TPCO Tribune Publishing Company

Tribune Publishing Company (NASDAQ: TPCO) today announced financial results for the third quarter ended September 27, 2020.

Third Quarter 2020 Highlights:

• Total revenues were $188.7 million, down from $236.0 million in the third quarter of 2019
• Net income from continuing operations increased to $8.5 million, from $6.9 million in the third quarter of 2019
• Adjusted EBITDA was $27.3 million, an increase of $2.5 million compared to the third quarter of 2019
• Digital-only subscriber revenue increased 67.4% or $5.1 million and digital subscribers grew to 427,000 at the end of the third quarter 2020, compared to 314,000 at the end of the third quarter 2019
• BestReviews continued significant growth during the third quarter with an increase in revenues exceeding 40%

Terry Jimenez, Tribune Publishing Chief Executive Officer and President said, “We have made significant progress mitigating the negative impact of the COVID-19 pandemic on the Company through aggressive cost discipline and deep focus on our transition to digital.  As a result, we increased Net income from continuing operations by 24% and improved Adjusted EBITDA by 10% over the prior year quarter despite significant pandemic-related revenue headwinds.”

“In the third quarter, we saw improved sequential revenue trends in advertising, circulation and other revenue categories compared to the second quarter of 2020.  However, we remain cautious about the continuing impact and duration of the pandemic and accordingly, we persist in our efforts to reduce our cost structure, particularly our fixed costs, including real estate and other infrastructure.  We believe that a continuing focus on cost management, coupled with substantial growth in our digital subscription revenue, has positioned the Company to succeed in a post-pandemic future.”

Third Quarter 2020 ResultsThird quarter 2020 total revenues were $188.7 million, down $47.4 million or 20.1% compared to $236.0 million for the third quarter 2019.  Revenues were in line with previously provided guidance.  Advertising revenues decreased 38.2%, or $35.6 million, in the three months ended September 27, 2020, compared to the same period for 2019, due to declines in all advertising categories.  Circulation revenues decreased 2.5%, or $2.3 million, in the three months ended September 27, 2020, compared to the same period for 2019.  Home delivery decreased $5.5 million and single copy decreased $1.9 million.  These decreases were partially offset by an increase of $5.1 million in digital subscription revenue driven by an increased number of digital subscribers and higher subscriptions rates per subscriber. Other revenue declined $9.5 million or 18.1%, of which $4.2 million is related to transition services provided to the California properties in the prior year as we wrapped up that agreement in the second quarter.

Third quarter total operating expenses, including depreciation and amortization, were $181.3 million, down 20.0% compared to $226.7 million in the third quarter of 2019.  The decrease reflects the Company’s ongoing disciplined cost management and aggressive efforts to reduce our overall costs.

Net income from continuing operations was $8.5 million in the third quarter of 2020, an increase of 23.5% compared to $6.9 million in the third quarter of 2019. 

Adjusted EBITDA was $27.3 million in the third quarter of 2020, an increase of 9.9% or $2.5 million compared to the third quarter of 2019.  Adjusted EBITDA exceeded previously provided guidance.

For the quarter ended September 27, 2020, capital expenditures totaled $2.1 million.  Cash balance at September 27, 2020, was $90.0 million, which does not include $31.4 million of restricted cash reflected in long-term assets.

Segment ResultsThe Company assesses its operating segments in accordance with ASC Topic 280, “Segment Reporting.”  Beginning with the first quarter of fiscal 2020, Tribune began managing its business as one business and one reportable segment.  The prior periods have been restated to reflect the change in reportable segments.

2020 OutlookFor the fourth quarter of 2020, the Company expects total revenues of $203 million to $208 million and Adjusted EBITDA of $36 million to $39 million.

Conference Call DetailsTribune Publishing will host a conference call to discuss the Company’s third quarter 2020 results at 5:00 p.m. Eastern Time (4:00 p.m. Central Time) on Wednesday, November 4, 2020.  The conference call may be accessed via Tribune Publishing’s Investor Relations website at investor.tribpub.com or by dialing 844.209.4036 (478.219.0556 for international callers) and entering conference ID 9449596.  An archived version of the webcast will also be available for one year on the Tribune Publishing website.  You can also access this replay via telephone by dialing 855.859.2056 (404.537.3406 for international callers) and entering conference ID 9449596.

