USA TODAY Co Inc (TDAY) 2018 Q3 法說會逐字稿

Good morning. My name is Angela, and I will be your conference operator. At this time, I would like to welcome everyone to the New Media third quarter earnings call. (Operator Instructions).

Thank you. I would now like to turn the call over to Ms. Ashley Higgins. Please go ahead.

Thank you, Angela. And good morning, everyone. I'd like to welcome you to New Media's third quarter 2018 earnings call. Joining us today are Mike Reed, New Media's CEO and President; Greg Freiberg, our CFO; Kirk Davis, COO of New Media; Peter Newton, COO of GateHouse Media; and Peter Cannone, CEO of UpCurve.

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 re-broadcasted without our consent.

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

Thank you, Ashley. And good morning, everyone. Thanks for joining our third quarter earnings call this morning. As Ashley mentioned, throughout the call I will be referencing the supplement that we posted on our website this morning.

I'm happy to report to you that the third quarter was another solid quarter for New Media. We saw a slight improvement in our organic same-store revenue trends versus Q2, which was driven by very strong performance from our new business initiatives, which we were very pleased to see. And we posted strong EBITDA and free cash flow performance in the quarter.

We are also excited to announce another increase to our dividend this morning. This marks the fifth consecutive year that we have raised our dividend dating back to our inception in 2014. The dividend increase reflects our view of continued organic and inorganic growth.

Before we jump into the deck, I would like to mention the extreme weather events that occurred in the southeast in September and October. We would like to convey our admiration, appreciation and support for all of our employees affected by Hurricanes Florence and Michael. Hurricane Florence occurred during the third quarter and we will share more about its financial impact later in today's call. However, most importantly, both storms were devastating to the communities they impacted.

I have been amazed by the commitment and resiliency my colleagues have shown in Wilmington, Kinston, New Bern and Jacksonville, North Carolina as well as Panama City, Florida where they continued to produce the news for their respective communities both during and in the aftermath of the storm's destruction. We also want to thank all of our surrounding newspaper partners and colleagues who stepped in to assist in the coverage, production and printing of the news for these communities and to assist in supporting us.

In North Carolina, we operate 4 daily newspapers that were in Florence's path with the total daily circulation of 57,700. We sustained the most significant damage to our Wilmington, North Carolina offices, which has forced over 50 employees to work out of temporary spaces while we work to repair the damage. In Panama City and surrounding communities, several reporters bravely rode out the storm in our building, which sustained major damage affecting both our presses and offices. Thankfully our reporters there remain safe.

Over 90 employees who are now displaced in Florida have not allowed this to stop news production however, working out of homes via satellite phones with limited supplies in the early aftermath of the storm. Many of our employees sustained personal damage during these storms, some of them losing everything and our thoughts continue to be with them, their families and everyone affected during this challenging time.

We are confident that all of the impacted communities will rebuild and come back stronger than before the storms and we will do our part to assist in these efforts.

It's difficult to transition to the quarterly numbers from that, but I will attempt to do that by moving to Slide 2. Revenue grew 19.9% to the prior year to $380.4 million in the third quarter. The increase was driven by acquisitions and the extraordinary growth from our new business lines, UpCurve and GateHouse Live. The growth we experienced is partially offset by the secular declines on the print advertising side of our business.

Revenue on an organic same-store basis was down 4.8% to prior year, a slight improvement from the Q2 trend and a 160 basis point improvement for over the Q3 2017 trend. Things are definitely moving in the right direction. We estimate Hurricane Florence reduced both revenue and EBITDA in the quarter by approximately $1 million.

Digital revenue grew 35.5% over the prior year to $46.6 million, excluding the impact of ASC Topic 606. As a reminder, this accounting rule change went into effect at the beginning of 2018 and impacted how we recognize a small portion of our IT services revenue earned through UpCurve Cloud.

Our revenue continues to diversify away from its historical dependence on traditional print with 61% of Q3 revenue coming from our stable or growing categories. On an LTM basis, 59% of revenue is now coming from these categories, which compares to 56% last year and 52% in 2016. The driver for this diversification has been our fast growing new businesses, which I briefly mentioned a few minutes ago.

