A. H. Belo Corporation (NYSE: AHC) today reported fourth quarter
net income from continuing operations of $3.07 per fully diluted
share, an increase of $2.84 per share over fourth quarter 2013.
Full-year 2014 net income from continuing operations was $3.82 per
fully diluted share, an increase of $3.75 per share over 2013.
Fourth quarter earnings growth was due to a $77.1 million gain on
the Company's divestiture of its investment in Classified Ventures,
partially offset by a $7.6 million non-cash charge related to the
amortization of actuarial losses in conjunction with pension
settlements. Full-year earnings growth also reflects an $18.5
million gain related to the second quarter sale of apartments.com
by Classified Ventures. Fourth quarter and full-year 2014 net
income from continuing and discontinued operations was $56.5
million and $92.9 million, respectively.
Adjusted earnings before interest, taxes, depreciation and
amortization (“EBITDA”) from continuing operations was $6.3 million
in the fourth quarter of 2014, a decrease of 28
percent compared to the prior year period. Full-year 2014
Adjusted EBITDA from continuing operations was $17.0 million, a
decrease of 9 percent compared to the prior year.
As of December 31, 2014, cash and cash equivalents were $158.2
million, and the Company had no debt.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “After considering non-cash pension expenses and transaction
related costs, the Company's operating income has remained strong.
In 2014, digital advertising and marketing services revenues grew
by 13 percent for the full year and we expanded our commercial
printing revenues by 76 percent. Taken together, these areas added
$11.5 million in incremental revenue to our top line in 2014, all
of which helped us limit our decline in year-over-year revenue to
1.2 percent, the smallest degree of decline since the spin-off of
the Company. In addition, the Company realized a significant return
on its investment in Classified Ventures, which permitted us to
return significant capital to our shareholders, while providing
sufficient liquidity to make additional investments in new
businesses that will further diversify our sources of revenue and
make the Company less dependent on revenue tied to paid print
edition volumes."
Fourth Quarter Results from Continuing
Operations
Total revenue was $73.2 million in the fourth quarter of 2014,
remaining flat compared to the prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, decreased 5 percent to $43.3 million as
display, preprint and classified advertising revenues decreased 11
percent, 7 percent and 14 percent, respectively.
Digital revenue increased 17 percent to $8.6 million primarily
due to the continued growth in marketing services revenue
associated with Speakeasy and increased revenue from dallasnews.com resulting from a new programmatic
advertising platform and growth in both unique visitors and page
views.
Advertising revenue from niche publications, which is a
component of the display, preprint, classified and digital revenues
reported above, decreased 12 percent to $5.9 million. This decline
primarily resulted from lower classified and preprint advertising
revenue at The Dallas Morning News' free, home-delivered print news
product Briefing.
Circulation revenue decreased 4 percent to $21.5 million as a
decline in home delivery revenue due to lower volumes was partially
offset by increased single copy revenue due to higher rates.
Printing, distribution, and other revenue increased 52 percent
to $8.5 million in the fourth quarter of 2014 primarily due to the
impact of printing the Fort Worth Star-Telegram, additional
printing of two local community newspapers and two Untapped events
owned and promoted by Crowdsource.
Total consolidated operating expense in the fourth quarter was
$80.2 million, a 17 percent increase compared to the prior year
period primarily due to a $7.6 million charge resulting from
pension settlements in the fourth quarter, higher delivery and
labor costs related to additional printing and distribution
business, and increased severance expense, offset by lower salary
and newsprint expenses.
The Company’s newsprint expense in the fourth quarter was $5.1
million, a decrease of 12 percent compared to the prior year
period. Newsprint consumption declined 7 percent to approximately
9,000 metric tons. Compared to the prior year period, newsprint
cost per metric ton decreased 6 percent and the average purchase
price per metric ton for newsprint decreased 2 percent.
