A. H. Belo Corporation (NYSE:AHC) today reported first quarter
operating income from continuing operations excluding certain items
(adjusted operating income) of $1.8 million, an increase of
$3.6 million, or 204 percent, over the first quarter of 2015.
In the first quarter of 2016, on a GAAP basis, the net loss
attributable to A. H. Belo Corporation (the “Company”) was $ (0.6)
million, or $ (0.03) per share. For the same period in 2015, the
Company reported net income attributable to A. H. Belo Corporation
of $0.4 million, or $0.02 per fully diluted share.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “While core print revenues continue to decline, we were
highly encouraged that the strong 2015 operating results we
experienced continued through the first quarter of 2016. Our
performance this quarter highlights our ongoing efforts to
diversify our revenue sources, manage-out product lines that can’t
sustain profitability and closely scrutinize spending."
First Quarter Results from Continuing
Operations
Total revenue was $62.5 million in the first quarter of 2016, a
decrease of $3.0 million, or 4.5 percent, when compared to the
prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, was $35.2 million in the first quarter of
2016, down 4.3 percent from the $36.8 million reported in the
first quarter of 2015, resulting from the decrease in print
advertising revenue mostly offset by the increase in digital and
marketing services revenue.
Total digital and marketing services revenue increased 23.5
percent to $11.5 million primarily due to organic growth in
marketing services revenue associated with Speakeasy and DMV
Digital Holdings, Inc. (“DMV Holdings”), which was acquired on
January 2, 2015. For the first quarter of 2016, total digital and
marketing services revenue was 32.7 percent of total
advertising and marketing services revenue, reflecting a 730 basis
point increase when compared to the 25.4 percent reported in
the first quarter of 2015. Total digital advertising and marketing
services revenue is approximately 18.5 percent of total revenue,
reflecting a 420 basis point increase when compared to the 14.3
percent reported in the first quarter of 2015.
Circulation revenue was $20.4 million, a decrease of $0.7
million or 3.3 percent, primarily due to lower home delivery and
single copy volumes partially offset by an increase in home
delivery subscription rates.
Printing, distribution and other revenue decreased 8.9 percent
to $6.9 million in the first quarter of 2016, primarily due to a
decrease of $0.2 million in commercial printing revenue and a
decrease of $0.4 million resulting from the timing of Savor,
Dallas’ four-day celebration of food, wine and spirits, which, in
2015, occurred in the first quarter. In 2016, the festival occurred
in April.
Total consolidated operating expense in the first quarter was
$64.3 million, a decrease of $6.3 million or 8.9 percent
compared to the prior year period, primarily due to a decrease in
newsprint, ink and other supplies of $2.1 million, a decrease in
operating expenses related to the 2015 DMV Holdings acquisition of
$0.7 million and a decrease in employee compensation and benefits
of $0.5 million.
The Company’s newsprint expense in the first quarter was $3.2
million, a decrease of 28.3 percent compared to the prior year
period. Newsprint consumption declined 15.0 percent to
approximately 6,589 metric tons. Compared to the same period in
2015, newsprint cost per metric ton decreased 13.6 percent and the
average purchase price per metric ton for newsprint decreased 10.3
percent.
Non-GAAP Financial Measures
A reconciliation of income from continuing operations to
adjusted income from continuing operations are included as exhibits
to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on Monday,
May 2, 2016, at 9:00 a.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 612-234-9960 (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 May 2, 2016,
until 11:59 p.m. CDT on May 9, 2016. The access code for
the replay is 391207.