In the third quarter, UpCurve grew revenue 50.6% excluding the impact of ASC Topic 606 to $25.5 million. It has now produced nearly $90 million in revenue over the last 12 months and represents 6% of total New Media revenue. Our events and promotion businesses also continued to see rapid growth, bringing in a combined $11.4 million in revenue in the third quarter, up 68.5% to prior year.

Our belief and confidence in achieving same-store revenue growth has been affirmed by traditional print continuing to be a smaller component to our revenue base and our new businesses continuing to show strong growth of much higher basis.

2018 has also been another good year for our company on the acquisition front, having completed $156.4 million in acquisition so far this year. In the third quarter, we completed our first acquisition in the event space acquiring a majority interest in Rugged Events Holding, LLC. This investment rapidly expands our GateHouse Live business into the endurance event space, adding 90 premier events to our portfolio as well as top management expertise from its founders who remain with us and remain minority owners in the business. We expect double digit growth from this endurance events business over the next several years as we grow into New Media markets and beyond.

Subsequent to the quarter, we completed the acquisition of The Oklahoman, a newspaper based in Oklahoma State Capital, Oklahoma City. Purchase price was $12.5 million. Important to note, we do not expect to realize any EBITDA in Q4 from these 2 deals due to the timing of events and execution on synergies. However, we do expect these 2 deals to add approximately $7 million to $9 million in EBITDA in 2019.

With regard to capital structure, our position remains strong. We had $96.2 million in liquidity at the end of the quarter. Net leverage remains low at 1.9x, and as mentioned, we increased our dividend this morning bringing the third quarter dividend to $0.38 per share or $1.52 per share on an annualized basis.

As of the close of the third quarter, New Media operates in over 555 communities throughout the United States and we own 145 daily newspapers. This makes us the largest owner of daily newspapers in the country. As most of you know, our portfolio is focused on small to mid-sized communities where we have a competitive advantage due to our longstanding local media brands and where we believe we have sustainability driven by providing unique local content to each of our respective communities.

At the end of the third quarter, we had approximately 1.6 million paid print subscribers and 132,000 paid digital only subscribers. We have tremendous reach touching 23 million people on a weekly basis through all of our print and digital products, and we average more than 54 million unique visitors to our websites each month.

We were also recognized for a prestigious national journalism award during the third quarter. The DSpace team, which is our innovation team at our Center for News and Design, was named the Associated Press Media Editor Innovator of the Year for their long-form storytelling template. This award recognizes news organizations for outstanding content development and innovative projects that have had significant impact in local communities. The storytelling template has 2 components; one that can be leveraged by all of our news rooms and one that is used by our native advertising team. Additionally, the template can be used by any newsroom across our industry because it is open source code. To date, 32 editorial projects and 16 native campaigns have utilized it with readers spending more than twice their average time on our site and campaigns receiving twice the average click through rate. We are excited about future contributions from this template and would like to congratulate our DSpace team for its work on this template.

The unique strength of our local content combined with the large audience we reach has created a compelling B2B opportunity. We leverage our longstanding local brands and status as a trusted business partner to provide a variety of advertising and service offerings to small and medium-sized businesses or SMBs. With over 5 million SMBs in our markets, we have a huge opportunity to grow this side of our business through further leveraging our unique in-market footprint.

Now let's turn to Slide 4 to briefly review our investment thesis. Our investment thesis, as most of you know, has 3 primary drivers. One, we own and operate businesses that produce strong cash flows. Two, we put that cash flow to work to grow the business organically and inorganically. And three, we consistently return capital to shareholders, creating very compelling overall returns. We have performed successfully against this thesis since our inception creating a total return for shareholders of 63.9% since inception and 8.5% over the last 12 months. Importantly, this outperformed the S&P 500 which returned 59.2% and 5.9% over the same periods respectively.

To highlight a handful of points on this slide, we have grown EBITDA 20.2% CAGR with free cash flow conversion of 74.3%. We have created growth through strong organic investment in our businesses such as UpCurve, events and promotions, and we have completed over $1 billion in acquisitions. We have maintained a balanced capital allocation strategy and have raised our dividend for 5 consecutive years.

