A. H. Belo Corporation (NYSE:AHC) today reported fourth quarter
2017 income from continuing operations before income taxes of
$6.9 million. In the fourth quarter of 2016, the A. H. Belo
Corporation (the “Company”) reported loss from continuing
operations before income taxes of $(22.4) million. The fourth
quarter 2017 income was driven by the sale of real estate, while
the fourth quarter 2016 loss was driven by a noncash goodwill
impairment charge of $22.7 million. Finalization of the fourth
quarter 2017 net income attributable to A. H. Belo Corporation is
pending completion of the calculation of income taxes. Final fourth
quarter 2017 net income attributable to A. H. Belo Corporation will
be reported in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2017.
In the fourth quarter of 2017, on a non-GAAP basis, the Company
reported operating income excluding certain items (“adjusted
operating income”) of $5.5 million, an increase of
$3.7 million, or 209.5 percent, when compared to the
fourth quarter of 2016.
For the full year 2017, income from continuing operations before
income taxes was $4.5 million. For the full year 2016, the
Company reported loss from continuing operations before income
taxes of $(21.5) million. The full year 2017 income was driven
by the sale of real estate, while the full year 2016 loss was
driven by a noncash goodwill impairment charge of
$22.7 million. Finalization of the full year 2017 net income
attributable to A. H. Belo Corporation is pending completion of the
calculation of income taxes. Final full year 2017 net income
attributable to A. H. Belo Corporation will be reported in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017.
For the full year 2017, on a non-GAAP basis, the Company
reported adjusted operating income of $11.7 million, a slight
improvement when compared to the $11.6 million reported for
the full year 2016.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “During 2017, we continued to perform well against our two
most important operating strategies: we grew our paid digital
subscriber base by 38 percent over 2016, ending the year with
23,465 paid digital subscribers and DMV, the primary driver of
digital and marketing services, grew revenues by $5.3 million,
or 31.3 percent, over 2016, continuing its strong growth. For
all of 2017, digital and marketing services revenue represented
37.9 percent of total advertising and marketing services
revenue, a 400 basis point increase when compared to the
33.9 percent reported for the full year 2016. These revenue
growth strategies, coupled with diligent expense management that
saw total expenses for 2017 decline by 8.8 percent over 2016,
provided for a slight improvement in adjusted operating income when
compared to 2016.”
Full Year Results from Continuing
Operations
Total revenue was $248.6 million for the full year of 2017,
a decrease of $11.4 million, or 4.4 percent, when
compared to the prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, was $143.2 million for the full year of
2017, a decrease of $7.1 million, or 4.7 percent, when compared to
the $150.3 million reported for the full year of 2016. Within
advertising and marketing services, total digital and marketing
services revenue, which includes digital advertising revenue in the
Company’s publishing segment, increased 6.5 percent to
$54.4 million primarily due to organic growth associated with
DMV. DMV revenue increased $5.3 million, or 31.3 percent,
compared to the prior year. For the full year of 2017, total
digital and marketing services revenue was 37.9 percent of
total advertising and marketing services revenue, reflecting a
400 basis point increase when compared to the
33.9 percent reported for the full year of 2016. Total digital
advertising and marketing services revenue was approximately
21.9 percent of total revenue, reflecting a 230 basis
point increase when compared to the 19.6 percent reported for
the full year of 2016.
Circulation revenue was $76.9 million, a decrease of
$2.7 million, or 3.4 percent, primarily due to lower home
delivery and single copy volumes, partially offset by an increase
of $1.2 million, or 75.2 percent, in digital-only
subscription revenue, home delivery rate increases applied
throughout the year and an increase in the daily single copy rate,
which was put in place in November 2016.
Printing, distribution and other revenue decreased
$1.6 million, or 5.2 percent, to $28.5 million for
the full year of 2017, primarily due to a decrease of
$0.5 million related to CrowdSource events that occurred in
2016, which the Company did not host in 2017, a decrease in
commercial printing revenue of $0.5 million and a decrease of
$0.4 million related to the distribution of outside
publications.