Non-GAAP Financial Information

Adjusted EBITDA, Adjusted Operating Expenses, Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders, and Adjusted Diluted EPS are not measures presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and Tribune Publishing’s use of the terms Adjusted EBITDA, Adjusted Operating Expenses, Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders, and Adjusted Diluted EPS may vary from that of others in the Company’s industry.  Adjusted EBITDA, Adjusted Operating Expenses, Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders, and Adjusted Diluted EPS should not be considered as an alternative to net income (loss), income from operations, operating expenses, net income (loss) per diluted share, revenues or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or liquidity.  Further information regarding Tribune Publishing’s presentation of these measures, including a reconciliation of Adjusted EBITDA, Adjusted Operating Expenses, Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders and Adjusted Diluted EPS to the most directly comparable U.S. GAAP financial measure, is included below in this press release.

Cautionary Statements Regarding Forward-looking StatementsThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based largely on our current expectations and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include, without limitation, the effect of the novel coronavirus (“COVID-19”) and related governmental and economic responses; changes in advertising demand, circulation levels and audience shares; competition and other economic conditions; our ability to develop and grow our online businesses; changes in newsprint price and availability; our ability to maintain data security and comply with privacy-related laws; economic and market conditions that could impact the level of our required contributions to the defined benefit pension plans to which we contribute; decisions by trustees under rehabilitation plans (if applicable) or other contributing employers with respect to multiemployer plans to which we contribute which could impact the level of our contributions; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interest may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results.  For specific risks related to the COVID-19 pandemic, refer to Item 1A. Risk Factors in the most recently filed Quarterly Report on Form 10-Q.  For more information about these and other risks, see Item 1A (Risk Factors) of the Company’s most recent Annual Report on Form 10-K and in the Company’s other reports filed with the Securities and Exchange Commission.

The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and similar expressions generally identify forward-looking statements.  However, such words are not the exclusive means for identifying forward-looking statements, and their absence does not mean that the statement is not forward looking. Whether or not any such forward-looking statements, in fact occur will depend on future events, some of which are beyond our control.  Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this press release.  Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

About Tribune Publishing CompanyTribune Publishing Company (NASDAQ: TPCO) is a media company rooted in award-winning journalism.  Headquartered in Chicago, Tribune Publishing operates local media businesses in eight markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida's Sun Sentinel and Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania.  In addition to award-winning local media businesses, Tribune Publishing operates Tribune Content Agency and is the majority owner of the product review website BestReviews.

Tribune’s unique and valuable content across its brands have earned a combined 65 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities.  Our brands are committed to informing, inspiring and engaging local communities.  We create and distribute content across our media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.

Investor Relations Contact:Amy Bullis312.222.2102abullis@tribpub.com

Media Contact:Max Reinsdorf847.867.6294mreinsdorf@tribpub.com

Source: Tribune Publishing

Exhibits:Consolidated Statements of Income (Loss)Consolidated Condensed Balance SheetsNon-GAAP Reconciliations - Income (Loss) from Operations to Adjusted EBITDANon-GAAP Reconciliations - Total Operating Expenses to Adjusted Operating ExpensesNon-GAAP Reconciliations - Net income (loss) attributable to Tribune common stockholders to Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders and Adjusted Diluted EPS

