A. H. Belo Corporation (NYSE:AHC) today reported first quarter 2017
net loss attributable to A. H. Belo Corporation (the
“Company”) of $(4.4) million, or $(0.21) per share. In
the first quarter of 2016, the Company reported net loss
attributable to A. H. Belo Corporation of
$(0.6) million, or $(0.03) per share.
In the first quarter of 2017, on a non-GAAP basis, the Company
reported operating loss excluding certain items (“adjusted
operating income (loss)”) of $(0.8) million, a decrease of
$2.7 million, or 145.8 percent, when compared to adjusted
operating income of $1.8 million reported in the first quarter
of 2016.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “As I mentioned during the 2016 earnings calls, we continue
to work to decrease our dependency on print related revenues. To
that end, in the first quarter of 2017 we purchased the remaining
interests in both DMV and Speakeasy. As you heard me say repeatedly
last year, the growth in these companies, and their ability to
provide ROI-based marketing solutions to our customers, has been
exceptional. With the remaining acquisition of these companies now
complete, we can resume looking for investments which complement
our current suite of marketing services and improve our ability to
earn our customers a return on their marketing investment with our
company.
"Digital and marketing services grew 12.4 percent in 2017
compared to 2016, driven primarily by revenue growth from DMV,
which grew $2.1 million, or 66.8 percent, on top of revenue growth
of 65.6 percent in the first quarter of 2016. Our digital and
marketing services revenue now represents 36.8 percent of our total
advertising and marketing services revenue, compared to
32.7 percent in 2016 and 26.8 percent in the fourth
quarter of 2015, which was the first time we reported this
metric.
"We are making the steady progress that we expect from the
consistent execution of our revenue diversification strategy."
First Quarter Results from Continuing
Operations
Total revenue was $60.9 million in the first quarter of
2017, a decrease of $1.6 million, or 2.5 percent, when
compared to the first quarter of 2016.
Revenue from advertising and marketing services, including print
and digital revenues, was $35.2 million in the first quarter
of 2017, flat when compared to the first 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 12.4 percent to
$13.0 million primarily due to organic growth associated with
DMV. DMV revenue increased $2.1 million, or 66.8 percent,
compared to the first quarter of 2016, which was 65.6 percent
over the first quarter of 2015. For the first quarter of 2017,
total digital and marketing services revenue was 36.8 percent
of total advertising and marketing services revenue, reflecting a
410 basis point increase when compared to the 32.7 percent
reported in the first quarter of 2016. Total digital advertising
and marketing services revenue was approximately 21.3 percent
of total revenue, reflecting a 280 basis point increase when
compared to the 18.5 percent reported in the first quarter of
2016.
Circulation revenue was $19.2 million, a decrease of
$1.2 million, or 5.8 percent. The decline was primarily
due to a decrease in home delivery volume. Single copy revenue
remained relatively flat to prior year, driven by a decrease in
single copy volume that was offset by an increase in the daily
single copy rate.
Printing, distribution and other revenue decreased
$0.4 million, or 5.3 percent, in the first quarter of
2017, primarily due to a decrease of $0.2 million related to
distribution of outside publications and a $0.1 million
decrease in commercial printing revenue.
Total consolidated operating expense in the first quarter was
$65.0 million, an increase of $0.8 million, or
1.2 percent, compared to the first quarter of 2016, primarily
due to an increase of $0.9 million in employee compensation
and benefits expense driven by DMV headcount growth.
In the first quarter of 2017, on a non-GAAP basis, total
consolidated operating expense excluding certain items (“adjusted
operating expense”) was $61.7 million, an increase of
$1.1 million, or 1.8 percent, compared to
$60.7 million of adjusted operating expense reported in the
first quarter of 2016, primarily due to an increase in DMV’s
revenue related expenses.
The Company’s newsprint expense in the first quarter of 2017 was
$3.1 million, a decrease of 4.4 percent, compared to the
first quarter of 2016. Newsprint consumption declined
11.4 percent to 5,835 metric tons. Compared to the first
quarter of 2016, newsprint cost per metric ton increased
11.9 percent and the average purchase price per metric ton for
newsprint increased 10.5 percent.
