A. H. Belo Corporation (NYSE: AHC) today reported a third
quarter 2020 net loss of $0.1 million, or
$(0.00) per share, and an operating loss of $2.4 million.
In the third quarter of 2019, the Company reported a net loss of
$4.0 million, or $(0.19) per share, and an operating loss of
$7.0 million.
For the third quarter of 2020, on a non-GAAP basis,
A. H. Belo reported an operating loss adjusted for certain items
(“adjusted operating loss”) of $0.1 million, an improvement of
$1.4 million or 92.2 percent when compared to an adjusted
operating loss of $1.6 million reported in the third quarter
of 2019.
Robert W. Decherd, chairman, president and Chief
Executive Officer, said, “The events of 2020 continue to create
challenges for managing A. H. Belo’s businesses while we remain
attentive to the longer term strategies that will enable the
Company to become a sustainably profitable digital media
enterprise. Colleagues throughout the Company have responded to the
many effects of the coronavirus pandemic with ingenuity and
resolve, and everyone has made sacrifices to ensure that our
communities receive the highest quality news, information and
insights possible. As the country enters the next phase of the
pandemic this fall and winter, we expect operating conditions to
remain mostly the same. The Company’s balance sheet continues to be
a significant advantage.”
Third Quarter
Results
Total revenue was $37.7 million in the third
quarter of 2020, a decrease of $5.3 million or
12.3 percent when compared to the third quarter of 2019.
Revenue from advertising and marketing services,
including print and digital revenues, was $17.5 million in the
third quarter of 2020, a decrease of $4.1 million or
19.2 percent when compared to the $21.6 million reported
for the third quarter of 2019.
Circulation revenue was $16.1 million, a
decrease of $0.7 million or 4.2 percent when compared to
the third quarter of 2019. The decline is primarily due to a
decrease in home delivery and single copy volumes, partially offset
by rate increases and an increase of $0.4 million or
34.5 percent in digital-only subscription revenue.
Printing, distribution and other revenue decreased
$0.5 million, or 10.3 percent, to $4.2 million,
primarily due to a reduction in brokered and commercial printing,
partially offset by an increase in shared mail packaging
revenue.
Total consolidated operating expense in the third
quarter of 2020, on a GAAP basis, was $40.2 million, a
decrease of $9.9 million or 19.7 percent compared to the
third quarter of 2019. Excluding the 2019 loss of $2.9 million
from asset disposals and impairments, the improvement is primarily
due to decreases of $3.0 million in employee compensation and
benefits expense, $1.5 million in newsprint, ink and other
supplies expense, and $1.1 million in outside services
expense.
In the third quarter of 2020, on a non-GAAP basis,
adjusted operating expense was $41.0 million, an improvement
of $7.1 million or 14.7 percent when compared to
$48.1 million of adjusted operating expense in the third
quarter of 2019. The improvement is primarily due to expense
decreases in employee compensation and benefits, newsprint expense,
and reductions from continued management of discretionary
spending.
As of September 30, 2020, the Company had 750
employees, a decrease of 120 or 13.8 percent when compared to
the prior year period. Cash and cash equivalents were
$43.2 million and the Company had no debt.
Non-GAAP
Financial
Measures
Reconciliations of operating income (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, October 27, 2020, 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
1-877-226-8152 and enter the following access code when prompted:
4445036. A replay line will be available at 1-866-207-1041 from
12:00 p.m. CDT on October 27, 2020 until 11:59 p.m. CST on
November 2, 2020. The access code for the replay is
5679783.
About A.
H. Belo
Corporation
A. H. Belo Corporation is the leading local news
and information publishing company in Texas. The Company has a
growing presence in emerging media and digital marketing, and
maintains capabilities related to commercial printing, distribution
and direct mail. 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,
revenues, expenses, 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; cybersecurity incidents;
technological obsolescence; and the current and future impacts of
the COVID-19 public health crisis. Among other risks, there can be
no guarantee that the board of directors will approve a quarterly
dividend in future quarters; 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.
