Tribune Publishing Company (NASDAQ: TPCO) today announced financial
results for the first quarter ended March 29, 2020.
First Quarter 2020 Highlights:
- Total revenues were $216.5 million, down from $244.5 million in
the first quarter of 2019
- Loss from operations was $62.0 million, substantially due to
non-cash impairment charges of $51.0 million, compared to a loss of
$7.4 million in the first quarter of 2019
- Adjusted EBITDA was $13.3 million, a decrease of $8.0 million
compared to the first quarter of 2019
- Digital-only subscribers increased 30.7% to 370,000 at the end
of the first quarter 2020, up from 283,000 at the end of the first
quarter 2019, and related revenue was up 42.4% compared to the
first quarter of 2019
Terry Jimenez, Tribune Publishing Chief Executive Officer and
President, said: “We began 2020 with a sharp focus on growing our
digital-only subscriber base and managing costs to offset secular
revenue declines. The onset of the COVID-19 pandemic in the first
quarter required us to accelerate these efforts in order to manage
the impact of the economic slowdown on our advertising partners and
thereby our business. We have continued to see strong growth in
digital-only subscribers which increased 30.7% year-over-year as of
the end of the first quarter and continue to grow rapidly as we
progress through second quarter. We have taken extensive and
aggressive steps to mitigate the economic impact of COVID-19
including modification of manufacturing and distribution processes,
reducing and freezing spending, eliminating incentive and
discretionary bonuses and delaying non-essential repairs and
maintenance along with difficult decisions that resulted in the
elimination of positions, salary reductions and employee furloughs.
While we are not on the other side of the pandemic, I am very
appreciative of our team's ability to move with agility to navigate
through the pandemic's storm.”
“We recognize that coming out of the pandemic, the Company must
accelerate its digital footprint and position itself as a smaller,
more nimble operation in order to sustain itself for the long term.
Accordingly, we have and are aggressively flattening our management
organization, reducing our real estate footprint and eliminating
our fixed cost infrastructure. We believe the combination of these
restructuring activities, cost saving measures, preserving our
strong balance sheet and the reopening of businesses will favorably
position the Company's short and long-term financial future. While
we have withdrawn full year guidance given the lack of visibility
on the timing and the size for the economic recovery, we still
believe we will generate positive cash flow for 2020 and we have
provided guidance for Q2, 2020.”
First Quarter 2020 ResultsFirst quarter 2020
total revenues were $216.5 million, down $28.0 million or 11.5%
compared to $244.5 million for the first quarter 2019. Advertising
revenues decreased 20.6%, or $20.0 million, in the three months
ended March 29, 2020, compared to the same period for 2019,
due to decreases in all revenue categories. Circulation revenues
decreased 3.1%, or $2.9 million, in the three months ended
March 29, 2020, compared to the same period for 2019. Home
delivery decreased $4.4 million and single copy decreased $1.1
million. These decreases were partially offset by an increase of
$2.6 million in digital subscription revenue as customers seeking
information on the pandemic turn to digital delivery.
First quarter 2020 total operating expenses were $278.5 million,
which includes an impairment charge of $51.0 million driven by
COVID-19 and restructuring of real estate. This is an increase of
10.6% compared to $251.9 million for the first quarter of 2019.
Excluding the impairment charge, operating expenses decreased
$24.4M or 9.7% and reflect the Company's ongoing disciplined cost
management.
Net loss from operations was $44.0 million in the first
quarter of 2020, compared to a loss of $4.7 million in the
first quarter of 2019.
Adjusted EBITDA was $13.3 million in the first quarter of 2020,
beating our previous guidance of $12.0-$13.0 million.
For the quarter ended March 29, 2020, capital expenditures
totaled $3.5 million. Cash balance at March 29, 2020, was
$48.8 million, which does not include $37.3 million of restricted
cash reflected in long-term assets.
Segment ResultsThe Company assesses its
operating segments in accordance with ASC Topic 280, “Segment
Reporting.” In the three months ended March 29, 2020, the Company
realigned its operations, combining the print and digital
operations of its media groups together under the leadership of its
new Chief Executive Officer. The desegregation of the digital
business has triggered an evaluation of the Company’s operating and
reportable segments and the Company has determined that the
financial statements should reflect one reportable segment. Prior
to the first quarter of fiscal 2020, Tribune was managed by its
chief operating decision maker as two segments, segment M and
segment X. The prior periods have been restated to reflect the
change in reportable segments.