TRIBUNE PUBLISHING COMPANYCONSOLIDATED STATEMENTS OF INCOME (LOSS)(In thousands, except per share data)(Unaudited)
Preliminary
		Three months ended								Nine months ended
		September 27, 2020				September 29, 2019				September 27, 2020				September 29, 2019
Operating revenues		$	188,668			$	236,027			$	588,253			$	730,879
Compensation		64,888				83,066				231,981				276,583
Newsprint and ink		7,665				12,613				25,784				43,834
Outside services		61,982				77,549				203,193				241,787
Other operating expenses		32,400				42,163				97,891				123,604
Depreciation and amortization		9,360				11,261				28,702				34,993
Impairment		4,960				—				56,009				—
Total operating expenses		181,255				226,652				643,560				720,801
Income (loss) from operations		7,413				9,375				(55,307		)		10,078
Interest income (expense), net		(176		)		(57		)		(391		)		478
Loss on equity investments, net		—				(2,213		)		(117		)		(3,255		)
Other income (expense), net		401				248				1,237				265
Income (loss) from continuing operations before income taxes		7,638				7,353				(54,578		)		7,566
Income tax expense (benefit)		(853		)		480				(20,619		)		63
Net income (loss) from continuing operations		8,491				6,873				(33,959		)		7,503
Plus: Loss from discontinued operations, net of taxes		—				(12,848		)		—				(13,570		)
Net income (loss)		8,491				(5,975		)		(33,959		)		(6,067		)
Less: Income attributable to noncontrolling interest		1,824				1,150				5,316				3,037
Net income (loss) attributable to Tribune common stockholders		$	6,667			$	(7,125	)		$	(39,275	)		$	(9,104	)
Basic net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations		$	0.18			$	(0.25	)		$	(1.09	)		$	(0.29	)
Income (loss) from discontinued operations		$	—			$	(0.36	)		$	—			$	(0.38	)
Basic net income (loss) attributable to Tribune per common share		$	0.18			$	(0.61	)		$	(1.09	)		$	(0.67	)
Diluted net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations		$	0.18			$	(0.25	)		$	(1.09	)		$	(0.29	)
Income (loss) from discontinued operations		$	—			$	(0.36	)		$	—			$	(0.38	)
Diluted net income (loss) attributable to Tribune per common share		$	0.18			$	(0.61	)		$	(1.09	)		$	(0.67	)
Weighted average shares outstanding:
Basic		36,522				35,863				36,426				35,734
Diluted		36,635				35,863				36,426				35,734

TRIBUNE PUBLISHING COMPANYCONSOLIDATED CONDENSED BALANCE SHEETS(In thousands)(Unaudited)
Preliminary
		September 27, 2020				December 29, 2019
Assets
Current assets
Cash		$	89,992			$	60,963
Accounts receivable, net		75,905				112,754
Inventories		3,056				4,820
Prepaid expenses and other current assets		24,712				15,114
Total current assets		193,665				193,651
Property, plant and equipment, net		84,997				123,913
Other assets
Goodwill		115,197				117,675
Intangible assets, net		56,917				69,165
Software, net		18,734				20,736
Lease right-of-use asset		56,502				99,480
Restricted cash		31,371				37,290
Other long-term assets		24,144				20,368
Total other assets		302,865				364,714
Total assets		$	581,527			$	682,278
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		$	32,530			$	46,482
Employee compensation and benefits		24,903				36,305
Deferred revenue		37,466				42,773
Current portion of long-term lease liability		26,327				25,380
Current portion of long-term debt		6,974				105
Other current liabilities		22,348				24,317
Total current liabilities		150,548				175,362
Non-current liabilities
Long term lease liability		73,980				98,847
Workers’ compensation, general liability and auto insurance payable		24,243				24,192
Pension and postretirement benefits payable		16,690				20,338
Deferred revenue		2,051				2,504
Long-term debt		57				6,857
Other obligations		15,846				5,851
Total non-current liabilities		132,867				158,589
Noncontrolling interest		—				63,501
Stockholders’ equity
Total stockholders’ equity		298,112				284,826
Total liabilities and stockholders’ equity		581,527				682,278