About A. H. Belo Corporation
A. H. Belo Corporation (NYSE:AHC) 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 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, 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 our 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
Subsidiaries |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2016 |
|
2015 |
Net Operating
Revenue |
|
|
|
|
|
|
Advertising and marketing
services |
|
$ |
|
35,237 |
|
|
$ |
|
36,831 |
|
Circulation |
|
|
|
20,352 |
|
|
|
|
21,038 |
|
Printing, distribution and
other |
|
|
|
6,894 |
|
|
|
|
7,567 |
|
Total net operating revenue |
|
|
|
62,483 |
|
|
|
|
65,436 |
|
Operating Costs
and Expense |
|
|
|
|
|
|
Employee compensation and
benefits |
|
|
|
27,017 |
|
|
|
|
27,503 |
|
Other production, distribution and
operating costs |
|
|
|
28,331 |
|
|
|
|
31,460 |
|
Newsprint, ink and other
supplies |
|
|
|
6,058 |
|
|
|
|
8,166 |
|
Depreciation |
|
|
|
2,632 |
|
|
|
|
3,040 |
|
Amortization |
|
|
|
226 |
|
|
|
|
373 |
|
Total operating costs and
expense |
|
|
|
64,264 |
|
|
|
|
70,542 |
|
Operating loss |
|
|
|
(1,781 |
) |
|
|
|
(5,106 |
) |
Other Income
(Expense), Net |
|
|
|
|
|
|
Loss on equity method investments,
net |
|
|
— |
|
|
|
(414 |
) |
Other income, net |
|
|
|
79 |
|
|
|
|
109 |
|
Total other income (expense),
net |
|
|
|
79 |
|
|
|
|
(305 |
) |
Loss from
Continuing Operations Before Income Taxes |
|
|
|
(1,702 |
) |
|
|
|
(5,411 |
) |
Income tax benefit |
|
|
|
(1,109 |
) |
|
|
|
(5,730 |
) |
Income (Loss)
from Continuing Operations |
|
|
|
(593 |
) |
|
|
|
319 |
|
Loss related to the divestiture of
discontinued operations, net |
|
|
— |
|
|
|
(12 |
) |
Loss from
Discontinued Operations, Net |
|
|
— |
|
|
|
(12 |
) |
Net Income
(Loss) |
|
|
|
(593 |
) |
|
|
|
307 |
|
Net income (loss) attributable to
noncontrolling interests |
|
|
|
39 |
|
|
|
|
(56 |
) |
Net Income
(Loss) Attributable to A. H. Belo
Corporation |
|
$ |
|
(632 |
) |
|
$ |
|
363 |
|
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
Net income (loss) attributable to
A. H. Belo Corporation |
|
|
|
|
|
|
Basic and diluted |
|
$ |
|
(0.03 |
) |
|
$ |
|
0.02 |
|
Weighted average shares
outstanding |
|
|
|
|
|
|
Basic |
|
|
|
21,514,133 |
|
|
|
|
21,770,698 |
|
Diluted |
|
|
|
21,514,133 |
|
|
|
|
21,845,197 |
|
|
|
A. H. Belo Corporation and
Subsidiaries |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
In thousands (unaudited) |
|
2016 |
|
2015 |
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
74,656 |
|
$ |
78,380 |
Accounts receivable, net |
|
|
26,355 |
|
|
31,502 |
Other current assets |
|
|
17,069 |
|
|
13,467 |
Total current assets |
|
|
118,080 |
|
|
123,349 |
Property, plant and equipment,
net |
|
|
50,822 |
|
|
51,358 |
Intangible assets, net |
|
|
5,552 |
|
|
5,778 |
Goodwill |
|
|
36,883 |
|
|
36,883 |
Other assets |
|
|
4,129 |
|
|
4,133 |
Total assets |
|
$ |
215,466 |
|
$ |
221,501 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
9,950 |
|
$ |
12,736 |
Accrued compensation and other
current liabilities |
|
|
9,733 |
|
|
11,812 |
Advance subscription payments |
|
|
15,564 |
|
|
14,424 |
Total current liabilities |
|
|
35,247 |
|
|
38,972 |
Long-term pension liabilities |
|
|
56,574 |
|
|
57,446 |
Other liabilities |
|
|
5,579 |
|
|
4,812 |
Total liabilities |
|
|
97,400 |
|
|
101,230 |
Noncontrolling interest -
redeemable |
|
|
1,335 |
|
|
1,421 |
Total shareholders’ equity
attributable to A. H. Belo Corporation |
|
|
115,801 |
|
|
117,781 |
Noncontrolling interests |
|
|
930 |
|
|
1,069 |
Total shareholders' equity |
|
|
116,731 |
|
|
118,850 |
Total liabilities and shareholders’
equity |
|
$ |
215,466 |
|
$ |
221,501 |
|
|
A. H. Belo Corporation - Non-GAAP Financial
Measures |
Reconciliation of Operating Loss to Adjusted Operating
Income (Loss) |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
In thousands (unaudited) |
|
|
|
2016 |
|
|
|
|
2015 |
|
Total Net Operating Revenue |
|
$ |
|
62,483 |
|
|
$ |
|
65,436 |
|
Total Operating Costs and
Expense |
|
|
|
64,264 |
|
|
|
|
70,542 |
|
Operating
Loss |
|
|
|
(1,781 |
) |
|
|
|
(5,106 |
) |
|
|
|
|
|
|
|
Addback: |
|
|
|
|
|
|
Depreciation |
|
|
|
2,632 |
|
|
|
|
3,040 |
|
Amortization |
|
|
|
226 |
|
|
|
|
373 |
|
Severance expense |
|
|
|
742 |
|
|
|
|
(55 |
) |
Adjusted Operating Income
(Loss) |
|
$ |
|
1,819 |
|
|
$ |
|
(1,748 |
) |
|
The Company evaluates adjusted operating income (loss) from
continuing operations, calculated by adjusting operating loss for
depreciation, amortization, severance expense and pension plan
settlement (“Adjusted Operating Income (Loss)”). The Company
believes that such expenses and charges are not indicative of
normal, ongoing operations and their inclusion in the results makes
for more difficult comparisons between years and with peer group
companies.
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 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 (Loss) should not 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,
this non-GAAP measure may not be comparable to similarly-titled
measures of other companies.
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