A. H. Belo Corporation (NYSE: AHC) today reported results for
the first quarter of 2015, highlighted by an increase in total
operating revenue of 1.6 percent over the prior year quarter,
driven by marketing services and commercial printing and
distribution. The Company's January acquisition of three marketing
services businesses, Distribion, Inc., CDFX, LLC (d/b/a Marketing
FX) and Vertical Nerve, Inc. (collectively, "DMV"), added
incremental revenue of $1.9 million.
Jim Moroney, chairman, president and Chief Executive Officer,
said, "Although core advertising revenues remain challenged, we are
continuing to invest in new and diversified sources of revenue and
those investments are producing returns. The improvement of 1.6
percent this quarter is primarily due to our expansion of marketing
services operations, resulting from our January acquisition of DMV,
the continued growth of our content marketing agency Speakeasy, the
expansion of our event marketing company Crowdsource and growth in
our commercial printing and distribution operations.
"Although the Company anticipates continued challenges for print
advertising revenues, we continue our efforts to look for
opportunities to increase the channels of marketing we can offer to
our customers while assiduously working on expense management."
Net income from continuing operations was $0.02 per share in the
first quarter of 2015, an increase of $0.24 per share over the
first quarter of 2014. First quarter 2015 earnings include an
income tax benefit of $5.7 million primarily due to a reduction in
the valuation allowance for the offset of deferred tax assets by
$4.0 million of DMV acquisition-date tax liabilities.
Adjusted EBITDA, or earnings before interest, taxes,
depreciation and amortization ("EBITDA") from continuing operations
with acquisition costs and net investment-related gains and losses
added back, was $(1.4) million in the first quarter of 2015, a
decrease of $1.8 million from the first quarter of 2014.
As of March 31, 2015, cash and cash equivalents were $81.4
million, and the Company had no debt.
First Quarter Results from Continuing
Operations
Total revenue was $65.4 million in the first quarter of 2015, an
increase of 1.6 percent compared to the prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, decreased 2.4 percent. Marketing services
revenue more than doubled from the prior year period as a result of
growth of Speakeasy and the acquisition of DMV. The acquired
marketing services businesses contributed $1.9 million of
incremental revenue. Increases in marketing services revenue were
offset by declines in display, classified, preprint and digital
advertising revenues which decreased 2.7 percent, 11.7 percent,
11.8 percent and 7.3 percent, respectively. The decrease in digital
advertising revenues is primarily due to declines in online
classified advertising related to the resale of cars.com products and services.
Circulation revenue remained flat to the prior year period at
$21.0 million as increased rates offset lower volumes.
Printing and distribution revenue increased 33.8 percent to $7.6
million in the first quarter of 2015 due primarily to the impact of
commercial printing agreements with various regional and community
papers.
Total consolidated operating expense in the first quarter was
$70.5 million, a 3.7 percent increase compared to the prior year
period, due to higher materials, production and distribution
expenses related to additional printing and distribution business
and operating expenses related to the acquired businesses.
The Company's newsprint expense in the first quarter was $4.5
million, a decrease of 7.6 percent compared to the prior year
period. Newsprint consumption dropped 4.5 percent to approximately
7,750 metric tons. Compared to the prior year period, newsprint
cost per metric ton and the average purchase price per metric ton
for newsprint decreased 3.2 percent and 8.0 percent,
respectively.
Corporate and non-operating unit expenses in the first quarter
were $4.9 million, an increase of 4.6 percent compared to the prior
year period primarily due to legal and professional fees associated
with recent transactions.
As of March 31, 2015, A. H. Belo had approximately 1,200
full-time equivalent employees, a decrease of 19.1 percent compared
to the prior year period, primarily due to the sale of The
Providence Journal during the third quarter of 2014.
Non-GAAP Financial
Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA from
continuing operations are included as exhibits to this release.
Financial Results Conference
Call
A. H. Belo will conduct a conference call on Tuesday, April 28
at 1:00 p.m. CDT to discuss financial results. The conference call
will be available via webcast by accessing the Company's website
(www.ahbelo.com/invest) or by dialing
1-800-230-1074 (USA) or 612-288-0337 (International). A replay line
will be available at 1-800-475-6701 (USA) or 320-365-3844
(International) from 3:00 p.m. CDT on April 28 until 11:59 p.m. CDT
on May 5, 2015. The access code for the replay is 357654.
About A. H. Belo
Corporation
A. H. Belo Corporation (NYSE: AHC) is a leading local news
information publishing company with commercial printing,
distribution and direct mail capabilities, as well as expertise in
emerging media and marketing services. With a continued focus on
extending the Company's media platform, A. H. Belo is able to
deliver news and information in innovative ways to a broad spectrum
of audiences with diverse interests and lifestyles. For additional
information, visit ahbelo.com or email
invest@ahbelo.com.