Turning to Slide 5, let's talk a little bit more about the growth side of our business. At the start of the year, we laid out 5 primary areas for investment to further diversify our revenue streams away from print and to better position us for future organic revenue growth. We laid out our targets for 2018 revenue growth for each of them and continue to be very excited about how the majority of our initiatives are performing.

You can see our growth trends for Q3 here on Page 5 versus the targets we had established at the beginning of the year. GateHouse Live had a very strong performance again in this quarter, benefiting from our Best of the Best events concept, which was very active across our markets in the quarter. This concept recognizes the best businesses across a number of categories within a local community.

The local community nominates and then votes on these businesses with the top 3 vote winners being honored at the event itself. Readers can partake both via print and digital voting ballots to support their favorite small businesses and help raise awareness of them throughout the community. The growth of new concepts as well as the expansion of current concepts like Best of the Best has us well positioned to continue to see strong growth going forward in the events category. And shortly I'll also be discussing our recent acquisition, which expands our event concept offerings into the active and outdoor categories.

UpCurve had another standout quarter growing 50.6% to the prior year, excluding ASC Topic 606. Both ThriveHive and UpCurve Cloud performed well and I'll cover these in a little bit more detail on the next slide. Our third organic growth initiative listed on the slide is promotions, which grew 83.3% over the prior year. This remains a very popular and fast growing offering for us, thanks to its ability to be customized for a single sponsor or shared across several sponsors. We can also tie it directly into our events. It generates strong brand recognition for SMBs as well as consumer data that the advertisers can utilize well beyond the life of the promotion itself. We are excited about our continued growth opportunity here.

In the third quarter, commercial printing grew 5.9% on an organic same-store basis to the prior year. We successfully closed $2.8 million in new contracts during the quarter and we have a pipeline of over $10 million for additional commercial print opportunities. It is worth noting, however, that we closed a large commercial print deal last year at the end of the third quarter with $7 million in annualized revenues. So we have cycled that at the end of this quarter. And while the customer remains a great customer and the revenue remains with us, it no longer will contribute to growth. We will continue to optimize the use of our presses and actively pursue new deals where capacity is available.

Consumer revenue trailed our stated growth target this quarter. However, it did improve 30 basis points over our Q2 trend. As we discussed last quarter, we have made significant investment into this area and we continue to do so, building a strong team and targeting initiatives that will strengthen our consumer marketing and customer retention efforts across the country within all of our local markets. Our same-store digital subscription growth in the quarter was 34.1%, bringing our digital-only subscriber count to 132,000 at the end of the quarter. We have seen acceleration in our digital-only subscriber same-store growth trends, really the result of this centralized consumer marketing investment we've made. So we're excited about how that's going to continue to contribute to our future growth.

Turning the Slide 6 real quickly to discuss UpCurve's performance. Third quarter revenue for UpCurve was $25.5 million, up 50.6% excluding the impact of the accounting change and obviously $25.5 million annualizes to more than $100 million, which is an important milestone for us. UpCurve, as you know, offers a suite of products and services that bring technology and automation to our SMB customers to support their growth, productivity and efficiency. These products can be tailored to the needs of each SMB and integrated a la carte or in various bundles. They also span a wide range of service options from a low touch do-it-yourself guided platform all the way to a full service dedicated do-it-for-me team.

We have 2 primary business segments today inside UpCurve and that's ThriveHive and UpCurve Cloud. ThriveHive revenue grew 45.1% to the prior quarter, earning $20.9 million. Active customers grew 38.8% in the quarter with professional service customers being our largest contributor. Professional services businesses were historically not large advertisers in newspapers, so seeing strong growth from this vertical is exciting because it shows we are expanding the total base of SMBs that we serve within our communities.

UpCurve Cloud revenue grew to $6.1 million in the quarter, up 74.3% over the prior year quarter when excluding the impact of the accounting change. We manage nearly 115,000 licenses across SugarCRM and Google G Suite and have maintained low churn and high recurring revenue trends. It's also very important to note that both of these businesses within UpCurve are EBITDA positive today and we believe now positioned to see further improvement in both EBITDA and margin going forward.