2020 OutlookThe Company is not providing full
year 2020 guidance at this time.
For the second quarter of 2020, the Company expects total
revenues of $172.0 million to $175.0 million and Adjusted EBITDA of
$10.5 million to $12.0 million.
Conference Call DetailsTribune Publishing will
host a conference call to discuss the Company’s first quarter 2020
results at 8:30 a.m. Eastern Time (7:30 a.m. Central
Time) on Friday, June 5, 2020. The conference call may be accessed
via Tribune Publishing’s Investor Relations website at
investor.tribpub.com or by dialing 844.494.0195 (508.637.5599 for
international callers) and entering conference ID 1045919. An
archived version of the webcast will also be available for one year
on the Tribune Publishing website. You can also access this replay
via telephone, until June 12, 2020, by dialing 855.859.2056
(404.537.3406 for international callers) and entering conference ID
1045919.
Non-GAAP Financial InformationAdjusted EBITDA,
Adjusted Operating Expenses, Adjusted Income (Loss) available to
Tribune common stockholders, and Adjusted Diluted EPS are not
measures presented in accordance with United States generally
accepted accounting principles (U.S. GAAP) and Tribune Publishing’s
use of the terms Adjusted EBITDA, Adjusted Operating Expenses,
Adjusted Income (Loss) available to Tribune common stockholders,
and Adjusted Diluted EPS may vary from that of others in the
Company’s industry. Adjusted EBITDA, Adjusted Operating Expenses,
Adjusted Income (Loss) available to Tribune common stockholders,
and Adjusted Diluted EPS should not be considered as an alternative
to net income (loss), income from operations, operating expenses,
net income (loss) per diluted share, revenues or any other
performance measures derived in accordance with U.S. GAAP as
measures of operating performance or liquidity. Further information
regarding Tribune Publishing’s presentation of these measures,
including a reconciliation of Adjusted EBITDA, Adjusted Operating
Expenses, Adjusted Income (Loss) available to Tribune common
stockholders and Adjusted Diluted EPS to the most directly
comparable U.S. GAAP financial measure, is included below in this
press release.
Cautionary Statements Regarding Forward-looking
StatementsThis press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 that
are based largely on our current expectations and reflect various
estimates and assumptions by us. Forward-looking statements are
subject to certain risks, trends and uncertainties that could cause
actual results and achievements to differ materially from those
expressed in such forward-looking statements. Such risks, trends
and uncertainties, which in some instances are beyond our control,
include, without limitation, the effect of the novel coronavirus
("COVID-19") and related governmental and economic responses,
changes in advertising demand, circulation levels and audience
shares; competition and other economic conditions; our ability to
develop and grow our online businesses; changes in newsprint price
and availability; our ability to maintain data security and comply
with privacy-related laws; economic and market conditions that
could impact the level of our required contributions to the defined
benefit pension plans to which we contribute; decisions by trustees
under rehabilitation plans (if applicable) or other contributing
employers with respect to multiemployer plans to which we
contribute which could impact the level of our contributions; our
ability to maintain effective internal control over financial
reporting; concentration of stock ownership among our principal
stockholders whose interest may differ from those of other
stockholders; and other events beyond our control that may result
in unexpected adverse operating results. For specific risks related
to the COVID-19 pandemic refer to "Additional Risk Factors" in the
Company's Form 8-K filed on May 8, 2020. For more information about
these and other risks see Item 1A (Risk Factors) of the Company’s
most recent Annual Report on Form 10-K and in the Company’s other
reports filed with the Securities and Exchange Commission.
The words “believe,” “expect,” “anticipate,” “estimate,”
“could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and
similar expressions generally identify forward-looking statements.
However, such words are not the exclusive means for identifying
forward-looking statements, and their absence does not mean that
the statement is not forward looking. Whether or not any such
forward-looking statements, in fact occur will depend on future
events, some of which are beyond our control. Readers are cautioned
not to place undue reliance on such forward-looking statements,
which are being made as of the date of this press release. Except
as required by law, we undertake no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
About Tribune Publishing CompanyTribune
Publishing Company (NASDAQ: TPCO) is a media company rooted in
award-winning journalism. Headquartered in Chicago, Tribune
Publishing operates local media businesses in eight markets with
titles including the Chicago Tribune, New York Daily
News, The Baltimore Sun, Orlando Sentinel, South
Florida's Sun Sentinel, Virginia’s Daily Press and The
Virginian-Pilot, The Morning Call of Lehigh Valley, Pennsylvania,
and the Hartford Courant. In addition to award-winning local
media businesses, Tribune Publishing operates Tribune Content
Agency and is the majority owner of the product review website
BestReviews. Our vision is to engage, inspire and empower our
communities every day.