Contact:Katy Murray214-977-8869
A. H. Belo
Corporation and SubsidiariesConsolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands, except share and per share amounts
(unaudited) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net Operating Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
17,474 |
|
|
$ |
21,616 |
|
|
$ |
52,392 |
|
|
$ |
70,957 |
|
Circulation |
|
|
16,111 |
|
|
|
16,809 |
|
|
|
48,248 |
|
|
|
51,095 |
|
Printing, distribution and other |
|
|
4,157 |
|
|
|
4,632 |
|
|
|
12,860 |
|
|
|
14,709 |
|
Total net operating revenue |
|
|
37,742 |
|
|
|
43,057 |
|
|
|
113,500 |
|
|
|
136,761 |
|
Operating Costs and
Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
16,499 |
|
|
|
19,504 |
|
|
|
52,512 |
|
|
|
60,456 |
|
Other production, distribution and operating costs |
|
|
19,307 |
|
|
|
21,171 |
|
|
|
58,958 |
|
|
|
67,200 |
|
Newsprint, ink and other supplies |
|
|
2,476 |
|
|
|
3,972 |
|
|
|
8,018 |
|
|
|
12,741 |
|
Depreciation |
|
|
1,753 |
|
|
|
2,289 |
|
|
|
5,320 |
|
|
|
7,008 |
|
Amortization |
|
|
63 |
|
|
|
140 |
|
|
|
191 |
|
|
|
356 |
|
(Gain) loss on sale/disposal of assets, net |
|
|
61 |
|
|
|
1,362 |
|
|
|
56 |
|
|
|
(24,546 |
) |
Asset impairments |
|
|
— |
|
|
|
1,593 |
|
|
|
— |
|
|
|
1,593 |
|
Total operating costs and expense |
|
|
40,159 |
|
|
|
50,031 |
|
|
|
125,055 |
|
|
|
124,808 |
|
Operating income (loss) |
|
|
(2,417 |
) |
|
|
(6,974 |
) |
|
|
(11,555 |
) |
|
|
11,953 |
|
Other income, net |
|
|
2,095 |
|
|
|
1,161 |
|
|
|
4,778 |
|
|
|
3,123 |
|
Income (Loss) Before
Income Taxes |
|
|
(322 |
) |
|
|
(5,813 |
) |
|
|
(6,777 |
) |
|
|
15,076 |
|
Income tax provision (benefit) |
|
|
(224 |
) |
|
|
(1,808 |
) |
|
|
(1,644 |
) |
|
|
4,688 |
|
Net Income
(Loss) |
|
$ |
(98 |
) |
|
$ |
(4,005 |
) |
|
$ |
(5,133 |
) |
|
$ |
10,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.24 |
) |
|
$ |
0.48 |
|
Number of common shares used in the per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
21,410,423 |
|
|
|
21,476,029 |
|
|
|
21,410,423 |
|
|
|
21,553,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
In thousands (unaudited) |
|
2020 |
|
2019 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
43,174 |
|
$ |
48,626 |
Accounts receivable, net |
|
|
15,174 |
|
|
18,441 |
Notes receivable |
|
|
22,775 |
|
|
— |
Other current assets |
|
|
10,406 |
|
|
7,737 |
Total current assets |
|
|
91,529 |
|
|
74,804 |
Property, plant and equipment, net |
|
|
13,479 |
|
|
18,453 |
Operating lease right-of-use assets |
|
|
21,496 |
|
|
21,371 |
Intangible assets, net |
|
|
128 |
|
|
319 |
Deferred income taxes, net |
|
|
27 |
|
|
50 |
Long-term note receivable |
|
|
— |
|
|
22,400 |
Other assets |
|
|
2,608 |
|
|
3,648 |
Total assets |
|
$ |
129,267 |
|
$ |
141,045 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
5,792 |
|
$ |
6,103 |
Accrued compensation and other current liabilities |
|
|
12,613 |
|
|
13,337 |