Total consolidated operating expense for the full year of 2017
was $258.7 million, a decrease of $25.1 million, or
8.8 percent, compared to the prior year, primarily due to a
noncash goodwill impairment charge of $22.7 million in 2016, a
reduction in employee compensation and benefits expense of
$4.0 million, a decrease of $3.3 million in distribution
expense, a decrease of $2.0 million in newsprint, ink and
other supplies and other operating expense reductions of
$2.3 million, partially offset by a noncash pension settlement
charge of $5.9 million and asset impairment charges of
$3.3 million in 2017.
Total consolidated operating expense excluding certain items
(“adjusted operating expense”) for the full year 2017 was
$237.0 million, a decrease of $11.4 million, or
4.6 percent, compared to $248.4 million of adjusted
operating expense reported for the full year 2016. The decrease in
adjusted operating expense is a result of the Company’s continued
focus on operating efficiency. As of December 31, 2017, the Company
had 1,090 employees, a headcount decrease of 131, or
10.7 percent, compared to the prior year. Excluding hiring at
DMV and a conversion of production headcount from temporary to
permanent employees, the Company’s headcount decreased by 166, or
13.6 percent, when compared to 2016.
The Company’s newsprint expense in 2017 was $12.5 million,
a decrease of 7.3 percent, compared to the prior year.
Newsprint consumption declined 12.9 percent to 23,296 metric
tons. Compared to the prior year, newsprint cost per metric ton
increased 6.0 percent and the average purchase price per
metric ton for newsprint increased 5.2 percent.
As of December 31, 2017, cash and cash equivalents balance was
$57.7 million and the Company had no debt.
Fourth Quarter Results from Continuing
Operations
Total revenue was $64.1 million in the fourth quarter of
2017, a decrease of $2.0 million, or 3.1 percent, when
compared to the fourth quarter of 2016.
Revenue from advertising and marketing services, including print
and digital revenues, was $37.1 million in the fourth quarter
of 2017, a decrease of $1.6 million, or 4.1 percent, when
compared to the $38.7 million reported in the fourth quarter
of 2016. Within advertising and marketing services, total digital
and marketing services revenue, which includes digital advertising
revenue in the Company’s publishing segment, increased
3.0 percent to $13.8 million primarily due to organic
growth associated with DMV. DMV revenue increased
$0.4 million, or 7.3 percent, compared to the fourth
quarter of 2016. For the fourth quarter of 2017, total digital and
marketing services revenue was 37.1 percent of total
advertising and marketing services revenue, reflecting a 260 basis
point increase when compared to the 34.5 percent reported in
the fourth quarter of 2016. Total digital advertising and marketing
services revenue was 21.5 percent of total revenue, reflecting
a 130 basis point increase when compared to the
20.2 percent reported in the fourth quarter of 2016.
Circulation revenue was $19.8 million, flat when compared
to the prior year period, primarily due to lower home delivery and
single copy volumes, offset by an increase of $0.3 million, or
51.7 percent, in digital-only subscription revenue and home
delivery and single copy rate increases.
Printing, distribution and other revenue decreased
$0.4 million, or 5.3 percent, to $7.1 million in the
fourth quarter of 2017, primarily due to a decrease in commercial
printing revenue of $0.2 million and a decrease in other
revenue of $0.2 million.
Total consolidated operating expense in the fourth quarter of
2017 was $64.5 million, a decrease of $25.7 million, or
28.5 percent, compared to the fourth quarter of 2016,
primarily due to a noncash goodwill impairment charge of
$22.7 million in the fourth quarter of 2016, a reduction in
employee compensation and benefits expense of $3.0 million, a
decrease of $1.3 million in distribution expense, a decrease
of $0.7 million in newsprint, ink and other supplies and other
operating expense reductions of $1.1 million, partially offset
by asset impairment charges of $3.1 million in 2017.
Adjusted operating expense in the fourth quarter of 2017 was
$58.6 million, a decrease of $5.8 million, or
9.0 percent, compared to $64.3 million of adjusted
operating expense reported in the fourth quarter of 2016.
The Company’s newsprint expense in the fourth quarter of 2017
was $3.2 million, a decrease of 10.8 percent, compared to
the fourth quarter of 2016. Newsprint consumption declined
13.5 percent to 5,821 metric tons. Compared to the fourth
quarter of 2016, newsprint cost per metric ton increased
2.7 percent and the average purchase price per metric ton for
newsprint increased 4.0 percent.