Let's talk about recent acquisition activity and for that, I'm going to turn to Slide 7. Year-to-date we have closed acquisitions that total a $156.4 million in purchase price. As I mentioned at the start of the call, we completed our first events acquisition in Q3. Rugged Events produces over 90 premier endurance events across the U.S. and Canada, including the Rugged Maniac obstacle races, trail runs, cycling events and road races.

New Media purchased a majority stake in the company, which positions GateHouse Live as the only national media events company to own and operate a network of endurance events. Further, it improves our management team within the events division with the addition of the founders of Rugged Events. We now host over 460 events across 300 markets with 650,000 annual attendees.

Subsequent to the quarter, we also closed on the acquisition of the Oklahoman, the daily newspaper in Oklahoma City, for $12.5 million. We are spending the fourth quarter in Oklahoma, executing on synergy and revenue opportunities for this investment. We expect this property to contribute $5 million to $6 million in EBITDA in 2019, healthy returns on a $12.5 million investment.

Quickly on Slide 8, we've updated that to include recent acquisitions, should you be interested in a reference page with the full list of all of our completed acquisitions and average transaction details since our spin nearly 5 years ago.

I'll now conclude my remarks really on page -- sorry, Slide 9. As I mentioned earlier this morning, we are pleased that our Board approved a dividend increase this quarter, bringing the dividend per share to $0.38 or a $1.52 annualized. This reflects our positive view for continued organic and inorganic growth as we look forward into 2019.

Our last 12 months total return for our shareholders was 8.5% and that compares to our peer group's returns of 3.2% and the S&P 500's total returns of 5.9%. So we continue to see that outperformance.

In closing, we remain excited about the trend of our growth initiatives and our pipeline for acquisitions. And we believe we are well positioned to continue to outperform for our shareholders in 2019 and beyond.

We appreciate your continued support. Thank you. And Greg, I'll hand it off to you for a third quarter financial discussion.

Thank you, Mike, and good morning, everyone. I'll now be speaking to Page 11 of the supplement. And before I begin, I want to remind you that we adopted the ASC Topic 606 revenue from contracts with customers at the beginning of the year. This standard impacted the revenue treatment of certain UpCurve Cloud services to net versus previously being at gross. The prior year results do not reflect this adoption. Thus the comparison is not on an apples-to-apples basis. So when we speak about excluding the impact of ASC 606, that gives a representation of the results to the prior year on the same basis. This change affects UpCurve Cloud, UpCurve and Digital.

We delivered total revenues of $380.4 million in the quarter, compared to $317.2 million in the same period last year, up 19.9% on a reported basis and down 4.8% on an organic same-store basis, excluding the impact of ASC 606.

Excluding Q1, this is our best performance since the third quarter of 2016 in organic same-store. Organic same-store is 10 bps better than the second quarter, 80 bps better than the fourth quarter and 160 bps better than Q3 last year. Traditional print revenues were $148.2 million, and they decreased 13.8% on an organic same-store basis. Within this category, preprints were down 19%, classified print was down 11% and local print advertising was down 13%, all on an organic same-store basis.

Digital, our consistently growing revenue category, increased 31.3% to $46.6 million. UpCurve is our largest component of digital, generated $25.5 million in the quarter, up 50.6% to the prior year, excluding the impact of ASC 606. Circulation, which comprises over 38% of New Media's total revenues, was $145.9 million, down 1.8% to the prior year on an organic same-store basis. We continue to invest in the development of our fully centralized consumer marketing agency and in growing our audience.

Our digital-only subscriber base in the third quarter grew to 132,000. That includes 32,200 digital-only subscribers from 2018 acquisitions. Excluding those acquired subscribers, our growth in this category was strong at 34.1%.

Turning to Commercial Print Distribution, Events and Other, revenue in the quarter was $39.7 million, up 6.3% on an organic same-store basis. GateHouse Live and third party commercial printing wins contributed to this growth.