Contract liabilities |
|
|
14,860 |
|
|
12,098 |
Total current liabilities |
|
|
33,265 |
|
|
31,538 |
Long-term pension liabilities |
|
|
18,893 |
|
|
23,039 |
Long-term operating lease liabilities |
|
|
22,555 |
|
|
23,120 |
Other liabilities |
|
|
4,718 |
|
|
5,611 |
Total liabilities |
|
|
79,431 |
|
|
83,308 |
Total shareholders' equity |
|
|
49,836 |
|
|
57,737 |
Total liabilities and shareholders’ equity |
|
$ |
129,267 |
|
$ |
141,045 |
|
|
|
|
|
|
|
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of
Operating Income
(Loss) to
Adjusted Operating
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
In thousands (unaudited) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Total net operating revenue |
|
$ |
37,742 |
|
|
$ |
43,057 |
|
|
$ |
113,500 |
|
|
$ |
136,761 |
|
Total operating costs and expense |
|
|
40,159 |
|
|
|
50,031 |
|
|
|
125,055 |
|
|
|
124,808 |
|
Operating Income
(Loss) |
|
$ |
(2,417 |
) |
|
$ |
(6,974 |
) |
|
$ |
(11,555 |
) |
|
$ |
11,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net operating revenue |
|
$ |
37,742 |
|
|
$ |
43,057 |
|
|
$ |
113,500 |
|
|
$ |
136,761 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra revenue |
|
|
3,012 |
|
|
|
3,380 |
|
|
|
5,400 |
|
|
|
9,116 |
|
Circulation contra revenue |
|
|
104 |
|
|
|
48 |
|
|
|
205 |
|
|
|
368 |
|
Adjusted Operating
Revenue |
|
$ |
40,858 |
|
|
$ |
46,485 |
|
|
$ |
119,105 |
|
|
$ |
146,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expense |
|
$ |
40,159 |
|
|
$ |
50,031 |
|
|
$ |
125,055 |
|
|
$ |
124,808 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra expense |
|
|
3,012 |
|
|
|
3,380 |
|
|
|
5,400 |
|
|
|
9,116 |
|
Circulation contra expense |
|
|
104 |
|
|
|
48 |
|
|
|
205 |
|
|
|
368 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
1,753 |
|
|
|
2,289 |
|
|
|
5,320 |
|
|
|
7,008 |
|
Amortization |
|
|
63 |
|
|
|
140 |
|
|
|
191 |
|
|
|
356 |
|
Severance expense |
|
|
418 |
|
|
|
20 |
|
|
|
621 |
|
|
|
1,421 |
|
(Gain) loss on sale/disposal of assets, net |
|
|
61 |
|
|
|
1,362 |
|
|
|
56 |
|
|
|
(24,546 |
) |
Asset impairments |
|
|
— |
|
|
|
1,593 |
|
|
|
— |
|
|
|
1,593 |
|
Adjusted Operating
Expense |
|
$ |
40,980 |
|
|
$ |
48,055 |
|
|
$ |
124,472 |
|
|
$ |
148,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating revenue |
|
$ |
40,858 |
|
|
$ |
46,485 |
|
|
$ |
119,105 |
|
|
$ |
146,245 |
|
Adjusted operating expense |
|
|
40,980 |
|
|
|
48,055 |
|
|
|
124,472 |
|
|
|
148,460 |
|
Adjusted Operating
Loss |
|
$ |
(122 |
) |
|
$ |
(1,570 |
) |
|
$ |
(5,367 |
) |
|
$ |
(2,215 |
) |
The Company calculates adjusted operating income
(loss) by adjusting operating income (loss) to exclude
depreciation, amortization, severance expense, (gain) loss on
sale/disposal of assets, 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).
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.
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