A. H. Belo Corporation (NYSE: AHC) today reported a first quarter
2019 net loss of $3.0 million, or $(0.14) per share. In
the first quarter of 2018, the Company reported a net loss of
$4.0 million, or $(0.19) per share.
For the first quarter of 2019, on a non-GAAP basis, A. H. Belo
reported operating loss adjusted for certain items (“adjusted
operating loss”) of $0.9 million, an improvement of
$2.6 million, or 74.7 percent, compared to the first
quarter of 2018.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “The Company made notable progress during the first
quarter by narrowing our net loss and concentrating on a range of
initiatives designed to build a strong digital business.
“There were encouraging signs at The Dallas Morning News during
the first quarter, particularly the improvement in run-of-press
print advertising. The News continues to see sequential growth in
digital subscription volume and pricing, albeit at levels that must
continue to grow in order to fully implement our digital-first
strategy. News and editorial content of the newspaper has been
highly-impactful during the first four months of the year.
“Changes implemented by The News in its commercial printing
business during the quarter have matched our expectations for
margin improvement and re-sizing the business to focus on a few,
major customers.
“At Belo + Company, timing of sales and fulfillment of
contracts were the focus during the first quarter, along with the
bolt-on acquisition of a small creative agency in Tulsa, Oklahoma,
acquired on April 1st, that will complete Belo + Company's
suite of services and support client activities now and into the
future. We are also benefiting from the presence of new leaders in
both the sales and agency channels.”
First Quarter Results
Total revenue was $46.6 million in the first quarter of
2019, a decrease of $2.9 million, or 5.8 percent, when
compared to the first quarter of 2018.
Revenue from advertising and marketing services, including print
and digital revenues, was $24.0 million in the first quarter
of 2019, a decrease of $1.7 million, or 6.6 percent, when
compared to the $25.7 million reported for the first quarter
of 2018.
Circulation revenue was $17.3 million, a decrease of
$0.5 million, or 2.7 percent, when compared to the first
quarter of 2018. The decline was primarily due to a decrease in
home delivery and single copy volumes, partially offset by rate
increases and an increase of $0.3 million, or
33.6 percent, in digital-only subscription revenue.
Printing, distribution and other revenue decreased
$0.7 million, or 11.6 percent, to $5.3 million,
primarily due to a reduction in brokered and commercial
printing.
Total consolidated operating expense in the first quarter of
2019, on a GAAP basis, was $50.6 million, a decrease of
$5.0 million, or 9.0 percent, compared to the first
quarter of 2018. The improvement was primarily due to decreases of
$3.5 million in employee compensation and benefits expense,
$0.6 million in newsprint, ink and other supplies expense, and
$0.5 million in distribution expense.
In the first quarter of 2019, on a non-GAAP basis, adjusted
operating expense was $50.3 million, an improvement of
$5.7 million, or 10.2 percent, compared to
$56.0 million of adjusted operating expense in the first
quarter of 2018. The improvement is primarily due to expense
decreases in employee compensation and benefits, newsprint,
distribution, and reductions from continued management of
discretionary spending.
As of March 31, 2019, the Company had 918 employees, a decrease
of 128, or 12.2 percent, compared to the prior year period.
Cash and cash equivalents were $50.3 million and the Company
had no debt.
Non-GAAP Financial Measures
Reconciliations of operating loss to adjusted operating loss,
total net operating revenue to adjusted operating revenue, and
total operating costs and expense to adjusted operating expense are
included in the exhibits to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on
Tuesday, April 30, 2019, at 9:00 a.m. CDT 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 1-800-230-1951
(USA) or 612-288-0340 (International). A replay line will be
available at 1-800-475-6701 (USA) or 320-365-3844 (International)
from 11:00 a.m. CDT on April 30, 2019 until 11:59 p.m. CDT on
May 7, 2019. The access code for the replay is 466835.
