· Digital and
marketing services revenue grew 14.8 percent in 2017 compared
to 2016, primarily from DMV, which grew $1.8 million, or
50.3 percent
A. H. Belo Corporation (NYSE:AHC) today reported second quarter
2017 net loss attributable to A. H. Belo Corporation (the
“Company”) of $(0.8) million, or $(0.04) per share. In
the second quarter of 2016, the Company reported net income
attributable to A. H. Belo Corporation of
$0.7 million, or $0.03 per fully diluted share.In the second
quarter of 2017, on a non-GAAP basis, the Company reported
operating income excluding certain items (“adjusted operating
income”) of $2.8 million, a decrease of $3.0 million, or
51.6 percent, when compared to adjusted operating income of
$5.8 million reported in the second quarter of 2016.Jim
Moroney, chairman, president and Chief Executive Officer, said,
“While the second quarter decline in print-related revenues was
challenging, we continue to see excellent growth from digital
marketing services as revenue improved by 14.8 percent over
the prior year, primarily driven by DMV’s growth of
50.3 percent compared to the second quarter of 2016. In
addition, we are making steady progress in building a base of paid
digital subscribers which increased to 20,270 at the end of the
second quarter, a gain of 2,101 subscribers, or
11.6 percent, over the total at the end of the first quarter.
These two areas of our business have significant upside opportunity
and provide the basis for growing our way into a sustainable
business model.“On the news side, we were very pleased to be
recognized with numerous awards. Most recently, we received a
national Edward R. Morrow Award and were recognized as a finalist
for the prestigious Pulitzer Prize for Breaking News reporting for
our coverage on last summer’s deadly ambush of police in downtown
Dallas. In addition, we were also awarded fourteen National
Headliner Awards, including four first-place prizes, for our work
in 2016.“I am confident that the work we are focused on now will
continue to drive our strategy to diversify our revenue through
organic growth and acquisitions that are focused on providing
attributable ROI to our business customers and to deliver excellent
journalism that gives us the ability to build an important base of
paid digital subscribers.”
Second Quarter Results from Continuing
Operations
Total revenue was $63.1 million in the second quarter of
2017, a decrease of $3.5 million, or 5.3 percent, when
compared to the second quarter of 2016.
Revenue from advertising and marketing services, including print
and digital revenues, was $36.0 million in the second quarter
of 2017, a decrease of $2.0 million, or 5.3 percent, when
compared to the second 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 14.8 percent to
$13.9 million primarily due to organic growth associated with
DMV. DMV revenue increased $1.8 million, or 50.3 percent,
compared to the second quarter of 2016. For the second quarter of
2017, total digital and marketing services revenue was
38.5 percent of total advertising and marketing services
revenue, reflecting a 670 basis point increase when compared to the
31.8 percent reported in the second quarter of 2016. Total
digital and marketing services revenue was 22.0 percent of
total revenue, reflecting a 390 basis point increase when
compared to the 18.1 percent reported in the second quarter of
2016.
Circulation revenue was $19.1 million, a decrease of
$0.7 million, or 3.7 percent. The decline was primarily
due to a decrease in home delivery revenue. Single copy revenue
increased slightly compared to prior year, driven by an increase in
the daily single copy rate, partially offset by a decrease in
single copy volume.
Printing, distribution and other revenue decreased
$0.8 million, or 9.0 percent, in the second quarter of
2017, primarily due to a decrease of $0.4 million in revenue
related to events the Company did not host in the second quarter of
2017, a decrease of $0.1 million related to distribution of
outside publications and a $0.1 million decrease in commercial
printing revenue.