Overall, we're pleased with our revenue performance in the quarter. One important trend that gives us encouragement regarding future trend improvement is that circulation revenue will soon become a larger portion of our revenue pie than all of traditional print advertising, an important milestone in our drive to return the top line back to positive growth.

As adjusted EBITDA with $44.1 million, an increase of $7 million or 18.9% to the prior year. Free cash flow was $31.0 million, up $3.7 million or 13.6% to the prior year. This represents a 70% conversion rate of our as-adjusted EBITDA into free cash flow, demonstrating the strong and consistent cash flow generation that we produce.

And as a reminder, we estimate revenue, as adjusted EBITDA and free cash flow were all negatively impacted by approximately $1 million in the quarter due to Hurricane Florence. We had a net loss of $6.1 million in the quarter, negatively impacted by $9.1 million of severance-related expenses and $4.7 million of facility consolidation charges and accelerated depreciation. This is a solid operational quarter for us, as you see in the numbers I just shared. On a reported basis, revenue, as-adjusted EBITDA and free cash flow are all up by double digits to the prior year.

We ended the quarter with $56.7 million of cash on the balance sheet and $39.5 million of available undrawn revolver. So we have substantial liquidity to continue our pursuit of strategic acquisitions.

Debt outstanding at the end of the quarter was $415.3 million at an average blended rate of 8.37%. Net leverage against our LTM as adjusted EDIBTA is 1.9x.

We continue to find and execute on strategic acquisitions and we continue to execute on initiatives that are improving our top line performance. We have net leverage just below our target of 2x and we have significant liquidity and debt capacity available. We have now reported 6 consecutive quarters with as-adjusted EBITDA and free cash flow ahead of the prior year.

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

(Operator Instructions). Your first question is from the line of Kyle Evans with Stephens.

Could you kind of step back and look at the M&A pipeline? This is the third -- the Oklahoman is the third kind of top 50 DMA paper you guys have bought this year. And just kind of maybe frame up the newspaper opportunity, kind of smaller markets versus larger markets and maybe talk about any kind of strategic change there because this is the third one this year?

Well, Kyle, we're finding in those -- I would -- well, you could say top 50 DMA, but more kind of middle markets is what we call them in our portfolio. We're finding the most compelling upside to EBITDA and free cash flow as well as a faster path to revenue stabilization for a variety of reasons. But the larger number of small and medium-sized businesses that are in the community and potential clients of UpCurve is a substantial reason relative to a very small markets which just has very -- just fewer of those. We are also finding that the events and promotions business can grow much faster with multiple events held throughout the year in a middle-sized market; in a smaller market much tougher to do multiple events throughout a year. And then on the cost side, there are just simply more cost to take out in those middle market paper. So we just see overall a better financial profile, better investment returns for our shareholders right now in those middle market papers. The other thing, Kyle, to keep in mind is on the backend, those markets over the last 20 years had suffered larger print advertising declines. And therefore sitting here today, they have a smaller print advertising base and that's the category under pressure. So the path to organic same-store revenue growth right now looks a little more compelling in a middle-market paper. And I say middle market because the markets we're choosing, the newspapers still have to meet certain criteria and that one of the most important ones is, is it the only or the most dominant provider of local news to that community? And so the acquisitions we have chosen fit that criteria and frankly we've passed on other opportunities in slightly smaller middle-sized markets because we didn't feel the newspaper was the dominant provider of local news.

If you -- I think you guys gave $5.5 million of EBITDA for The Oklahoman as a target for next year, the purchase prices.

[$5 million to $6 million].

Got you. The purchase price at $12.5 million means we are talking about something like 2 in a quarter when you're out. What kind of execution risk and the price suggests that it was distressed and I'm a little curious about the execution risk that you see to get to that midpoint?

The 2 opportunities we have are improving the revenue performance of the business. We think it was vastly underperforming there. So by bringing our standards, accountability metrics and performance tactics to the market, we think will improve the revenue trends from where they had been historically under previous ownership to something that's more reflective of our company. That will help a lot. Second opportunity is that there is still a large amount of cost in the business that should have been taken out to reflect the current revenue environment. So those 2 opportunities are where the synergies are. So I guess you would say that's where the execution risk is, Kyle.

