A. H. Belo Corporation (NYSE: AHC) today reported a first
quarter 2021 net loss of $2.8 million, or
$(0.13) per share, and an operating loss of $3.7 million.
In the first quarter of 2020, the Company reported a net loss of
$1.6 million, or $(0.08) per share, and an operating loss of
$4.8 million. The 2020 net loss included a federal tax refund
of $2.3 million permitted under the CARES Act.
For the first quarter of 2021, on a non-GAAP basis, A. H. Belo
reported an operating loss adjusted for certain items (“adjusted
operating loss”) of $2.4 million, an improvement of
$0.4 million or 14.4 percent when compared to an adjusted
operating loss of $2.8 million reported in the first quarter
of 2020.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “We are encouraged that operating conditions have
settled to some extent during the first part of 2021. However, it
is obviously important to remain focused on revenue generation
across all platforms while shaping the Company’s expense structure
to reflect the smaller enterprise A. H. Belo has become.
On April 15 we announced a voluntary severance offer (“VSO”) for
eligible employees in select departments, which is an important
step in this process. The VSO should help accelerate the
realignment of administrative, back office and production
activities, and result in meaningful ongoing savings.
“The Dallas Morning News continues to provide
superior, unduplicated local and regional news, information and
commentary. The impact is seen in The News’ growth in digital
memberships and the relative stability of its print member base.
The Board’s commitment to investing in this growth is the best
pathway to becoming a sustainably profitable digital newspaper
enterprise.”
First Quarter Results
Total revenue was $36.8 million in the first quarter of
2021, a decrease of $3.5 million or 8.7 percent when
compared to the first quarter of 2020.
Revenue from advertising and marketing services, including print
and digital revenues, was $16.8 million in the first quarter
of 2021, a decrease of $2.6 million or 13.2 percent when
compared to the $19.3 million reported for the first quarter
of 2020. The decline is primarily due to a $1.6 million
reduction in print advertising revenue, which has been
significantly impacted by the COVID-19 pandemic.
Circulation revenue was $16.0 million, a decrease of
$0.4 million or 2.4 percent when compared to the first
quarter of 2020. Home delivery revenue decreased 4.3 percent
and single copy revenue decreased 27.1 percent, primarily due
to the significantly reduced number of locations selling newspapers
as a result of the pandemic, partially offset by an increase of
$0.6 million or 46.5 percent in digital-only subscription
revenue.
Printing, distribution and other revenue decreased
$0.6 million, or 12.6 percent, to $4.0 million,
primarily due to reductions in commercial printing and distribution
revenue.
Total consolidated operating expense in the first quarter of
2021, on a GAAP basis, was $40.5 million, an improvement of
$4.6 million or 10.2 percent compared to the first
quarter of 2020. The improvement is primarily due to expense
decreases of $1.1 million in employee compensation and
benefits, $0.9 million in newsprint, ink and other supplies,
$0.9 million in outside services, $0.7 million in
depreciation, $0.4 million in distribution, and
$0.3 million in travel and entertainment.
In the first quarter of 2021, on a non-GAAP basis, adjusted
operating expense was $45.3 million, an increase of
$0.8 million or 1.7 percent when compared to
$44.6 million of adjusted operating expense in the first
quarter of 2020. The increase is primarily due to an increase of
$4.7 million in contra expense, partially offset by expense
decreases in employee compensation and benefits, newsprint,
distribution, and reductions from continued management of
discretionary spending.
As of March 31, 2021, the Company had 713 employees, a decrease
of 75 or 9.5 percent when compared to the prior year period.
Cash and cash equivalents were $38.1 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 27, 2021, 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 1-877-226-8189
and enter the following access code when prompted: 5840199. A
replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT
on April 27, 2021 until 11:59 p.m. CDT on
May 3, 2021. The access code for the replay is
8305657.
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,
including statements of the Company’s expectations relating to its
plans to regain NYSE compliance, 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.