TRIBUNE PUBLISHING COMPANYSupplemental Revenue Schedule(In thousands)(Unaudited)
Preliminary
		Three months ended								Nine months ended
		September 27, 2020				September 29, 2019				September 27, 2020				September 29, 2019
Print		$	42,151			$	71,387			$	138,147			$	227,054
Digital		15,432				21,831				50,013				66,484
Advertising		57,583				93,218				188,160				293,538
Print		75,594				82,992				233,907				254,482
Digital		12,736				7,606				31,690				20,562
Circulation		88,330				90,598				265,597				275,044
Commercial print & delivery		17,159				22,404				56,173				70,765
Direct mail		5,248				8,853				17,914				26,431
Content syndication and other		20,348				20,954				60,409				65,101
Other		42,755				52,211				134,496				162,297
Total operating revenues		$	188,668			$	236,027			$	588,253			$	730,879

TRIBUNE PUBLISHING COMPANYNON-GAAP RECONCILIATIONS(In thousands)(Unaudited)
Preliminary
Reconciliation of Income (Loss) from Operations to Adjusted EBITDA:
		Three months ended										Nine months ended
		Sept 27, 2020				Sept 29, 2019				% Change		Sept 27, 2020				Sept 29, 2019				% Change
Net income (loss) from continuing operations		$	8,491			$	6,873			23.5%		$	(33,959	)		$	7,503			*
Income tax expense (benefit) from continuing operations		(853		)		480				*		(20,619		)		63				*
Interest income (expense), net		176				57				*		391				(478		)		*
Loss on equity investments, net		—				2,213				*		117				3,255				(96.4%)
Other income (expense), net		(401		)		(248		)		61.7%		(1,237		)		(265		)		*
Income (loss) from operations		7,413				9,375				(20.9%)		(55,307		)		10,078				*
Depreciation and amortization		9,360				11,261				(16.9%)		28,702				34,993				(18.0%)
Impairment		4,960				—				*		56,009				—				*
Restructuring and transaction costs (1)		4,531				1,721				*		25,813				14,389				79.4%
Stock based compensation		1,001				2,449				(59.1%)		4,133				11,065				(62.6%)
Adjusted EBITDA from continuing operations		$	27,265			$	24,806			9.9%		$	59,350			$	70,525			(15.8%)

* Represents positive or negative change in excess of 100%

(1) - Restructuring and transaction costs include costs related to Tribune’s internal restructuring, such as severance, charges associated with vacated space and costs related to completed and potential acquisitions.

Adjusted EBITDA

Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP.  Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, stock-based compensation, and gain/loss on equity investments) and (ii) expenses that are not reflective of the Company’s core operating results over time (such as restructuring costs, including the employee voluntary separation program and gain/losses on employee benefit plan terminations, litigation or dispute settlement charges or gains, premiums on stock buyback, impairment, and transaction-related costs), this measure provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period.  The Company’s management uses Adjusted EBITDA (a) as a measure of operating performance; (b) for planning and forecasting in future periods; and (c) in communications with the Company’s Board of Directors concerning the Company’s financial performance.  In addition, Adjusted EBITDA, or a similarly calculated measure, has been used as the basis for certain financial maintenance covenants that the Company was subject to in connection with certain credit facilities.  Since not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with U.S. GAAP.  Instead, management believes Adjusted EBITDA should be used to supplement the Company’s financial measures derived in accordance with U.S. GAAP to provide a more complete understanding of the trends affecting the business.

Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP.  Some of the limitations to using non-GAAP measures as an analytical tool are: they do not reflect the Company’s interest income and expense, or the requirements necessary to service interest or principal payments on the Company’s debt; they do not reflect future requirements for capital expenditures or contractual commitments; and although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.

The Company does not provide a reconciliation of Adjusted EBITDA guidance due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring and transaction costs, stock-based compensation amounts and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.

TRIBUNE PUBLISHING COMPANYNON-GAAP RECONCILIATIONS(In thousands)(Unaudited)

Preliminary

Reconciliation of Total Operating Expenses to Adjusted Operating Expenses

Adjusted operating expenses consist of total operating expenses per the income statement, adjusted to exclude the impact of items listed in the Adjusted EBITDA non-GAAP reconciliation.  Management believes that adjusted operating expenses is informative to investors as it enhances the investors' overall understanding of the financial performance of the Company's business as they analyze current results compared to prior periods.