Investor Relations Contact:Amy BullisTribune
Publishing Investor
Relations312.222.2102abullis@chicagotribune.com
Media Contact:Max ReinsdorfTribune Publishing
Media Relations847.867.6294mreinsdorf@tribpub.comSource: Tribune
Publishing
Exhibits:Consolidated Statements of LossConsolidated Condensed
Balance SheetsNon-GAAP Reconciliations - Loss from Operations to
Adjusted EBITDANon-GAAP Reconciliations - Total Operating Expenses
to Adjusted Operating ExpensesNon-GAAP Reconciliations - Net loss
attributable to Tribune common stockholders to Adjusted Income
(Loss) available to Tribune common stockholders and Adjusted
Diluted EPS
TRIBUNE PUBLISHING
COMPANYCONSOLIDATED STATEMENTS OF
LOSS(In thousands, except per share
data)(Unaudited)
Preliminary
|
Three months ended |
|
March 29, 2020 |
|
March 31, 2019 |
|
|
|
|
Operating revenues |
$ |
216,485 |
|
|
$ |
244,525 |
|
|
|
|
|
Operating
expenses |
278,530 |
|
|
251,927 |
|
|
|
|
|
Loss from
operations |
(62,045 |
) |
|
(7,402 |
) |
|
|
|
|
Interest income (expense), net |
(30 |
) |
|
220 |
|
Loss on equity investments, net |
— |
|
|
(487 |
) |
Other income, net |
387 |
|
|
73 |
|
Loss from operations
before income taxes |
(61,688 |
) |
|
(7,596 |
) |
Income tax benefit |
(17,682 |
) |
|
(2,882 |
) |
Net loss |
(44,006 |
) |
|
(4,714 |
) |
Less: Income (loss) attributable to noncontrolling interest |
1,330 |
|
|
(39 |
) |
Net loss attributable
to Tribune common stockholders |
$ |
(45,336 |
) |
|
$ |
(4,675 |
) |
|
|
|
|
Net loss available to
Tribune common stockholders, per common share: |
|
|
|
Basic |
$ |
(1.26 |
) |
|
$ |
(0.13 |
) |
Diluted |
$ |
(1.26 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
Weighted average
shares outstanding: |
|
|
|
Basic |
36,294 |
|
|
35,628 |
|
Diluted |
36,294 |
|
|
35,628 |
|
TRIBUNE PUBLISHING
COMPANYCONSOLIDATED CONDENSED BALANCE
SHEETS(In
thousands)(Unaudited)
Preliminary
|
March 29, 2020 |
|
December 29, 2019 |
Assets |
|
|
|
Current
assets |
|
|
|
Cash |
$ |
48,791 |
|
$ |
60,963 |
Accounts receivable, net |
94,265 |
|
112,754 |
Inventories |
4,796 |
|
4,820 |
Prepaid expenses and other current assets |
23,909 |
|
15,114 |
Total current assets |
171,761 |
|
193,651 |
Property, plant and
equipment, net |
94,901 |
|
123,913 |
Other
assets |
|
|
|
Goodwill |
115,197 |
|
117,675 |
Intangible assets, net |
60,347 |
|
69,165 |
Software, net |
20,500 |
|
20,736 |
Lease right-of-use asset |
76,895 |
|
99,480 |
Restricted cash |
37,290 |
|
37,290 |
Other long-term assets |
26,839 |
|
20,368 |
Total other assets |
337,068 |
|
364,714 |
Total
assets |
$ |
603,730 |
|
$ |
682,278 |
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current
liabilities |
|
|
|
Accounts payable |
$ |
37,544 |
|
$ |
46,482 |
Employee compensation and benefits |
31,151 |
|
36,305 |
Deferred revenue |
41,178 |
|
42,773 |
Current portion of long-term lease liability |
25,546 |
|
25,380 |
Current portion of long-term debt |
6,911 |
|
105 |
Other current liabilities |
22,444 |
|
24,317 |
Total current liabilities |
164,774 |
|
175,362 |
Non-current
liabilities |
|
|
|
Long term lease liability |
92,748 |
|
98,847 |
Workers’ compensation, general liability and auto insurance
payable |
23,881 |
|
24,192 |
Pension and postretirement benefits payable |
19,457 |
|
20,338 |
Deferred revenue |
2,387 |
|
2,504 |
Long-term debt |
55 |
|
6,857 |
Other obligations |
9,576 |
|
5,851 |
Total non-current liabilities |
148,104 |
|
158,589 |
Noncontrolling
interest |
— |
|
63,501 |
Stockholders’
equity |
|
|
|
Total stockholders’ equity |
290,852 |
|
284,826 |
Total liabilities and
stockholders’ equity |
603,730 |
|
682,278 |
TRIBUNE PUBLISHING
COMPANYNON-GAAP
RECONCILIATIONS(In
thousands)(Unaudited)
Preliminary
Reconciliation of Loss from Operations to
Adjusted EBITDA:
