A. H. Belo Corporation (NYSE: AHC) today reported a net loss of
$0.18 per share for the first quarter of 2012 compared to a net
loss of $0.31 per share in the first quarter of 2011. The first
quarter 2012 net loss includes gains totaling $0.5 million from the
Company's disposition of certain real estate assets in Dallas.
Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $5.1 million in the first quarter of 2012, an
increase of 82 percent compared to the first quarter of 2011. When
pension expense is added back to EBITDA (“Adjusted EBITDA”) in both
periods, Adjusted EBITDA in the first quarter was $6.1 million, an
increase of 36 percent compared to the prior year period.
As of March 31, 2012, cash and cash equivalents were $55.7
million, and the Company had no borrowings under its bank credit
facility.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “First quarter Adjusted EBITDA performance exceeded
our internal expectations by a large margin due to expense
containment. 508 Digital, our new digital business focused on small
and medium businesses in Dallas, completed its first round of sales
training at the end of March and launched sales teams into the
market. We are pleased with the startup guidance provided by our
partner, Hearst Corporation, and the early financial results. Our
second wave of sales teams is now on the field.”
Decherd continued, “On this afternoon’s conference call, Jim
Moroney, Publisher and Chief Executive Officer of The Dallas
Morning News, will discuss key takeaways from the first year of The
Morning News’ subscriber content initiative, and The Morning News’
subscriber content priorities for 2012.”
First Quarter Results
Total revenue was $104.8 million in the first quarter of 2012, a
decrease of 7 percent compared to the prior year period. Excluding
the impact of advertising related to the Super Bowl in Dallas
during the first quarter of 2011, total revenue decreased 5 percent
in the first quarter of 2012.
Advertising revenue, including print and digital revenues,
decreased 12 percent – with the smallest percentage decrease at The
Providence Journal followed by The Press-Enterprise and The Dallas
Morning News. Excluding the impact of advertising related to the
Super Bowl, advertising revenue, including print and digital
revenues, decreased 10 percent – with the smallest percentage
decrease at The Dallas Morning News followed by The Providence
Journal and The Press-Enterprise. Display advertising revenue
decreased 18 percent to $19.4 million, and preprint revenue
decreased 6 percent to $18.9 million. Classified revenue decreased
10 percent to $13.9 million. As expected, digital revenue decreased
11 percent to $7.8 million. Excluding the impact of a
discontinuation of a revenue allocation to digital and the Super
Bowl, digital revenue was flat in the first quarter of 2012
compared to the prior year period.
In the third quarter of 2011, The Morning News discontinued the
niche publication Quick. When Quick’s advertising revenue in the
first quarter of 2011 is excluded, advertising revenue from ongoing
niche publications increased 2 percent in the first quarter of
2012. This increase resulted from higher advertising revenue at The
Morning News’ Spanish-language publication Al Día. Advertising
revenue from niche publications is a component of the display,
preprint, classified and digital revenue figures presented
above.
Circulation revenue decreased 1 percent to $34.7 million in the
first quarter of 2012 compared to the prior year period. Excluding
$0.9 million of circulation revenue resulting from The Providence
Journal’s transition from a carrier to a distributor circulation
model in 2011, total circulation revenue decreased 4 percent to
$33.8 million.
Printing and distribution revenue increased 10 percent to $10.1
million in the first quarter of 2012 due primarily to new contracts
at The Providence Journal. During the first quarter, The
Press-Enterprise reached agreement with the North County Times for
The Press-Enterprise to print the North County Times beginning in
June.
Total consolidated operating expense in the first quarter was
$109.1 million. Excluding the effect of pension expense in both
periods, operating expense in the first quarter was $108.1 million,
an 8 percent decrease compared to the prior year period as salaries
and wages, newsprint, outside services and advertising expenses all
decreased. First quarter severance and related expenses totaled
$0.2 million.
The Company’s newsprint expense in the first quarter was $9.5
million, a decrease of 12 percent compared to the prior year
period. Newsprint consumption dropped 11 percent to 15,041 metric
tons. Compared to the prior year period, newsprint cost per metric
ton and the average purchase price per metric ton for newsprint
were flat.
Excluding the effect of pension expense in both periods, first
quarter corporate and non-operating unit expenses were $7.7
million, a decrease of 8 percent compared to the prior year
period.
