These papers have consistently been known for their outstanding journalism and investigative reporting, and we are proud to have been chosen by the Morris family to steward them into the future. We are also excited to expand UpCurve into those markets, providing local businesses in those communities with tools they can use to help them grow.

And finally, the third quarter dividend we announced this morning increased about 6% to $0.37. And as I mentioned, our dividend has increased $0.37 -- 37% since its inception back in 2014. We repurchased over 390,000 shares in the second quarter at a weighted average price of $12.77 per share. We did not repurchase any shares in the third quarter as our share price had traded up, and as we discussed a minute ago, we had a large acquisition to complete. And importantly, our pipeline for deals remains solid. We are committed to continuing to execute on all parts of our strategy with the goal of creating attractive returns for our shareholders.

I'm turning to Slide 6, let's take a quick look at the scorecard on some of the key numbers reflecting our historical financial performance. Since going public in February of 2014, we have grown our revenue at a 26% compounded annual growth rate, and our as adjusted EBITDA has grown at a 20% compounded annual growth rate. These numbers for 2017 combine our September year-to-date actual performance with average analyst estimates for the fourth quarter.

Considering our organic growth initiatives and our

acquisitions, we believe we are well positioned to continue to grow at this kind of a strong pace for many years to come.

And let's look a little bit into the details of our growth initiatives. And to do this, I'm going to flip to Slide 7. These initiative are crucial to our transformation strategy for the business and our long-term success. These 5 initiatives, shown here in the slide, have become central to our organic revenue growth plan. We expect growth from these businesses to outpace the traditional print revenue declines and lead to overall organic revenue growth, the key component to our strategy, obviously.

UpCurve has been the largest contributor to the -- this new growth, adding $17.9 million of revenue in Q3 and $66.3 million in revenue over the trailing 12-month period, and that revenue is 42% higher than the prior LTM period.

Within UpCurve, UpCurve Cloud is a particular bright spot for us and one that is growing significantly. Showing revenue growth this quarter of 74.9%, UpCurve Cloud is a very compelling segment for us. We have found that at this juncture, 65% of the revenue is recurring, and our customer churn is less than 10%. And importantly, margins are strong also, averaging more than 20%.

GateHouse Live, our events business, held over 70 events in Q3, which brings their total events hosted for the year to 171. We expect them to hold 240 events in total in 2017, which will double their events and revenue from -- to -- and revenue, importantly, to approximately $15 million for the year.

These events are also building an incredible amount of goodwill in their communities, our communities, in addition to being very impactful for our newspapers and the event sponsors.

We expect to do $25 million in revenue in Q4 from UpCurve and GateHouse Live on a combined basis, annualizing to $100 million. These businesses are becoming a substantial revenue contributor and give us great confidence that we can achieve overall organic revenue growth in our business.

Consumer revenue continues to be our largest single revenue category and has shown steady to modest performance on an annualized basis over the past few years. The performance in the quarter was down slightly, but we believe that is an anomaly due to our shifting of resources in the quarter into better growth opportunities for 2018.

We have been working to grow our digital subscriber base as well, and we saw 47% growth in that category in Q3, and we now have over 68,000 digital-only subscribers.

As mentioned earlier, our print and digital products are reaching more than 21 million consumers each week across the country, and that's before we reflect the impact of the Morris acquisition.

BridgeTower Media did not see the same downward trend that our traditional newspapers did for circulation. In fact, they achieved low single-digit growth in the quarter. We were also -- we're also very excited about their efforts in the diversity space, both through the specialized events they're holding as well as through webinars and newsletters.

There's a lot of innovation happening within our BridgeTower business, and we are excited about this and we continue to also see it less affected by the traditional print advertising trends since they are not exposed to the traditional brick-and-mortar industry. BridgeTower also continues to strengthen its digital trends, expanding this quarter to offer more video capabilities to advertisers.