You know, I always focused on your circulation below the line, down 1.8%, better on a quarter-over-quarter basis. Could you speak to the pricing and volume dynamics there and kind of refresh your outlook?

Yes, right now volume is declining high single digits, pretty consistent with what we've talked about prior quarters and pricing increasing right now kind of mid single digits leading to that 1% to 2% top line decline. We've been less aggressive on pricing over the last several quarters, more focused on volume retention, customer service and value in the product and a little bit less focused on pricing. We feel that the more aggressive pricing actions that many in the industry are taking are just driving excessive volume declines. And so we've been less aggressive in that area and I think it's proving to be the right strategy.

Is your plus or minus 1% still a good long term goal?

We think so, yes. We haven't waivered from that.

And I think it was last quarter, you called out a few markets that were contributing to maybe a little bit worse than expected revenue there. Can you update us on those?

Yes, we've worked pretty hard on those 3 and we saw improved performance in each of those 3 during the quarter. That partially contributed to the improved performance we had overall in the quarter.

Two more and I will get back in line. Can you update us on the Canadian paper tariff, kind of how that hit newsprint and how you think that affects 4Q and 2019 on the cost side?

Yes, so right now prices are up about 40% on a pure price standpoint for newsprint. The tariffs drove about 10% of that price increase. The rest was just supply and demand. As everybody knows that the tariffs have gone away and we have not seen a price decrease as a result of that yet, but I would suspect some time in 2019 we will. However, I don't expect it -- I would expect it only to be maybe in the 10% range as most of the price increases today have been driven by supply and demand. So I think prices are more likely to stay closer to where they are now in 2019. For us, we talked last quarter about that. That's potentially a close to $20 million impact on expense. However, we thought we'd be able to mitigate half or a little bit more than half of that, which we have been able to do. So from a nominal or dollar perspective, our newsprint costs in the third quarter were up $2 million or 10% to prior year. I'd expect that to continue in Q4 and Q1 and the good thing there, Kyle, is that after Q1 we will have cycled it. And so the current newsprint status pricing and cost would be reflected in our P&Ls without a huge impact on anything in the company. So I think we have 2 more quarters of probably plus 10%, which translates to about $2 million in additional expense and then we may get some reprieve towards the middle of next year, but I don't think it will be a large amount of reprieve, unless something changes in the supply-demand equation.

Can you -- I guess, I thought that tariff was largely responsible for the price increase. Help me understand the demand side of the equation for newsprint that would account for 30 points of year-over-year increase.

Well, it was kind of a misnomer. People hid behind the tariffs as an easy way to talk about increasing newsprints. Suppliers hid behind it and newspaper companies did as well. But the fact of the matter is that the average tariff was somewhere between 9% and 10%. So that wasn't driving a large portion of the increases. The fact is suppliers have increasingly been taking some supply out of the U.S. market and either converting it to other types of paper like tissue or sending it elsewhere besides the U.S. So there was less supply in the market and that was all the result of suppliers themselves. When the tariffs went into place, the other thing that did is it caused Canadian suppliers who were on the cusp of making decisions of whether to continue to supply the same amount of newsprint to the U.S. or to do something else that might be more profitable, and they were on the cusp, the tariffs kind of threw them over the edge to say, okay, we are going to go do something else. So that took some supply out of the U.S. market as well. And so I -- I mean the supply demand equation is not being driven because demand is growing and newspapers, of course that's not the case. It's more a factor of there's a lot less supply in the market coming from suppliers.

We know more today than we did 3 months ago when this first came up and I'd really characterize the tariffs were the spark that kind of caused all of these items to combine.

Lastly, the dividend increase cadence over the last couple of years has kind of been a 3Q $0.02. Today, you raised again for the fifth year in a row. Congrats on that, but not what you did in the prior 2 years. Can you just update your thoughts on percent of free cash flow that you'd be willing to put towards that dividend kind of looking forward on a 1-, 3-, 5-year basis?