Capital expenditures totaled $1.8 million in the first quarter.
The Company anticipates full-year 2012 capital expenditures in the
$8 to $10 million range.
As of March 31, 2012, A. H. Belo had approximately 2,000
full-time equivalent employees, a decrease of approximately 14
percent compared to the prior year period.
Executive Changes
The Dallas Morning News recently retained executive search firms
to assist The Morning News with hiring two key executives, a Vice
President/Sales and a Vice President/Marketing, both reporting to
Jim Moroney. The current head of the sales department, Cyndy Carr,
is leaving The Morning News to join a startup. The Vice
President/Marketing position will focus on consumer marketing, data
analytics, and print and digital subscriber acquisition and
retention.
Moroney said, “Cyndy’s work in re-organizing and re-constituting
The Dallas Morning News’ sales department over the past three years
has been invaluable, and we wish her success in her new business
venture. I am excited about the opportunity to recruit two new
senior leaders who can continue to leverage the strong assets of
The Morning News.”
Pension Plans
At the start of the second quarter, the Company voluntarily
contributed $10 million to its defined benefit pension plans.
Provided aggregate discount rates stabilize and investment
performance meets or exceeds expectations, the Company does not
anticipate making further voluntary contributions to its pension
plans in 2012 or 2013.
In April, the Company also made a required quarterly
contribution of $4.6 million and accelerated payment of its $3.4
million required quarterly contribution due in September 2012.
As a result of the $10 million voluntary contribution, the
accelerated September payment and other factors, the Company
anticipates that its required 2012 cash contributions to the
pension plans will be reduced by $1.9 million. The estimated total
required cash contribution to the pension plans in 2012 is $22.6
million, significantly below the Company’s previous estimates.
Non-GAAP Financial
Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA are
included as exhibits to this release.
Conference Call
A. H. Belo will conduct a conference call today at 1:30 p.m. CDT
to discuss first quarter 2012 financial results and The Dallas
Morning News’ subscriber content initiative. Before the market
opens, A. H. Belo will post a presentation about The Morning News’
subscriber content initiative on the Company’s website under the
Investor Relations section (www.ahbelo.com/invest), and this
presentation will be referenced during the conference call. The
conference call will be available via webcast under the Investor
Relations section of the Company’s website (www.ahbelo.com/invest)
or by dialing 1-800-230-1074 (USA) or 612-234-9960 (International).
A replay line will be available at 1-800-475-6701 (USA) or
320-365-3844 (International) from approximately 3:30 p.m. CDT on
April 30 until 11:59 p.m. CDT on May 7, 2012. The access code for
the replay is 243285.
About A. H. Belo
Corporation
A. H. Belo Corporation (NYSE: AHC), headquartered in Dallas,
Texas, is a distinguished newspaper publishing and local news and
information company that owns and operates four daily newspapers
and related websites. A. H. Belo publishes The Dallas Morning News,
Texas’ leading newspaper and winner of nine Pulitzer Prizes; The
Providence Journal, the oldest continuously-published daily
newspaper in the United States and winner of four Pulitzer Prizes;
The Press-Enterprise (Riverside, CA), serving the Inland Southern
California region and winner of one Pulitzer Prize; and the Denton
Record-Chronicle. The Company publishes niche publications
targeting specific audiences, and its investments and/or
partnerships include Classified Ventures, owner of Cars.com, and
the Yahoo! Newspaper Consortium. A. H. Belo also owns and operates
commercial printing, distribution and direct mail service
businesses. Additional information is available at www.ahbelo.com
or by contacting David A. Gross, Vice President/Investor Relations
and Strategic Analysis, at 214-977-4810.
Statements in this communication concerning A. H. Belo
Corporation's (the "Company's") business outlook or future economic
performance, anticipated profitability, revenues, expenses,
dividends, capital expenditures, investments, impairments, pension
plan contributions, real estate sales, future financings, and other
financial and non-financial items that are not historical facts,
are "forward-looking statements" as the term is defined under
applicable federal securities laws. Forward-looking statements are
subject to risks, uncertainties and other factors that could cause
actual results to differ materially from those statements.