Full-Year Results from Continuing
Operations
Total revenue was $272.8 million in 2014, a decrease of 1
percent compared to the prior year. This represents the second
consecutive year the Company has been effective in significantly
stabilizing year-over-year revenue losses attributable to declines
in print related revenue. The continued improvement in year over
year revenue performance in 2014 was driven by growth in printing
and distribution revenues and from growth in revenues from the
Company's recent initiatives in marketing services and event
promotion.
Advertising and marketing services revenue decreased 6 percent
to $158.2 million primarily due to declines in display, preprint
and classified advertising revenues which decreased 14 percent, 6
percent and 8 percent, respectively. These decreases were partially
offset by growth in digital advertising revenue of 5.6 percent,
while the Company's marketing services revenue associated with
508 Digital and Speakeasy generated $8.0 million of
combined revenues in 2014, an increase of 39 percent over the prior
year.
Advertising revenue from niche publications, which is a
component of the display, preprint, classified and digital revenues
reported above, decreased 7 percent to $23.0 million,
primarily due to lower preprint and classified advertising.
Circulation revenue decreased 2 percent to $84.9 million due to
lower volumes, substantially offset by increased rates for home
delivery and single copy.
Printing, distribution and other revenue increased 35 percent to
$29.7 million primarily due to the impact of printing the Fort
Worth Star-Telegram, additional printing of two local community
newspapers and an increase in events promoted by Crowdsource.
Total consolidated operating expense was $280.5 million in 2014,
a 2 percent increase compared to the prior year. This increase was
primarily driven by a $7.6 million charge resulting from pension
settlements in the fourth quarter, higher delivery and labor costs
related to additional printing and distribution business, and
higher third party costs associated with classified advertising,
offset by lower salary and newsprint expense. Excluding the $7.6
million non-cash pension charge, consolidated operating expense
decreased 1 percent compared to the prior year.
In 2014, the Company’s newsprint expense was $19.8 million, a
decrease of 11 percent compared to the prior year. Newsprint
consumption decreased 9 percent to approximately 34,000 metric
tons. Compared to the prior year, newsprint cost per metric ton and
the average purchase price per metric ton for newsprint decreased 3
percent and 1 percent, respectively.
In 2014, the Company's total direct compensation expense
decreased by $4.1 million or 4.3 percent, primarily due to
headcount reductions and lower commissions. As of December 31,
2014, A. H. Belo had approximately 1,200 full-time equivalent
employees, a decrease of approximately 23 percent compared to
the prior year, primarily due to the sale of The Providence Journal
during 2014.
Discontinued Operations
In 2014, income from discontinued operations was $6.8 million,
which included a pretax gain of $17.1 million from the disposition
of The Providence Journal and pretax income of $4.1 million from
operations through its September 3, 2014 sale date.
Pension Plans
In 2014, the Company made required contributions to its pension
plans of $9.9 million and a fourth quarter voluntary contribution
of $20.0 million. The Company does not anticipate any required cash
contributions to its pension plans in 2015.
In 2014, the liability for the net unfunded position of the
Company's pension plans increased by $15.8 million due to $49.2
million in actuarial adjustments primarily related to lower
discount rates and adoption of new mortality tables, partially
offset by favorable investment performance and contributions during
the year. These actuarial adjustments were recorded to accumulated
other comprehensive loss on the balance sheet. Pension expense for
2014 was $4.1 million, which includes the $7.6 million charge for
pension settlements.
Income Taxes
As a result of the previously discussed transactions, the
Company generated taxable income in 2014. The tax provision
recognized was reduced by $28.4 million for changes in the
valuation allowance, which primarily resulted from the use of $19.6
million in net operating loss carryforwards.
Real Estate Holdings
In the fourth quarter of 2014, the Company sold the land and
building formerly used as a commercial packaging operation in
southern Dallas, generating sales proceeds and a gain of $6.7
million and $1.8 million, respectively.
Non-GAAP Financial
Measures
Reconciliations of net income to EBITDA and Adjusted EBITDA from
continuing operations are included as exhibits to this release.