Non-GAAP Financial Measures
A reconciliation of operating loss to adjusted operating income
and of total operating costs and expense to adjusted operating
expense is included in the exhibits to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on Friday,
March 2, 2018, at 9:00 a.m. CST to discuss financial
results. The conference call will be available via webcast by
accessing the Company’s website at www.ahbelo.com/invest. An
archive of the webcast will be available at www.ahbelo.com in the
Investor Relations section.
To access the listen-only conference call, dial 1-800-288-8961
(USA) or 612-288-0337 (International). A replay line will be
available at 1-800-475-6701 (USA) or 320-365-3844 (International)
from 11:00 a.m. CST on March 2, 2018 until 11:59 p.m. CST on March
9, 2018. The access code for the replay is 445020.
About A. H. Belo Corporation
A. H. Belo Corporation 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 the
Company’s media platform, A. H. Belo Corporation delivers news and
information in innovative ways to a broad spectrum of audiences
with diverse interests and lifestyles. For additional information,
visit www.ahbelo.com or email invest@ahbelo.com.
Statements in this communication concerning A. H. Belo
Corporation’s business outlook or future economic performance,
anticipated profitability, revenues, expenses, 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, trends and uncertainties are, in most
instances, beyond the Company’s control, and include changes in
advertising demand and other economic conditions; consumers’
tastes; newsprint prices; program costs; labor relations;
technology obsolescence; 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. Forward-looking statements, which are as of the date of
this filing, are not updated to reflect events or circumstances
after the date of the statement.
A. H. Belo Corporation and
SubsidiariesConsolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
|
Twelve Months Ended December 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net Operating
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
37,146 |
|
|
$ |
38,734 |
|
|
$ |
143,247 |
|
|
$ |
150,315 |
|
Circulation |
|
|
19,785 |
|
|
|
19,813 |
|
|
|
76,884 |
|
|
|
79,619 |
|
Printing,
distribution and other |
|
|
7,146 |
|
|
|
7,548 |
|
|
|
28,495 |
|
|
|
30,050 |
|
Total net
operating revenue |
|
|
64,077 |
|
|
|
66,095 |
|
|
|
248,626 |
|
|
|
259,984 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
23,545 |
|
|
|
26,592 |
|
|
|
105,966 |
|
|
|
104,009 |
|
Other
production, distribution and operating costs |
|
|
29,072 |
|
|
|
30,986 |
|
|
|
114,594 |
|
|
|
119,830 |
|
Newsprint, ink and other supplies |
|
|
6,019 |
|
|
|
6,756 |
|
|
|
23,561 |
|
|
|
25,590 |
|
Depreciation |
|
|
2,575 |
|
|
|
2,988 |
|
|
|
10,415 |
|
|
|
10,713 |
|
Amortization |
|
|
200 |
|
|
|
226 |
|
|
|
799 |
|
|
|
906 |
|
Assets
impairments |
|
|
3,116 |
|
|
|
22,682 |
|
|
|
3,344 |
|
|
|
22,682 |
|
Total
operating costs and expense |
|
|
64,527 |
|
|
|
90,230 |
|
|
|
258,679 |
|
|
|
283,730 |
|
Operating
loss |
|
|
(450 |
) |
|
|
(24,135 |
) |
|
|
(10,053 |
) |
|
|
(23,746 |
) |
Other
income, net |
|
|
7,334 |
|
|
|
1,693 |
|
|
|
14,543 |
|
|
|
2,294 |
|
Income (Loss)
from Continuing Operations Before Income Taxes |
|
$ |
6,884 |
|
|
$ |
(22,442 |
) |
|
$ |
4,490 |
|
|
$ |
(21,452 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
December 31, |
In thousands (unaudited) |
|
2017 |
|
2016 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
57,660 |
|
$ |
80,071 |
Accounts
receivable, net |
|
|
26,740 |
|
|
29,114 |
Assets
held for sale |
|
|
1,089 |
|
|
— |
Other
current assets |
|
|
12,832 |
|
|
12,939 |
Total
current assets |
|
|
98,321 |
|
|
122,124 |
Property,
plant and equipment, net |
|
|
31,706 |
|
|
43,759 |
Intangible assets, net |
|
|
4,073 |
|
|
4,872 |
Goodwill |
|
|
13,973 |
|
|
14,201 |
Other
assets |
|
|
5,347 |
|
|
7,775 |
Total
assets |
|
$ |
153,420 |
|
$ |