We continue to manage our costs as well, always looking for ways to leverage our scale and operate more efficiently. Despite the roughly $1 million negative impact we saw from the hurricanes and a more challenging traditional advertising trend, we continue to see both EBITDA and cash flow growth in the quarter over the prior year.

The combination of these initiatives outlined here on the slide are driving us down a path to overall organic revenue growth for our company, and we are excited about how -- about the contributions that each of these initiatives will make to our business, both in Q4 and beyond.

I'm going to flip to Slide 8 now and talk a little bit more about our UpCurve business. UpCurve is our SMB services platform business that we recently rebranded from Propel Business Services. UpCurve offers a suite of products and services to support small business growth, productivity and company-wide efficiency. Our products can be tailored for the needs of each SMB and integrated à la carte or as a bundle.

As we've mentioned, the LTM revenue for UpCurve is more than $66 million and growing at 42%. We have 2 main product areas within the business, ThriveHive and UpCurve Cloud. ThriveHive is our digital marketing services product that offers a range of services from do-it-yourself guided marketing software to do-it-for-me marketing agency services. We are recognized as a Google premier SMB partner for AdWords, and could help SMBs with lead generation and getting found online.

ThriveHive active customers grew 2.6% in the quarter, and our highest penetration is within the professional and home service verticals, not historically strong newspaper customer verticals. One of the exciting components to this business, in fact, beyond its growth potential, is the fact that it caters to a wider set of customer verticals than our newspapers previously ever serviced.

UpCurve Cloud is our IT-services offering that has a number of cloud-based products, focused on helping SMBs grow faster, smarter and more efficiently. We now service over 91,000 SugarCRM and G Suite Google licenses. Our churn is less than 10% annually on these licenses, and over 65% of the total revenue is recurring. This attractive, stable revenue stream is one we are very excited about from a future growth standpoint.

As both the SugarCRM partner of the year and Google premier SMB partner for G Suite, we are uniquely well positioned among our competitors to deliver great -- these great products with exceptional execution for business -- for our business partners.

And as you can see on Slide 9, the strong revenue growth that we've seen in this business since we had the idea and launched it back in 2012. With expected full year revenue of $70 million to $75 million this year, UpCurve has grown at a compounded annual growth rate of more than 80%. And importantly, even though it's a large number today, we expect to see significant growth going forward. We're still in the first inning of a baseball game, to use that analogy, in terms of what this business can do.

Now let’s turn to Slide 10 and review our acquisition strategy and discuss a bit more about the publishing -- the Morris Publishing Group transaction. The third quarter was a big one for us as we not only closed on Calkins and the South Carolina Business journal, but we also announced the acquisition of many of the assets of Morris Publishing Group for $120 million. This deal is one of the larger newspaper clusters that remained family-owned, and we closed the deal subsequent to the quarter on October 2. All of these assets were purchased within our stated acquisition range of 3.5 to 4.5x the sellers' LTM as adjusted EBITDA.

The Morris acquisition is one that we cultivated over several years, building trust with the family that we would be the appropriate steward of their portfolio into the future. This deal adds 11 dailies to our portfolio and 79 publications in all, and expands us into 2 new states, Alaska and Georgia. These newspapers are all very strong locally, with well-known editors and numerous accolades for their high-quality journalism.

All 3 of the transactions I just mentioned included newspaper assets that are the dominant provider of local news in the markets that fit within our business thesis; very attractive local markets. They also are prime to plug our UpCurve business in, with several of them having a strong digital performance in their markets already. We also expect to find significant synergies due to our scale and centralized services. We're very excited, needless to say, about these acquisitions, particularly Calkins and Morris.

If you turn to Slide 11, you could see our historical acquisitions and the value that they have created for the company. And most importantly, we are not done, as we continue to see compelling opportunities available to us in the sector.

New Media has seen stock appreciation over the last 12 months, which has led to significant outperformance versus our peer set. New Media's LTM total return for shareholders is over 16% over the LTM period, while our peer group has declined over 25% on average during that same period. We have been very focused on taking the time to tell our story and get in front of both current and prospective investors, helping new investors to understand the company and not paint us with the broad brush strokes of the overall sector.