		Three months ended September 27, 2020												Three months ended September 29, 2019
		GAAP				Adjustments				AdjustedExpenses				GAAP				Adjustments				AdjustedExpenses
Compensation		$	64,888			$	(5,224	)		$	59,664			$	83,066			$	(3,484	)		$	79,582
Newsprint and ink		7,665				(157		)		7,508				12,613				—				12,613
Outside services		61,982				(145		)		61,837				77,549				(295		)		77,254
Other operating expenses		32,400				(6		)		32,394				42,163				(390		)		41,773
Depreciation and amortization		9,360				(9,360		)		—				11,261				(11,261		)		—
Impairment		4,960				(4,960		)		—				—				—				—
Total operating expenses		$	181,255			$	(19,852	)		$	161,403			$	226,652			$	(15,430	)		$	211,222
		Nine months ended September 27, 2020												Nine months ended September 29, 2019
		GAAP				Adjustments				AdjustedExpenses				GAAP				Adjustments				AdjustedExpenses
Compensation		$	231,981			$	(31,436	)		$	200,545			$	276,583			$	(19,915	)		$	256,668
Newsprint and ink		25,784				(157		)		25,627				43,834				—				43,834
Outside services		203,193				(2,543		)		200,650				241,787				(4,955		)		236,832
Other operating expenses		97,891				4,190				102,081				123,604				(584		)		123,020
Depreciation and amortization		28,702				(28,702		)		—				34,993				(34,993		)		—
Impairment		56,009				(56,009		)		—				—				—				—
Total operating expenses		$	643,560			$	(114,657	)		$	528,903			$	720,801			$	(60,447	)		$	660,354

TRIBUNE PUBLISHING COMPANYNON-GAAP RECONCILIATIONS(In thousands)(Unaudited)

Preliminary

Reconciliation of Net income (loss) attributable to Tribune common stockholders to Adjusted Income (Loss) from continuing operations attributable to Tribune common stockholders and Adjusted Diluted EPS:

Adjusted income (loss) from continuing operations attributable to Tribune common stockholders is defined as Net income (loss) from continuing operations attributable to Tribune common stockholders - GAAP excluding the adjustments for restructuring and transaction costs, net of the impact of income taxes.

Net income (loss) from continuing operations attributable to Tribune common stockholders - GAAP consists of Net income (loss) from continuing operations per the Consolidated Statements of Income (Loss), less Income attributable to noncontrolling interest and the noncontrolling interest carrying value adjustment as set forth in the Earnings (Loss) Per Share calculation in the Company's Form 10-Q.

Adjusted Diluted EPS computes Adjusted income (loss) from continuing operations attributable to Tribune common stockholders divided by diluted weighted average shares outstanding.

Management believes Adjusted income (loss) from continuing operations attributable to Tribune common stockholders and Adjusted Diluted EPS are informative to investors as they enhance investors' overall understanding of the financial performance of the Company's business as they analyze current results compared to future recurring projections.

		Three months ended
		September 27, 2020								September 29, 2019
		Earnings				Diluted EPS				Earnings				Diluted EPS
Net income (loss) from continuing operations attributable to Tribune common stockholders - GAAP		$	6,667			$	0.18			$	(9,130	)		$	(0.25	)
Adjustments to operating expenses, net of 27.8% tax
Restructuring and transaction costs		3,271				0.09				1,243				0.03
Adjusted income (loss) from continuing operations attributable to Tribune common stockholders - Non-GAAP		$	9,938			$	0.27			$	(7,887	)		$	(0.22	)
		Nine months ended
		September 27, 2020								September 29, 2019
		Earnings				Diluted EPS				Earnings				Diluted EPS
Net loss from continuing operations attributable to Tribune common stockholders - GAAP		$	(39,597	)		$	(1.09	)		$	(10,387	)		$	(0.29	)
Adjustments to operating expenses, net of 27.8% tax
Restructuring and transaction costs		18,637				0.51				10,389				0.29
Adjusted income (loss) from continuing operations attributable to Tribune common stockholders - Non-GAAP		$	(20,960	)		$	(0.58	)		$	2			$	—