Non-GAAP Financial Measures
A reconciliation of operating loss to adjusted operating income
(loss) 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
Wednesday, May 3, 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 1-877-209-9920
(USA) or 612-332-0802 (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 3, 2017 until 11:59 p.m. CDT on May 10,
2017. The access code for the replay is 421913.
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
|
|
Three Months Ended March 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2017 |
|
2016 |
Net Operating
Revenue: |
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
35,204 |
|
|
$ |
35,237 |
|
Circulation |
|
|
19,166 |
|
|
|
20,352 |
|
Printing,
distribution and other |
|
|
6,531 |
|
|
|
6,894 |
|
Total net
operating revenue |
|
|
60,901 |
|
|
|
62,483 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
27,875 |
|
|
|
27,017 |
|
Other
production, distribution and operating costs |
|
|
28,326 |
|
|
|
28,331 |
|
Newsprint, ink and other supplies |
|
|
5,901 |
|
|
|
6,058 |
|
Depreciation |
|
|
2,506 |
|
|
|
2,632 |
|
Amortization |
|
|
200 |
|
|
|
226 |
|
Goodwill
impairment |
|
|
228 |
|
|
|
— |
|
Total
operating costs and expense |
|
|
65,036 |
|
|
|
64,264 |
|
Operating
loss |
|
|
(4,135 |
) |
|
|
(1,781 |
) |
Other
income (expense), net |
|
|
(337 |
) |
|
|
79 |
|
Loss from
Continuing Operations Before Income Taxes |
|
|
(4,472 |
) |
|
|
(1,702 |
) |
Income
tax benefit |
|
|
(42 |
) |
|
|
(1,109 |
) |
Net
Loss |
|
|
(4,430 |
) |
|
|
(593 |
) |
Net
income attributable to noncontrolling interests |
|
|
— |
|
|
|
39 |
|
Net Loss
Attributable to A. H. Belo Corporation |
|
$ |
(4,430 |
) |
|
$ |
(632 |
) |
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
Net loss
attributable to A. H. Belo Corporation |
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.21 |
) |
|
$ |
(0.03 |
) |
Number of
common shares used in the per share calculation: |
|
|
|
|
|
|
Basic and
diluted |
|
|
21,690,371 |
|
|
|
21,514,133 |
|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
March 31, |
|
December 31, |
In thousands (unaudited) |
|
2017 |
|
2016 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
69,205 |
|
$ |
80,071 |
Accounts
receivable, net |
|
|
25,524 |
|
|
29,114 |
Other
current assets |
|
|
14,768 |
|
|
12,939 |
Total
current assets |
|
|
109,497 |
|
|
122,124 |
Property,
plant and equipment, net |
|
|
41,582 |
|
|
43,759 |
Intangible assets, net |
|
|
4,672 |
|
|
4,872 |
Goodwill |
|
|
13,973 |
|
|
14,201 |
Other
assets |
|
|
7,908 |
|
|
7,775 |
Total
assets |
|
$ |
177,632 |
|
$ |
192,731 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
11,550 |
|
$ |
9,036 |
Accrued
compensation and other current liabilities |
|
|
11,568 |
|
|
14,975 |
Advance
subscription payments |
|
|
13,791 |
|
|
13,243 |
Total
current liabilities |
|
|
36,909 |
|
|
37,254 |
Long-term
pension liabilities |
|
|
53,916 |
|
|
54,843 |
Other
liabilities |
|
|
10,104 |
|
|
8,812 |
Total
liabilities |
|
|
100,929 |
|
|
100,909 |
Noncontrolling interest - redeemable |
|
|
— |
|
|
2,670 |
Total
shareholders’ equity attributable to A. H. Belo Corporation |
|
|
76,703 |
|
|
87,918 |
Noncontrolling interests |
|
|
— |
|
|
1,234 |
Total
shareholders' equity |
|
|
76,703 |
|
|
89,152 |
Total liabilities and shareholders’ equity |
|
$ |
177,632 |
|
$ |
192,731 |
A. H. Belo Corporation - Non-GAAP Financial
MeasuresReconciliation of Operating Loss to
Adjusted Operating Income (Loss)
|
|
Three Months Ended March 31, |
In thousands (unaudited) |
|
2017 |
|
2016 |
Total net
operating revenue |
|
$ |
60,901 |
|
|
$ |
62,483 |
|
Total
operating costs and expense |
|
|
65,036 |
|
|
|
64,264 |
|
Operating
Loss |
|
$ |
(4,135 |
) |
|
$ |
(1,781 |
) |
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
65,036 |
|
|
$ |
64,264 |
|
Less: |
|
|
|
|
|
|
Depreciation |
|
|
2,506 |
|
|
|
2,632 |
|
Amortization |
|
|
200 |
|
|
|
226 |
|
Severance
expense |
|
|
367 |
|
|
|
742 |
|
Goodwill
impairment |
|
|
228 |
|
|
|
— |
|
Adjusted
Operating Expense |
|
$ |
61,735 |
|
|
$ |
60,664 |
|
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
60,901 |
|
|
$ |
62,483 |
|
Adjusted
operating expense |
|
|
61,735 |
|
|
|
60,664 |
|
Adjusted
Operating Income (Loss) |
|
$ |
(834 |
) |
|
$ |
1,819 |
|
The Company calculates adjusted operating income (loss) by
adjusting operating loss to exclude depreciation, amortization,
severance expense, pension plan settlement loss and goodwill
impairment (“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.
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 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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