We closed Q3 with over $200 million in investable liquidity, since have deployed $120 million for the Morris acquisition, so pro forma, we have $80 million after that. This highly -- the highly accretive nature of the Morris transaction, as well as the continued significant free cash flow generation of our local media assets, gives us great confidence as we look forward.

Considering the growth we are seeing and our prospects for the future, as I mentioned, the board approved a dividend increase of about 6% this morning, bringing our Q3 dividend payout to $0.37.

We continue to maintain all levers available to us from a capital-deployment standpoint, and our goal is to allocate capital across organic investments, acquisitions, and of course, returning capital to shareholders in a manner that will lead to the best overall long-term shareholder returns.

I'll now turn the call over to Greg to walk you through the financial performance and the details of the third quarter.

Greg?

Thank you, Mike. And good morning, everyone. I'll now be speaking to Page 14 of the supplement.

Third quarter revenue was $317.2 million, up 3.4% to the prior year on a reported basis and a decrease of 6.4% on an organic same-store basis. As a reminder, organic same store is a metric that gives us an apples-to-apples view of asset performance in the current period versus the prior year period.

Traditional print revenues were $137.6 million, and they decreased 14% on an organic same-store basis. Within this category, Preprints, Classified Print and Local Print Advertising categories declined 12.8%, 14.3% and 14.5%, respectively, on an organic same-store basis.

Digital, our consistently growing revenue category, increased 11.1% to $35.6 million. Digital now represents 11.2% of our total revenue performance.

UpCurve generated $17.9 million in the quarter, up 22% to the prior year.

Circulation, which comprises approximately 1/3 of New Media's total revenues, was $112.8 million, down 1.5% to the prior year on an organic same-store basis.

Digital-only subscribers were up 47% to over 68,000 in the quarter.

Turning to Commercial Print, Distribution and Events. Revenue in the quarter was $31.2 million, up 3.7% on an organic same-store basis. Within this category, Commercial Printing, which by far is the largest component in the category, remained stable, while Events are on track to more than double their performance to the prior year.

As adjusted EBITDA and free cash flow were $37.1 million and $27.3 million, an increase of $0.1 million and $0.4 million, respectively, to the prior year. Net loss for the quarter was $2 million, which was negatively impacted by $5.7 million of costs related to our term loan amendment in the quarter and $0.5 million for the consolidation of printer press equipment.

In regards to the term loan amendment, we proactively went into the market during the quarter, and our existing term loan dematurity was extended by 2 years to July 2022. In addition, we upsized the term loan by $20 million and increased our available accordion to $80 million. We were very pleased to receive 100% support from our lenders for this amendment, a strong vote of support. In addition, we've brought new lenders into our story, which is a very important feeder for supporting potential future capital needs.

We ended the quarter with $160.5 million of cash on the balance sheet and $40 million undrawn on the revolver. Subsequent to the quarter-end, we deployed $120 million of this cash for the acquisition of Morris Publishing Group, so that resulted in pro forma liquidity of $80 million. In addition, we have $80 million of availability to upsize the existing term loan using the accordion feature. So we have plenty of liquidity to support additional highly accretive acquisitions even after this acquisition of Morris.

Debt outstanding at the end of the quarter was $370.2 million at an average blended rate of 7.49%. Net leverage against our LTM as adjusted EBITDA was 1.3x.

We're proud to have reported 2 consecutive quarters with EBITDA and free cash flow ahead of the prior year. And with the closing of the highly accretive Morris acquisition, after the quarter close, using cash on the balance sheet, we have that performance uplift to look forward to going forward.

We have net leverage below our target of 2x, and we have significant liquidity and debt capacity available to continue executing on highly accretive transactions. Therefore, we're pleased that our board has decided to raise the dividend by $0.02, as we continue to share our growing cash flow with shareholders.

Operator, we'd like to open the call up for questions.

(Operator Instructions) Our first question is going to come from the line of Kyle Evans with Stephens.