A. H. Belo Corporation and
SubsidiariesConsolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2021 |
|
|
2020 |
|
Net Operating Revenue: |
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
16,769 |
|
|
$ |
19,327 |
|
Circulation |
|
|
16,022 |
|
|
|
16,414 |
|
Printing, distribution and other |
|
|
4,024 |
|
|
|
4,602 |
|
Total net operating revenue |
|
|
36,815 |
|
|
|
40,343 |
|
Operating Costs and
Expense: |
|
|
|
|
|
|
Employee compensation and benefits |
|
|
17,947 |
|
|
|
19,016 |
|
Other production, distribution and operating costs |
|
|
19,090 |
|
|
|
20,992 |
|
Newsprint, ink and other supplies |
|
|
2,341 |
|
|
|
3,271 |
|
Depreciation |
|
|
1,074 |
|
|
|
1,765 |
|
Amortization |
|
|
64 |
|
|
|
64 |
|
Gain on sale/disposal of assets, net |
|
|
(1 |
) |
|
|
(5 |
) |
Total operating costs and expense |
|
|
40,515 |
|
|
|
45,103 |
|
Operating loss |
|
|
(3,700 |
) |
|
|
(4,760 |
) |
Other income, net |
|
|
1,254 |
|
|
|
1,352 |
|
Loss Before Income
Taxes |
|
|
(2,446 |
) |
|
|
(3,408 |
) |
Income tax provision (benefit) |
|
|
319 |
|
|
|
(1,787 |
) |
Net Loss |
|
$ |
(2,765 |
) |
|
$ |
(1,621 |
) |
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.13 |
) |
|
$ |
(0.08 |
) |
Number of common shares used in the per share calculation: |
|
|
|
|
|
|
Basic and diluted |
|
|
21,410,423 |
|
|
|
21,410,423 |
|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
In thousands (unaudited) |
|
2021 |
|
2020 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
38,132 |
|
$ |
42,015 |
Accounts receivable, net |
|
|
15,503 |
|
|
16,562 |
Notes receivable |
|
|
22,775 |
|
|
22,775 |
Other current assets |
|
|
8,678 |
|
|
6,754 |
Total current assets |
|
|
85,088 |
|
|
88,106 |
Property, plant and equipment, net |
|
|
10,932 |
|
|
11,959 |
Operating lease right-of-use assets |
|
|
19,764 |
|
|
20,406 |
Intangible assets, net |
|
|
— |
|
|
64 |
Deferred income taxes, net |
|
|
91 |
|
|
76 |
Other assets |
|
|
2,213 |
|
|
2,604 |
Total assets |
|
$ |
118,088 |
|
$ |
123,215 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
7,381 |
|
$ |
7,759 |
Accrued compensation and other current liabilities |
|
|
10,524 |
|
|
10,829 |
Contract liabilities |
|
|
13,760 |
|
|
12,896 |
Total current liabilities |
|
|
31,665 |
|
|
31,484 |
Long-term pension liabilities |
|
|
17,119 |
|
|
18,520 |
Long-term operating lease liabilities |
|
|
21,216 |
|
|
21,890 |
Other liabilities |
|
|
4,941 |
|
|
4,913 |
Total liabilities |
|
|
74,941 |
|
|
76,807 |
Total shareholders' equity |
|
|
43,147 |
|
|
46,408 |
Total liabilities and shareholders’ equity |
|
$ |
118,088 |
|
$ |
123,215 |
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
In thousands (unaudited) |
|
2021 |
|
|
2020 |
|
Total net operating revenue |
|
$ |
36,815 |
|
|
$ |
40,343 |
|
Total operating costs and expense |
|
|
40,515 |
|
|
|
45,103 |
|
Operating
Loss |
|
$ |
(3,700 |
) |
|
$ |
(4,760 |
) |
|
|
|
|
|
|
|
Total net operating revenue |
|
$ |
36,815 |
|
|
$ |
40,343 |
|
Addback: |
|
|
|
|
|
|
Advertising contra revenue |
|
|
6,078 |
|
|
|
1,454 |
|
Circulation contra revenue |
|
|
95 |
|
|
|
38 |
|
Adjusted Operating
Revenue |
|
$ |
42,988 |
|
|
$ |
41,835 |
|
|
|
|
|
|
|
|
Total operating costs and expense |
|
$ |
40,515 |
|
|
$ |
45,103 |
|
Addback: |
|
|
|
|
|
|
Advertising contra expense |
|
|
6,078 |
|
|
|
1,454 |
|
Circulation contra expense |
|
|
95 |
|
|
|
38 |
|
Less: |
|
|
|
|
|
|
Depreciation |
|
|
1,074 |
|
|
|
1,765 |
|
Amortization |
|
|
64 |
|
|
|
64 |
|
Severance expense |
|
|
208 |
|
|
|
186 |
|
Gain on sale/disposal of assets, net |
|
|
(1 |
) |
|
|
(5 |
) |
Adjusted Operating
Expense |
|
$ |
45,343 |
|
|
$ |
44,585 |
|
|
|
|
|
|
|
|
Adjusted operating revenue |
|
$ |
42,988 |
|
|
$ |
41,835 |
|
Adjusted operating expense |
|
|
45,343 |
|
|
|
44,585 |
|
Adjusted Operating
Loss |
|
$ |
(2,355 |
) |
|
$ |
(2,750 |
) |
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.
Contact:Katy Murray214-977-8869
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