Total consolidated operating expense in the second quarter was
$63.5 million, a decrease of $0.5 million, or
0.7 percent, compared to the second quarter of 2016, primarily
due to a decrease of $1.0 million in outside services,
$0.6 million in distribution expense and $0.5 million in
newsprint expense, partially offset by an increase in DMV’s
revenue-related expenses. Excluding an increase of
$0.5 million related to DMV’s headcount additions and an
increase of $0.4 million related to the conversion of
production personnel from temporary to staff, employee compensation
and benefits expense decreased $0.9 million when compared to
the second quarter of 2016.In the second quarter of 2017, on a
non-GAAP basis, total consolidated operating expense excluding
certain items (“adjusted operating expense”) was
$60.3 million, a decrease of $0.6 million, or
0.9 percent, compared to $60.9 million of adjusted
operating expense reported in the second quarter of 2016. This
expense decrease is primarily due to a decline in outside services,
distribution and newsprint expense, partially offset by an increase
in DMV’s revenue-related expenses.The Company’s newsprint expense
in the second quarter of 2017 was $3.2 million, a decrease of
4.8 percent, compared to the second quarter of 2016. Newsprint
consumption declined 13.0 percent to 5,919 metric tons.
Compared to the second quarter of 2016, newsprint cost per metric
ton increased 7.1 percent and the average purchase price per
metric ton for newsprint increased 5.4 percent.
Non-GAAP Financial Measures
A reconciliation of operating income (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
Tuesday, August 1, 2017, 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 1-866-233-3843
(USA) or 651-224-7472 (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 August 1, 2017 until 11:59 p.m. CDT on
August 8, 2017. The access code for the replay is 426163.
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
|
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
In thousands, except share and per share amounts
(unaudited) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Net Operating
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
36,022 |
|
|
$ |
38,040 |
|
|
$ |
71,226 |
|
|
$ |
73,277 |
Circulation |
|
|
19,088 |
|
|
|
19,821 |
|
|
|
38,254 |
|
|
|
40,173 |
Printing,
distribution and other |
|
|
7,979 |
|
|
|
8,765 |
|
|
|
14,510 |
|
|
|
15,659 |
Total net
operating revenue |
|
|
63,089 |
|
|
|
66,626 |
|
|
|
123,990 |
|
|
|
129,109 |
Operating Costs
and Expense: |
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Employee
compensation and benefits |
|
|
24,853 |
|
|
|
24,774 |
|
|
|
52,728 |
|
|
|
51,791 |
Other
production, distribution and operating costs |
|
|
29,736 |
|
|
|
29,898 |
|
|
|
58,062 |
|
|
|
58,229 |
Newsprint, ink and other supplies |
|
|
5,993 |
|
|
|
6,461 |
|
|
|
11,894 |
|
|
|
12,519 |
Depreciation |
|
|
2,727 |
|
|
|
2,605 |
|
|
|
5,233 |
|
|
|
5,237 |
Amortization |
|
|
199 |
|
|
|
229 |
|
|
|
399 |
|
|
|
455 |
Goodwill
impairment |
|
|
— |
|
|
|
— |
|
|
|
228 |
|
|
|
— |
Total
operating costs and expense |
|
|
63,508 |
|
|
|
63,967 |
|
|
|
128,544 |
|
|
|
128,231 |
Operating
income (loss) |
|
|
(419 |
) |
|
|
2,659 |
|
|
|
(4,554 |
) |
|
|
878 |
Other
income (expense), net |
|
|
(93 |
) |
|
|
408 |
|
|
|
(430 |
) |
|
|
487 |
Income (Loss)
from Continuing Operations Before Income Taxes |
|
|
(512 |
) |
|
|
3,067 |
|
|
|
(4,984 |
) |
|
|
1,365 |
Income
tax provision |
|
|
293 |
|
|
|
2,393 |
|
|
|
251 |
|
|
|
1,284 |
Net Income
(Loss) |
|
|
(805 |
) |
|
|
674 |
|
|
|
(5,235 |
) |
|
|
81 |
Net
income (loss) attributable to noncontrolling interests |
|
|
— |
|
|
|
(19 |
) |
|
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— |
|
|
|
20 |
Net Income
(Loss) Attributable to A. H. Belo
Corporation |
|
$ |
(805 |
) |
|
$ |
693 |
|
|
$ |
(5,235 |
) |
|
$ |
61 |
|
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Per Share
Basis |
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Net
income (loss) attributable to A. H. Belo Corporation |