Yes, we're still looking at -- we haven't changed our methodology in terms of free cash flow allocation and we think 40% to 50% of free cash flow is the right allocation for the dividend. That hasn't changed.

And your next question is from Lee Cooperman with Omega Advisors.

My questions were asked by the previous questioner. But others, any update on the timing of the possible spin of UpCurve? The volume is getting close to $100 million, $89.7 million. What size would you consider spinning it? Second, the issue of capital adequacy, can one assume there would not be any additional equity sold unless another transaction of consequence was undertaken? And the stock is down today, so it's obviously disappointing with the size of the dividend increase of the results. I'm curious, the market is demanding a return of over 10% current. The stock is slightly under $15 and dividend $1.52. At what price would you consider returning to your stock repurchase program and retiring at 10% dividend yield?

Thanks for those questions. I think that we're obviously at below $15 or moving closer to the math, whether the math makes sense to repurchase shares as we've talked about in previous calls where we have actually executed on the share repurchase program. It's been at a share price below $14. So we consistently pay attention to that and will execute on our share buyback program when the math makes sense. Increasing the dividend, a $0.01 versus $0.02 in a quarter, part of that really reflects what we see in the pipeline. I mean, our capital allocation strategy is to put our capital to use in the way that we're going to return the most value for shareholders and our pipeline is pretty strong and so we saw the potential use of capital going forward for acquisitions, which is partially reflective of $0.01 versus $0.02. And then I think, Lee, with regard to UpCurve, it's a $100 million revenue business now. I don't know the exact right size. I think as we have talked about invest on previous calls and we've talked about, I think, in the next 24 months, it really becomes a discussion that's right at the center, whether it's a spin or a sale or some other way to transfer that value to New Media shareholders. But I think we're close to that and a lot closer than starting that business 5 years, 6 years ago. But I don't think it's quite big enough yet, but we're definitely making progress in that area.

Your next question is from Jason Bazinet with Citi.

I thought one of the comments Mr. Freiberg made was sort of interesting regarding circulation revenue sort of hitting crossover with your print advertising. And when I sort of think about that trend, which seems favorable for your organic growth and I overlay the good news is coming from UpCurve and GateHouse Live, it would seem that the composite of all of those things I would see sort of better organic top line numbers. But it sort of in broad term is sort of flattish, down for 4% or 5% a year over the last 4 or 5 years. What's the missing piece of the puzzle?

Well, I don't -- I don't think it's fair to say that we're kind of down 4% to 5% over the last 5 years, I think. If you just go back a couple of years, you saw trends that were down in the high 5s and even over 6%. So I actually think that we are making progress towards flat. And I think -- I actually think you will continue to see greater progress towards flat as this traditional print number becomes a smaller piece. And as Greg mentioned, it was I think 39% of total revenue in Q3 and circulation was 38.4% of total revenue. So they are about to cross. But one of the things we've seen in the last 12 months is instead of print advertising revenue being down 12%, 12.5%, it's been down 13.5% to 13.8%. It was down 13.8% this quarter. So just that 1 point uptick in print decline while it still represents 40% or more revenue has an impact on the overall same-store trend. So I think Greg's point and my point here is that as traditional print revenue drops below 40%, it's 39% this quarter as it continues to drop below that, the impact that it has on overall same-store will be less significant. And what you're really seeing now that the UpCurve and events businesses have higher basis is that their growth will actually have more impact positively on same-store trends. So I think we really should see over the next 4 to 8 quarters significant improvement in same-store trends.

And I think it was 2016 where you sort of had to stretch goal of getting to flat same-store sales by the fourth quarter of '17. And have you sort of -- when you pencil all this out in terms of your plans other than sort of improvement over the next 12 to 24 months, what's a reasonable target to get the flat in terms of timing?

We think over the next 2 years, over the next 2 quarters.

So yearend of '20.

Yes.

(Operator Instructions).

Angela, if there is nobody else, we can just wrap up then. Thank you.

Okay. We have no further questions.

Thank you, everybody. We look forward to catching you up on the next call. Thank you.

This does conclude today's New Media third quarter earnings call. You may now disconnect.