Such risks, uncertainties and factors include, but are not
limited to, changes in capital market conditions and prospects, and
other factors such as changes in advertising demand and newsprint
prices; newspaper circulation trends and other circulation matters,
including changes in readership methods, patterns and demography,
and audits and related actions by the Audit Bureau of Circulations;
challenges implementing increased subscription pricing and new
pricing structures; challenges in achieving expense reduction
goals, and on schedule, and the resulting potential effects on
operations; technological changes; development of Internet
commerce; industry cycles; changes in pricing or other actions by
existing and new competitors and suppliers; labor relations;
regulatory, tax and legal changes; adoption of new accounting
standards or changes in existing accounting standards by the
Financial Accounting Standards Board or other accounting
standard-setting bodies or authorities; the effects of Company
acquisitions, dispositions, co-owned ventures, and investments;
pension plan matters; general economic conditions and changes in
interest rates; significant armed conflict; and other factors
beyond our control, as well as other risks described in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2011, and other public disclosures and filings with
the Securities and Exchange Commission.
A. H. Belo Corporation Condensed Consolidated
Statements of Operations Three
months ended March 31, In thousands, except
per share amounts (unaudited) 2012 2011
Net operating revenues Advertising $ 60,077 $ 67,936
Circulation 34,655 35,052 Printing and distribution 10,102
9,187
Total net operating revenues
104,834
112,175
Operating costs and expenses Salaries, wages
and employee benefits 46,005 50,495 Other production, distribution
and operating costs 40,696 45,652 Newsprint, ink and other supplies
13,972 14,502 Depreciation 7,113 7,583 Amortization 1,310
1,310 Total operating costs and expenses
109,096 119,542 Loss from operations (4,262 ) (7,367 )
Other (expense) income, net Interest expense (136 )
(207 ) Other income, net 907 1,267
Total other (expense) income, net 771 1,060
Earnings Loss before income taxes (3,491 )
(6,307 ) Income tax expense 402 420
Net loss $ (3,893 ) $ (6,727 )
Net loss per
share: Basic and diluted $ (0.18 ) $ (0.31 )
Average
shares outstanding: Basic and diluted 21,688 21,383
A. H. Belo Corporation Condensed
Consolidated Balance Sheets
March 31, December 31, In
thousands (unaudited) 2012 2011
Assets Current assets Cash and cash equivalents $ 55,701 $
57,440 Accounts receivable, net 37,377 50,533 Other current assets
24,295 20,225 Total current assets 117,373 128,198
Property, plant and equipment, net 158,037 163,418
Intangible assets, net 40,222 41,532 Other assets 11,286
11,940 Total assets $ 326,918
$ 345,088
Liabilities and Shareholders' Equity
Current liabilities Accounts payable $ 13,687 $ 18,062 Accrued
expenses 25,633 30,167 Advance subscription payments 24,181
22,491 Total current liabilities 63,501 70,720
Pension liabilities 140,270 145,980 Other liabilities 6,039 6,909
Total shareholders' equity 117,108 121,479
Total liabilities and shareholders' equity $ 326,918 $ 345,088
A. H. Belo Corporation
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Three months ended
March 31, In thousands (unaudited)
2012 2011
AS REPORTED Net loss $
(3,893 ) $ (6,727 ) Addback: Depreciation and amortization 8,423
8,893 Interest expense 136 207 Income tax expense 402
420 EBITDA (1) 5,068 2,793
Addback: Pension expense 1,036 1,685
Adjusted EBITDA (1) $ 6,104 $ 4,478 (1)
EBITDA is calculated by adding depreciation and amortization,
interest expense and income tax expense recorded to net loss.
Adjusted EBITDA is calculated by adding pension expense, non-cash
impairment expense and net investment-related losses recorded to
EBITDA. Neither EBITDA nor Adjusted EBITDA is a measure of
financial performance under generally accepted accounting
principles ("GAAP"). Management uses EBITDA, Adjusted EBITDA and
similar measures in internal analyses as supplemental measures of
the Company's financial performance and to assist with performance
comparisons against its peer group of companies and other
decisions. EBITDA or similar measures are also common alternative
measures of performance used by investors, financial analysts and
rating agencies to evaluate financial performance. Neither EBITDA
nor Adjusted EBITDA should be considered in isolation or as a
substitute for cash flows provided by operating activities or other
income or cash flow data prepared in accordance with GAAP, and
these non-GAAP measures may not be comparable to similarly-titled
measures of other companies.
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