|
|
|
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Basic and
diluted |
|
$ |
(0.04 |
) |
|
$ |
0.03 |
|
|
$ |
(0.24 |
) |
|
$ |
0.00 |
Number of
common shares used in the per share calculation: |
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Basic |
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21,743,390 |
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21,614,260 |
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21,717,032 |
|
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21,564,200 |
Diluted |
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21,743,390 |
|
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|
21,762,559 |
|
|
|
21,717,032 |
|
|
|
21,724,876 |
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
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June 30, |
|
December 31, |
In thousands (unaudited) |
|
2017 |
|
2016 |
Assets |
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Current
assets: |
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Cash and
cash equivalents |
|
$ |
64,856 |
|
$ |
80,071 |
Accounts
receivable, net |
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|
23,960 |
|
|
29,114 |
Assets
held for sale |
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|
8,740 |
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|
— |
Other
current assets |
|
|
13,860 |
|
|
12,939 |
Total
current assets |
|
|
111,416 |
|
|
122,124 |
Property,
plant and equipment, net |
|
|
33,531 |
|
|
43,759 |
Intangible assets, net |
|
|
4,473 |
|
|
4,872 |
Goodwill |
|
|
13,973 |
|
|
14,201 |
Other
assets |
|
|
6,888 |
|
|
7,775 |
Total
assets |
|
$ |
170,281 |
|
$ |
192,731 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
8,411 |
|
$ |
9,036 |
Accrued
compensation and other current liabilities |
|
|
12,919 |
|
|
14,975 |
Advance
subscription payments |
|
|
12,832 |
|
|
13,243 |
Total
current liabilities |
|
|
34,162 |
|
|
37,254 |
Long-term
pension liabilities |
|
|
52,989 |
|
|
54,843 |
Other
liabilities |
|
|
8,777 |
|
|
8,812 |
Total
liabilities |
|
|
95,928 |
|
|
100,909 |
Noncontrolling interest - redeemable |
|
|
— |
|
|
2,670 |
Total
shareholders’ equity attributable to A. H. Belo Corporation |
|
|
74,353 |
|
|
87,918 |
Noncontrolling interests |
|
|
— |
|
|
1,234 |
Total
shareholders' equity |
|
|
74,353 |
|
|
89,152 |
Total
liabilities and shareholders’ equity |
|
$ |
170,281 |
|
$ |
192,731 |
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating
Income (Loss) to Adjusted Operating Income
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
In thousands (unaudited) |
|
2017 |
|
|
2016 |
|
2017 |
|
|
2016 |
Total net
operating revenue |
|
$ |
63,089 |
|
|
$ |
66,626 |
|
$ |
123,990 |
|
|
$ |
129,109 |
Total
operating costs and expense |
|
|
63,508 |
|
|
|
63,967 |
|
|
128,544 |
|
|
|
128,231 |
Operating
Income (Loss) |
|
$ |
(419 |
) |
|
$ |
2,659 |
|
$ |
(4,554 |
) |
|
$ |
878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
63,508 |
|
|
$ |
63,967 |
|
$ |
128,544 |
|
|
$ |
128,231 |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,727 |
|
|
|
2,605 |
|
|
5,233 |
|
|
|
5,237 |
Amortization |
|
|
199 |
|
|
|
229 |
|
|
399 |
|
|
|
455 |
Severance
expense |
|
|
277 |
|
|
|
258 |
|
|
644 |
|
|
|
1,000 |
Goodwill
impairment |
|
|
— |
|
|
|
— |
|
|
228 |
|
|
|
— |
Adjusted
Operating Expense |
|
$ |
60,305 |
|
|
$ |
60,875 |
|
$ |
122,040 |
|
|
$ |
121,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
63,089 |
|
|
$ |
66,626 |
|
$ |
123,990 |
|
|
$ |
129,109 |
Adjusted
operating expense |
|
|
60,305 |
|
|
|
60,875 |
|
|
122,040 |
|
|
|
121,539 |
Adjusted
Operating Income |
|
$ |
2,784 |
|
|
$ |
5,751 |
|
$ |
1,950 |
|
|
$ |
7,570 |
The Company calculates adjusted operating income by adjusting
operating income (loss) to exclude depreciation, amortization,
severance expense, pension plan settlement loss and goodwill
impairment (“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.
Contact:
Katy Murray
214-977-8869
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