Statements in this communication concerning A. H. Belo
Corporation’s (the “Company’s”) business outlook or future economic
performance, anticipated profitability, revenue, expense,
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, uncertainties and factors include, but are not
limited to, changes in capital market conditions and prospects, and
other factors such as changes in advertising demand and newsprint
prices; newspaper circulation trends and other circulation matters,
including changes in readership methods, patterns and demography;
audits and related actions by the Alliance for Audited Media;
challenges implementing increased subscription pricing and new
pricing structures; challenges in achieving expense reduction goals
in a timely manner and the resulting potential effects on
operations; challenges attracting and retaining key personnel;
challenges in consummating asset acquisitions or dispositions upon
acceptable terms; technological changes; development of Internet
commerce; industry cycles; changes in pricing or other actions by
existing and new competitors and suppliers; consumer acceptance of
new products and business initiatives; labor relations; regulatory,
tax and legal changes; adoption of new accounting standards or
changes in existing accounting standards by the Financial
Accounting Standards Board or other accounting standard-setting
bodies or authorities; the effects of Company acquisitions,
dispositions, co-owned ventures and investments; pension plan
matters; general economic conditions and changes in interest rates;
significant armed conflict; acts of terrorism; and other factors
beyond our control, 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.
A. H. Belo Corporation Condensed
Consolidated Statements of Operations Three Months
Ended March 31, In thousands, except share and per share
amounts (unaudited) 2015
2014 Net Operating Revenue Advertising and
marketing services $ 36,831 $ 37,726 Circulation 21,038 21,012
Printing, distribution and other 7,567 5,654 Total
net operating revenue 65,436 64,392
Operating Costs and
Expense Employee compensation and benefits 27,503 28,164 Other
production, distribution and operating costs 31,460 28,444
Newsprint, ink and other supplies 8,166 7,988 Depreciation 3,040
3,410 Amortization 373 30 Total operating costs and
expense 70,542 68,036 Operating loss (5,106 ) (3,644
)
Other Income (Expense), Net Losses on equity method
investments, net (414 ) (408 ) Other income, net 109 117
Total other income (expense), net (305 ) (291 )
Loss from
Continuing Operations Before Income Taxes (5,411 ) (3,935 )
Income tax (benefit) provision (5,730 ) 891
Income (Loss)
from Continuing Operations 319 (4,826 ) Income from
discontinued operations — 977 Loss related to the divestiture of
discontinued operations, net (12 ) (178 ) Tax expense from
discontinued operations — 16
Gain (Loss) from
Discontinued Operations, Net (12 ) 783
Net Income
(Loss) 307 (4,043 ) Net loss attributable to noncontrolling
interests (56 ) (6 )
Net Income (Loss) Attributable to A. H.
Belo Corporation $ 363 $ (4,037 )
Per Share
Basis Basic and Diluted Continuing operations $ 0.02 $
(0.22 ) Discontinued operations — 0.03 Net income
(loss) attributable to A. H. Belo Corporation $ 0.02 $ (0.19
)
Weighted average shares outstanding Basic
21,770,698 21,918,000 Diluted 21,845,197 21,918,000
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
March 31,
December 31, In thousands (unaudited)
2015 2014 Assets Current assets: Cash
and cash equivalents $ 81,442 $ 158,171 Accounts receivable, net
30,911 34,396 Other current assets 15,393 13,323 Assets of
discontinued operations 253 565 Total current assets
127,999 206,455 Property, plant and equipment, net 59,816 61,589
Intangible assets, net 46,358 25,238 Other assets 5,856
5,465 Total assets $ 240,029 $ 298,747
Liabilities and
Shareholders’ Equity Current liabilities: Accounts payable $
11,723 $ 12,904 Accrued expenses and other current liabilities
14,219 72,065 Advance subscription payments 16,451 15,894
Liabilities of discontinued operations 150 543 Total
current liabilities 42,543 101,406 Long-term pension liabilities
64,391 65,859 Other liabilities 5,032 5,463 Noncontrolling
interests - redeemable 1,263 — Total shareholders’ equity
126,800 126,019 Total liabilities and shareholders’ equity $
240,029 $ 298,747
A. H. Belo
Corporation Reconciliation of Net Income (Loss) to EBITDA
and Adjusted EBITDA from Continuing Operations
Three Months Ended March 31, In thousands (unaudited)
2015 2014 Net
Income (Loss) Attributable to A. H. Belo Corporation $ 363 $
(4,037 ) Less: Income (Loss) from discontinued operations, net (12
) 783 Plus: Net loss attributable to noncontrolling interests
(56 ) (6 ) Income (Loss) from continuing operations
319 (4,826 ) Depreciation and amortization 3,413 3,440 Income tax
provision (benefit) (5,730 ) 891
EBITDA
from Continuing Operations (1,998 ) (495 )
Addback: Acquisition costs 725 — Net investment-related (gains)
losses (81 ) 934
Adjusted EBITDA from
Continuing Operations $ (1,354 ) $ 439
The Company evaluates earnings before interest, taxes,
depreciation and amortization ( “EBITDA”) which is presented for
continuing operations by adjusting for discontinued operations and
losses attributable to noncontrolling interests. Adjusted EBITDA is
calculated by adding back to EBITDA recorded expenses to acquire
new businesses, net investment-related gains and losses and
non-cash impairment expense, as applicable.
Neither EBITDA nor Adjusted EBITDA is a measure of financial
performance under generally accepted accounting principles
(“GAAP”). Management uses EBITDA, Adjusted EBITDA 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. Neither EBITDA nor Adjusted
EBITDA should be considered in isolation or as a substitute for net
income from continuing operations, cash flows provided by operating
activities or other comparable measures prepared in accordance with
GAAP. Additionally, these non-GAAP measures may not be comparable
to similarly-titled measures of other companies.
A. H. Belo CorporationKaty Murray, 214-977-8869Senior Vice
President / Chief Financial Officer
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