About A. H. Belo Corporation
A. H. Belo Corporation is the leading local news and information
publishing company in Texas with commercial printing, distribution
and direct mail capabilities, as well as a presence in emerging
media and digital marketing. While focusing on extending the
Company’s media platforms, A. H. Belo delivers news and information
in innovative ways to a broad range 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 March 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2019 |
|
|
2018 |
|
Net Operating
Revenue: |
|
|
|
|
|
|
Advertising and
marketing services |
|
$ |
24,041 |
|
|
$ |
25,741 |
|
Circulation |
|
|
17,273 |
|
|
|
17,747 |
|
Printing,
distribution and other |
|
|
5,275 |
|
|
|
5,965 |
|
Total net
operating revenue |
|
|
46,589 |
|
|
|
49,453 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
21,124 |
|
|
|
24,672 |
|
Other
production, distribution and operating costs |
|
|
22,184 |
|
|
|
23,014 |
|
Newsprint, ink and other supplies |
|
|
4,747 |
|
|
|
5,311 |
|
Depreciation |
|
|
2,386 |
|
|
|
2,473 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
Total
operating costs and expense |
|
|
50,641 |
|
|
|
55,670 |
|
Operating
loss |
|
|
(4,052 |
) |
|
|
(6,217 |
) |
Other
income, net |
|
|
897 |
|
|
|
888 |
|
Loss Before
Income Taxes |
|
|
(3,155 |
) |
|
|
(5,329 |
) |
Income
tax benefit |
|
|
(143 |
) |
|
|
(1,315 |
) |
Net
Loss |
|
$ |
(3,012 |
) |
|
$ |
(4,014 |
) |
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
Net
loss |
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.14 |
) |
|
$ |
(0.19 |
) |
Number of
common shares used in the per share calculation: |
|
|
|
|
|
|
Basic and
diluted |
|
|
21,594,262 |
|
|
|
21,716,419 |
|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
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|
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|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
In thousands (unaudited) |
|
2019 |
|
2018 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
50,301 |
|
$ |
55,313 |
Accounts
receivable, net |
|
|
19,552 |
|
|
22,057 |
Assets
held for sale |
|
|
1,089 |
|
|
1,089 |
Other
current assets |
|
|
10,244 |
|
|
8,935 |
Total
current assets |
|
|
81,186 |
|
|
87,394 |
Property,
plant and equipment, net |
|
|
23,924 |
|
|
26,261 |
Operating
lease right-of-use assets |
|
|
22,527 |
|
|
— |
Intangible assets, net |
|
|
3,074 |
|
|
3,274 |
Goodwill |
|
|
13,973 |
|
|
13,973 |
Deferred
income taxes, net |
|
|
6,720 |
|
|
6,417 |
Other
assets |
|
|
4,028 |
|
|
5,029 |
Total
assets |
|
$ |
155,432 |
|
$ |
142,348 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
4,725 |
|
$ |
6,334 |
Accrued
compensation and other current liabilities |
|
|
12,260 |
|
|
13,880 |
Advance
subscription payments |
|
|
12,153 |
|
|
11,449 |
Total
current liabilities |
|
|
29,138 |
|
|
31,663 |
Long-term
pension liabilities |
|
|
30,997 |
|
|
31,889 |
Long-term
operating lease liabilities |
|
|
23,862 |
|
|
— |
Other
liabilities |
|
|
5,858 |
|
|
8,210 |
Total
liabilities |
|
|
89,855 |
|
|
71,762 |
Total
shareholders' equity |
|
|
65,577 |
|
|
70,586 |
Total
liabilities and shareholders’ equity |
|
$ |
155,432 |
|
$ |
142,348 |
The Company adopted the new lease guidance (Topic 842) using the
modified retrospective approach as of January 1, 2019, which
requires a right-of-use asset and a lease liability be recorded for
substantially all leases. Prior periods were not restated.
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
In thousands (unaudited) |
|
2019 |
|
|
2018 |
|
Total net operating
revenue |
|
$ |
46,589 |
|
|
$ |
49,453 |
|
Total operating costs and
expense |
|
|
50,641 |
|
|
|
55,670 |
|
Operating Loss |
|
$ |
(4,052 |
) |
|
$ |
(6,217 |
) |
|
|
|
|
|
|
|
Total net operating revenue |
|
$ |
46,589 |
|
|
$ |
49,453 |
|
Addback: |
|
|
|
|
|
|
Advertising contra revenue |
|
|
2,652 |
|
|
|
2,853 |
|
Circulation contra revenue |
|
|
175 |
|
|
|
258 |
|
Adjusted Operating
Revenue |
|
$ |
49,416 |
|
|
$ |
52,564 |
|
|
|
|
|
|
|
|
Total operating costs and
expense |
|
$ |
50,641 |
|
|
$ |
55,670 |
|
Addback: |
|
|
|
|
|
|
Advertising contra expense |
|
|
2,652 |
|
|
|
2,853 |
|
Circulation contra expense |
|
|
175 |
|
|
|
258 |
|
Less: |
|
|
|
|
|
|
Depreciation |
|
|
2,386 |
|
|
|
2,473 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
Severance
expense |
|
|
601 |
|
|
|
123 |
|
Adjusted Operating
Expense |
|
$ |
50,281 |
|
|
$ |
55,985 |
|
|
|
|
|
|
|
|
Adjusted operating revenue |
|
$ |
49,416 |
|
|
$ |
52,564 |
|
Adjusted operating expense |
|
|
50,281 |
|
|
|
55,985 |
|
Adjusted Operating
Loss |
|
$ |
(865 |
) |
|
$ |
(3,421 |
) |
The Company calculates adjusted operating income (loss) by
adjusting operating income (loss) to exclude depreciation,
amortization, severance expense, and asset impairments (“adjusted
operating income (loss)”). 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.
The Company adopted the new revenue guidance (Topic 606) using
the modified retrospective approach as of January 1, 2018. While
the Company adjusts operating revenue and expense for non-GAAP
presentation, these adjustments have no effect on adjusted
operating income (loss). Additionally, the Company adopted the new
retirement benefits guidance (Topic 715) retrospectively as of
January 1, 2018, which requires net periodic pension and other
post-employment expense (benefit) to be included in non-operating
income (expense). As of January 1, 2019, the Company determined
pension and post-employment expense (benefit) would no longer be an
addback in the calculation of adjusted operating expense. As a
result of this change, adjusted operating expense and adjusted
operating loss increased $930 for the three months ended March 31,
2018.
Adjusted operating income (loss) is not a measure of financial
performance under generally accepted accounting principles
(“GAAP”). Management uses adjusted operating income (loss) and
similar measures in internal analyses as supplemental measures of
the Company’s financial performance, and for performance
comparisons versus 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 (loss) should not be considered
in isolation or as a substitute for net income (loss), 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.
Contact:Katy Murray214-977-8869
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