192,731 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
10,303 |
|
$ |
9,036 |
Accrued
compensation and other current liabilities |
|
|
12,504 |
|
|
14,975 |
Advance
subscription payments |
|
|
11,670 |
|
|
13,243 |
Total
current liabilities |
|
|
34,477 |
|
|
37,254 |
Long-term
pension liabilities |
|
|
23,038 |
|
|
54,843 |
Other
liabilities |
|
|
4,456 |
|
|
8,812 |
Total
liabilities |
|
|
61,971 |
|
|
100,909 |
Noncontrolling interest - redeemable |
|
|
— |
|
|
2,670 |
Total
shareholders’ equity attributable to A. H. Belo Corporation |
|
|
91,449 |
|
|
87,918 |
Noncontrolling interests |
|
|
— |
|
|
1,234 |
Total
shareholders' equity |
|
|
91,449 |
|
|
89,152 |
Total
liabilities and shareholders’ equity |
|
$ |
153,420 |
|
$ |
192,731 |
|
|
|
|
|
|
|
The Company’s Consolidated Balance Sheet as of December 31,
2017, does not reflect the effect of the fourth quarter 2017 income
tax provision. The Company’s final Consolidated Balance Sheet as of
December 31, 2017, will be reported in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2017.
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
|
Twelve Months Ended December 31, |
In thousands (unaudited) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Total net
operating revenue |
|
$ |
64,077 |
|
|
$ |
66,095 |
|
|
$ |
248,626 |
|
|
$ |
259,984 |
|
Total
operating costs and expense |
|
|
64,527 |
|
|
|
90,230 |
|
|
|
258,679 |
|
|
|
283,730 |
|
Operating
Loss |
|
$ |
(450 |
) |
|
$ |
(24,135 |
) |
|
$ |
(10,053 |
) |
|
$ |
(23,746 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
64,527 |
|
|
$ |
90,230 |
|
|
$ |
258,679 |
|
|
$ |
283,730 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,575 |
|
|
|
2,988 |
|
|
|
10,415 |
|
|
|
10,713 |
|
Amortization |
|
|
200 |
|
|
|
226 |
|
|
|
799 |
|
|
|
906 |
|
Severance
expense |
|
|
84 |
|
|
|
24 |
|
|
|
1,259 |
|
|
|
1,073 |
|
Pension
plan settlement loss |
|
|
— |
|
|
|
— |
|
|
|
5,911 |
|
|
|
— |
|
Assets
impairments |
|
|
3,116 |
|
|
|
22,682 |
|
|
|
3,344 |
|
|
|
22,682 |
|
Adjusted
Operating Expense |
|
$ |
58,552 |
|
|
$ |
64,310 |
|
|
$ |
236,951 |
|
|
$ |
248,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
64,077 |
|
|
$ |
66,095 |
|
|
$ |
248,626 |
|
|
$ |
259,984 |
|
Adjusted
operating expense |
|
|
58,552 |
|
|
|
64,310 |
|
|
|
236,951 |
|
|
|
248,356 |
|
Adjusted
Operating Income |
|
$ |
5,525 |
|
|
$ |
1,785 |
|
|
$ |
11,675 |
|
|
$ |
11,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company calculates adjusted operating income by adjusting
operating loss to exclude depreciation, amortization, severance
expense, pension plan settlement loss and asset impairments
(“adjusted operating income”). The Company believes that inclusion
of certain noncash expenses and other items in the results makes
for more difficult comparisons between years and with peer group
companies.
Adjusted operating income is not a measure of financial
performance under generally accepted accounting principles
(“GAAP”). Management uses adjusted operating income 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. Management uses this non-GAAP
financial measure for the purposes of evaluating consolidated
Company performance. The Company therefore believes that the
non-GAAP measure presented provides useful information to investors
by allowing them to view the Company’s business through the eyes of
management and the Board of Directors, facilitating comparison of
results across historical periods and providing a focus on the
underlying ongoing operating performance of its business. Adjusted
operating income should not be considered in isolation or as a
substitute for net income (loss) from continuing operations, cash
flows provided by (used for) operating activities or other
comparable measures prepared in accordance with GAAP. Additionally,
this non-GAAP measure may not be comparable to similarly-titled
measures of other companies.
Katy Murray 214-977-8869
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