|
Three months ended |
|
Mar 29, 2020 |
|
Mar 31, 2019 |
|
% Change |
Net loss |
$ |
(44,006 |
) |
|
$ |
(4,714 |
) |
|
* |
Income tax benefit from operations |
(17,682 |
) |
|
(2,882 |
) |
|
* |
Interest income (expense), net |
30 |
|
|
(220 |
) |
|
* |
Loss on equity investments, net |
— |
|
|
487 |
|
|
* |
Other income, net |
(387 |
) |
|
(73 |
) |
|
* |
Loss from operations |
(62,045 |
) |
|
(7,402 |
) |
|
* |
Depreciation and amortization |
9,473 |
|
|
12,084 |
|
|
(21.6 |
) |
% |
Impairment |
51,049 |
|
|
— |
|
|
* |
Restructuring and transaction costs (1) |
13,221 |
|
|
10,870 |
|
|
21.6 |
|
% |
Stock based compensation |
1,592 |
|
|
5,737 |
|
|
(72.3 |
) |
% |
Adjusted EBITDA from operations |
$ |
13,290 |
|
|
$ |
21,289 |
|
|
(37.6 |
) |
% |
* Represents positive or negative change in excess of 100%
(1) - Restructuring and transaction costs include costs related
to Tribune’s internal restructuring, such as severance, charges
associated with vacated space and costs related to completed and
potential acquisitions.
Adjusted EBITDA
Adjusted EBITDA is a financial measure that is not calculated in
accordance with U.S. GAAP. Management believes that because
Adjusted EBITDA excludes (i) certain non-cash expenses (such
as depreciation, amortization, stock-based compensation, and
gain/loss on equity investments) and (ii) expenses that are
not reflective of the Company’s core operating results over time
(such as restructuring costs, including the employee voluntary
separation program and gain/losses on employee benefit
plan terminations, litigation or dispute settlement charges or
gains, premiums on stock buyback, impairment, and
transaction-related costs), this measure provides investors with
additional useful information to measure the Company’s financial
performance, particularly with respect to changes in performance
from period to period. The Company’s management uses Adjusted
EBITDA (a) as a measure of operating performance; (b) for planning
and forecasting in future periods; and (c) in communications with
the Company’s Board of Directors concerning the Company’s financial
performance. In addition, Adjusted EBITDA, or a similarly
calculated measure, has been used as the basis for certain
financial maintenance covenants that the Company was subject to in
connection with certain credit facilities. Since not all companies
use identical calculations, the Company’s presentation of Adjusted
EBITDA may not be comparable to other similarly titled measures of
other companies and should not be used by investors as a substitute
or alternative to net income or any measure of financial
performance calculated and presented in accordance with U.S. GAAP.
Instead, management believes Adjusted EBITDA should be used to
supplement the Company’s financial measures derived in accordance
with U.S. GAAP to provide a more complete understanding of the
trends affecting the business.
Although Adjusted EBITDA is frequently used by
investors and securities analysts in their evaluations of
companies, Adjusted EBITDA has limitations as an analytical tool,
and investors should not consider it in isolation or as a
substitute for, or more meaningful than, amounts determined in
accordance with U.S. GAAP. Some of the limitations to using
non-GAAP measures as an analytical tool are: they do not reflect
the Company’s interest income and expense, or the requirements
necessary to service interest or principal payments on the
Company’s debt; they do not reflect future requirements for capital
expenditures or contractual commitments; and although depreciation
and amortization charges are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the
future, and non-GAAP measures do not reflect any cash requirements
for such replacements.