Could we talk a little bit about the circulation trends you saw in the third quarter and help -- maybe provide some comfort on why you still think that's a stable to slight growth revenue segment? And then I've got some follow-ups.

Yes. The reason -- Kyle, the underlying reason why we feel confident about it is that we didn't see any changes in volumes. Volumes were -- remained where they were, and we didn't do as much work in kind of the value-add price content stuff that drives additional pricing in the quarter as we have some plans in place really to ramp up for a bigger fourth quarter, where we think some of the things we're working on can have a bigger impact just because of the seasonality of the business being stronger in the fourth quarter. So the volume stuff staying where it was, no change in that, gives us a lot of confidence that the plans we're working on, that we deferred a little bit from Q3 to Q4, will result in a much stronger Q4. And so our thesis and outlook for this particular category hasn't changed. We're still very bullish on it.

Great. The dividend increase, nice to see. Maybe you could give us some of the deeper thoughts behind that decision? How much of that was tied to Morris? And how much of that was tied to just the core outlook for the business as it stands pre-Morris? And then I've some more follow-ups.

Kyle, it's really tied to both. I mean, we've done $160 million of deals this year, and we haven't raised the dividend yet. Part of our business thesis, as we've talked about for 3.5 years, is we can and will do highly accretive acquisitions, and those will result in growth of free cash flow. And as a result of that, we've always said we'll return some of that free cash flow to shareholders. So given the size of the deals we've done this past year, we thought it was the appropriate time to raise the dividend. And as we look forward into next year, certainly the growth of Morris and future acquisitions should put us in a great position to be able to look at the dividend again.

How many more Morris-type businesses are out there, the family-owned clusters, where you can get scale?

There's not -- I mean, when you think about 1,350 daily newspapers, when you think about it in that magnitude, there's obviously not hundreds of Morris-type situations. There are a handful of them, maybe 10 or 15, but we think more about each opportunity and how we can attack the 1,350 daily newspaper marketplace. There are still over [350] owners of those daily newspaper, so it remains a very fragmented market and one where we've developed relationships with so many of the families that we think we're in a prime position to be able to continue to execute on them. I wish there was a lot more Morris-sized deals than there are. There aren't as many, but setting that aside there's still plenty of opportunity for us to acquire businesses in the space.

(Operator Instructions) Our next question will come from the line of Lee Cooperman with Omega Advisors.

You have a very comprehensive call so there's not a lot that I could ask. But I'm assuming in 2018, the $3 in the free cash flow, is that something that fits with your expectations?

Yes. I think, if you look at the LTM numbers we posted this morning for free cash flow, they're about $117 million. And if you think about Calkins and Morris, $140 million. You can think about that 3.5x, that's a $40 million free cash flow, so you get to 157 million shares outstanding. So your math is pretty spot on.

Right. And then you covered the buybacks, I just really want to compliment you. I think when the stock was at a ridiculous level, you stepped up, and I think that shows the right instincts. In terms of -- you said the acquisition pipeline, it still looked pretty attractive to you. With $3 in cash flow and the dividend, we'll call round off at $1.5, you generate about $80 million of retained cash in the next 12 months, you have $80 million after the recent deal. If you're [boasting] a 4x EBITDA, in theory, without any significant leveraging, you could probably add another $0.80 to EBITDA?

Yes, that's (inaudible).

Okay. And finally, UpCurve, is that a business that is spinnable? And what size would it be -- make sense for you to think about it?

It is a business that's spinnable someday, and the valuation we think would be pretty attractive. We think there's no value in New Media stock today attributed to UpCurve and businesses that look like UpCurve that do trade publicly 3 to 5x revenue. And as we look out over the next couple of years, we think that's a $150 million to $200 million revenue business. And if you think about 5 to 6x revenue, you could easily see a $1 billion-type valuation on that business.

And that's all the time we have allotted for questions. We'd like to thank everyone for dialing in for today's conference call. This does conclude the conference, and you may now disconnect your line.