Financial Results Conference
Call
A. H. Belo will conduct a conference call on Friday, February
27, 2015, at 10:00 a.m. CST to discuss financial results. The
conference call will be available via webcast by accessing the
Company’s website (www.ahbelo.com/invest) or by dialing
1-800-230-1092 (USA) or 612-234-9960 (International). A replay line
will be available at 1-800-475-6701 (USA) or 320-365-3844
(International) from 3:00 p.m. CST on February 27, 2015, until
11:59 p.m. CST on March 6, 2015. The access code for the replay is
351809.
About A. H. Belo
Corporation
A. H. Belo Corporation (NYSE: AHC) is a leading local news and
information publishing company with commercial printing,
distribution and direct mail capabilities, as well as expertise in
emerging media and digital marketing. With a continued focus on
extending our media platform, we are able to deliver news and
information in innovative ways to a broad spectrum of audiences
with diverse interests and lifestyles. For additional information,
visit ahbelo.com or email invest@ahbelo.com.
Statements in this communication concerning A. H. Belo
Corporation’s (the “Company’s”) business outlook or future economic
performance, anticipated profitability, revenue, expense,
dividends, capital expenditures, investments, dispositions,
impairments, business initiatives, acquisitions, pension plan
contributions and obligations, real estate sales, working capital,
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;
audits and related actions by the Alliance for Audited Media;
challenges implementing increased subscription pricing and new
pricing structures; challenges in achieving expense reduction goals
in a timely manner and the resulting potential effects on
operations; challenges attracting and retaining key personnel;
challenges in consummating asset acquisitions or dispositions upon
acceptable terms; technological changes; development of Internet
commerce; industry cycles; changes in pricing or other actions by
existing and new competitors and suppliers; consumer acceptance of
new products and business initiatives; 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; acts of terrorism; and other factors
beyond our control, as well as other risks described in
the Company’s Annual Report on Form 10-K, and in the Company’s
other public disclosures and filings with the Securities and
Exchange Commission.
A. H. Belo Corporation
Consolidated Statements of Operations Three
Months Ended Twelve Months Ended December 31,
December 31, In thousands, except share and per share
amounts (unaudited) 2014
2013 2014 2013 Net Operating
Revenue Advertising and marketing services $ 43,265 $ 45,657 $
158,183 $ 167,945 Circulation 21,464 22,250 84,922 86,274 Printing,
distribution and other 8,483 5,574
29,683 21,964 Total net operating
revenue 73,212 73,481 272,788 276,183
Operating Costs and
Expense Employee compensation and benefits 33,559 26,804
111,710 110,412 Other production, distribution and operating costs
34,309 29,080 122,239 114,720 Newsprint, ink and other supplies
8,495 9,363 32,507 34,847 Depreciation 3,721 3,357 13,820 14,861
Amortization 77 32 198
121 Total operating costs and expense 80,161
68,636 280,474 274,961
Operating income (loss) (6,949 ) 4,845 (7,686 ) 1,222
Other Income, Net Gains on equity method investments, net
76,692 451 93,898 2,269 Interest expense — — —
(311
)
Other income, net 1,637 80 5,773
196 Total other income, net 78,329
531 99,671 2,154
Income from Continuing Operations Before Income Taxes 71,380
5,376 91,985 3,376 Income tax provision 2,503
87 5,978 1,460
Income from
Continuing Operations 68,877 5,289
86,007 1,916 Income from discontinued
operations 298 3,867 4,064 665
Gain (loss) related to the divestiture of
discontinued operations, net
(52 ) 8,656 17,057 13,402 Tax expense from discontinued operations
12,653 195 14,351
57
Gain (Loss) from Discontinued Operations, Net
(12,407 ) 12,328 6,770
14,010
Net Income 56,470 17,617 92,777 15,926 Net
loss attributable to noncontrolling interests (72 )
(22 ) (152 ) (193 )
Net Income Attributable to A.