The Company does not provide a reconciliation of
Adjusted EBITDA guidance due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliation, including adjustments that could be made for
restructuring and transaction costs, stock-based compensation
amounts and other charges reflected in our reconciliation of
historic numbers, the amount of which, based on historical
experience, could be significant.
TRIBUNE PUBLISHING
COMPANYNON-GAAP
RECONCILIATIONS(In
thousands)(Unaudited)
Preliminary
Reconciliation of Total Operating Expenses
to Adjusted Operating Expenses
Adjusted operating expenses consist of total operating
expenses per the income statement, adjusted to exclude the impact
of items listed in the Adjusted EBITDA non-GAAP reconciliation.
Management believes that adjusted operating expenses is informative
to investors as it enhances the investors' overall understanding of
the financial performance of the Company's business as they analyze
current results compared to prior periods.
|
|
Three months ended March 29, 2020 |
|
Three months ended March 31, 2019 |
|
|
GAAP |
|
Adjustments |
|
Adjusted Expenses |
|
GAAP |
|
Adjustments |
|
Adjusted Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
$ |
96,828 |
|
$ |
(18,501 |
) |
|
$ |
78,327 |
|
$ |
97,709 |
|
$ |
(13,327 |
) |
|
$ |
84,382 |
Newsprint and ink |
|
10,720 |
|
— |
|
|
10,720 |
|
16,103 |
|
— |
|
|
16,103 |
Outside services |
|
75,042 |
|
(1,356 |
) |
|
73,686 |
|
83,813 |
|
(3,119 |
) |
|
80,694 |
Other operating expenses |
|
35,418 |
|
5,044 |
|
|
40,462 |
|
42,218 |
|
(161 |
) |
|
42,057 |
Depreciation and
amortization |
|
9,473 |
|
(9,473 |
) |
|
— |
|
12,084 |
|
(12,084 |
) |
|
— |
Impairment |
|
51,049 |
|
(51,049 |
) |
|
— |
|
— |
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
$ |
278,530 |
|
$ |
(75,335 |
) |
|
$ |
203,195 |
|
$ |
251,927 |
|
$ |
(28,691 |
) |
|
$ |
223,236 |
Reconciliation of Net loss attributable to Tribune
common stockholders to Adjusted Income (Loss) available to Tribune
common stockholders and Adjusted Diluted EPS:
Adjusted Income (Loss) available to Tribune common stockholders
is defined as income (loss) available to Tribune common
stockholders - GAAP excluding the adjustments for restructuring and
transaction costs, net of the impact of income taxes.
Net loss attributable to Tribune common stockholders - GAAP
consists of Net loss per the Consolidated Statements of Loss, less
Income (loss) attributable to noncontrolling interests and the
noncontrolling interest carrying value adjustment as set forth in
the Earnings Per Share calculation in the Company's Form 10-Q.
Adjusted Diluted EPS computes Adjusted Income (Loss) available
to Tribune common stockholders divided by diluted weighted average
shares outstanding.
Management believes Adjusted Income (Loss) available to Tribune
common stockholders and Adjusted Diluted EPS are informative to
investors as they enhance investors' overall understanding of the
financial performance of the Company's business as they analyze
current results compared to future recurring projections.
|
|
Three months ended |
|
|
March 29, 2020 |
|
March 31, 2019 |
|
|
Earnings |
|
Diluted EPS |
|
Earnings |
|
Diluted EPS |
Net loss attributable to Tribune common stockholders - GAAP |
|
$ |
(45,658 |
) |
|
$ |
(1.26 |
) |
|
$ |
(4,675 |
) |
|
$ |
(0.13 |
) |
Adjustments to operating expenses, net of 27.8% tax |
|
|
|
|
|
|
|
|
Restructuring and transaction costs |
|
9,546 |
|
|
0.26 |
|
|
7,848 |
|
|
0.22 |
|
Adjusted income (loss) attributable to Tribune common stockholders
- Non-GAAP |
|
$ |
(36,112 |
) |
|
$ |
(0.99 |
) |
|
$ |
3,173 |
|
|
$ |
0.09 |
|
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