H. Belo Corporation $ 56,542 $ 17,639 $ 92,929
$ 16,119
Per Share Basis Basic
Continuing operations $ 3.09 $ 0.23 $ 3.84 $ 0.07 Discontinued
operations (0.57 ) 0.54 0.31
0.64 Net income attributable to A. H. Belo
Corporation $ 2.52 $ 0.77 $ 4.15 $ 0.71
Diluted Continuing operations $ 3.07 $ 0.23 $ 3.82 $
0.07 Discontinued operations (0.57 ) 0.54
0.31 0.64 Net income attributable to A.
H. Belo Corporation $ 2.50 $ 0.77 $ 4.13 $
0.71
Weighted average shares outstanding Basic
21,943,031 21,972,832 21,899,602 21,967,666 Diluted 22,034,687
22,098,783 22,006,022 22,063,741
A.
H. Belo Corporation Condensed Consolidated Balance
Sheets December 31, December 31,
In thousands (unaudited) 2014
2013 Assets Current assets: Cash and cash equivalents
$ 158,171 $ 82,193 Accounts receivable, net 34,396 32,270 Other
current assets 13,323 11,246 Assets of discontinued operations
565 42,716 Total current assets 206,455 168,425
Property, plant and equipment, net 61,589 74,863 Intangible assets,
net 25,238 24,823 Other assets 5,465 11,107 Total
assets $ 298,747 $ 279,218
Liabilities and Shareholders’
Equity Current liabilities: Accounts payable $ 12,904 $ 13,717
Accrued expenses and other current liabilities 72,065 14,275
Advance subscription payments 15,894 14,842 Liabilities of
discontinued operations 543 11,538 Total current
liabilities 101,406 54,372 Long-term pension liabilities 65,859
50,082 Other liabilities 5,463 5,988 Total shareholders’ equity
126,019 168,776 Total liabilities and shareholders’
equity $ 298,747 $ 279,218
A. H.
Belo Corporation Reconciliation of Net Income to EBITDA and
Adjusted EBITDA from Continuing Operations
Three Months Ended
Twelve Months Ended
December 31,
December 31,
In thousands (unaudited) 2014
2013 2014 2013 Net Income
Attributable to A. H. Belo Corporation $ 56,542 $ 17,639 $
92,929 $ 16,119
Less: Income (loss) from discontinued
operations, net
(12,407 ) 12,328 6,770 14,010 Plus: Net loss attributable to
noncontrolling interests (72 ) (22 ) (152 )
(193 ) Income from continuing operations 68,877 5,289 86,007
1,916 Depreciation and amortization 3,798 3,389 14,018 14,982
Interest expense — — — 311 Income tax provision 2,503
87 5,978 1,460
EBITDA from Continuing
Operations
75,178
8,765
106,003
18,669 Addback: Acquisition costs 577 — 577 — Pension plan
settlement loss 7,648 — 7,648 — Net investment-related gains
(77,092 )
—
(97,240
)
—
Adjusted EBITDA from Continuing Operations $ 6,311
$ 8,765 $ 16,988 $ 18,669
The Company evaluates earnings before interest, taxes,
depreciation and amortization ( “EBITDA”) which is presented for
continuing operations by adjusting for discontinued operations and
losses attributable to noncontrolling interests. Adjusted EBITDA is
calculated by adding back to EBITDA recorded expenses to acquire
new businesses, expense related to the settlement of pension plan
obligations, net investment-related losses and non-cash impairment
expense, as applicable.
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 for performance comparisons
against its peer group of companies. Neither EBITDA nor Adjusted
EBITDA should be considered in isolation or as a substitute for net
income from continuing operations, cash flows provided by operating
activities or other comparable measures prepared in accordance with
GAAP. Additionally, these non-GAAP measures may not be comparable
to similarly-titled measures of other companies.
A. H. Belo CorporationMike Lavey, 214-977-7245Vice
President/Controller
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