A. H. Belo Corporation (NYSE: AHC) today reported a first
quarter net loss from continuing operations of $0.18 per share, an
improvement of $0.09 per share compared to the first quarter of
2013, due to strong expense management and growth in circulation,
printing and distribution, and marketing services revenue. The
first quarter 2014 net loss includes a $0.9 million net
investment-related loss for the partial impairment of the Company’s
investment in Wanderful Media.
Adjusted EBITDA, or earnings before interest, taxes,
depreciation and amortization (“EBITDA”) from continuing operations
with net investment-related losses added back, was $3.2 million in
the first quarter of 2014, an increase of $2.3 million or 256
percent compared to the prior year period due primarily to
continued expense containment.
As of March 31, 2014, cash and cash equivalents were $82.5
million, and the Company had no debt.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “First quarter total revenue decreased 1 percent compared to
prior year, the lowest year-over-year first quarter decline since
our spin-off in 2008. This improved rate of decline reflects our
continued focus on diversifying revenue streams, and was driven by
continued growth in marketing services revenue and increased
printing and distribution revenues in Dallas and Providence,
respectively.”
First Quarter Results from Continuing
Operations
Total revenue was $85.6 million in the first quarter of 2014, a
decrease of 1 percent compared to the prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, decreased 5 percent. Digital revenue
increased 18 percent over the prior year quarter, primarily due to
continued growth in automotive digital revenue at The Dallas
Morning News and marketing services revenue associated with 508
Digital and Speakeasy. Increases in digital revenue were offset by
declines in display, preprint and classified advertising revenues
which decreased 16 percent, 5 percent and 2 percent,
respectively.
Advertising revenue from niche publications, which is a
component of the display, preprint, classified and digital revenues
reported above, decreased 5 percent compared to the prior year
period due primarily to lower advertising revenue at
The Morning News' Spanish-language publication Al Día.
Circulation revenue increased 1 percent to $29.3 million in the
first quarter of 2014 compared to the prior year period due to
increased rates for home delivery at The Providence
Journal.
Printing and distribution revenue increased 9 percent to $9.4
million in the first quarter of 2014 due primarily to the impact of
the previously announced contract to print the Fort Worth
Star-Telegram, additional printing of local community newspapers in
Dallas and the expansion of the distribution of third-party
newspapers at The Providence Journal. These increases were
partially offset by lower printing revenue from national
publications due to declines in volumes.
Total consolidated operating expense in the first quarter was
$88.3 million, a 4 percent decrease compared to the prior year
period as employee compensation and benefits, newsprint,
distribution and depreciation expenses all decreased.
The Company’s newsprint expense in the first quarter was $6.4
million, a decrease of 13 percent compared to the prior year
period. Newsprint consumption dropped 10 percent to approximately
11,000 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 percent and 2 percent, respectively.
Corporate and non-operating unit expenses in the first quarter
were $5.2 million, a decrease of 26 percent compared to the
prior year period as employee related expenses, legal, technology
and depreciation expenses all decreased.
As of March 31, 2014, A. H. Belo had approximately 1,500
full-time equivalent employees, a decrease of approximately 5
percent compared to the prior year period.
Investments
In April 2014, the Company received distribution proceeds of
approximately $18.9 million following the sale of Apartments.com by
Classified Ventures and recorded a gain of approximately $18.5
million. The Company expects related federal income taxes on such
gain to be minimal as a result of previously incurred net operating
losses and is finalizing its estimate of state taxes.
The Company continues to explore a potential sale of
The Providence Journal with the assistance of its investment
bank, Stephens Inc.
2014 Guidance
A. H. Belo anticipates full-year 2014 EBITDA from continuing
operations in the range of $28.0 million to
$32.0 million, exclusive of gains or losses from asset
dispositions.
For the full-year 2014, total capital expenditures are expected
to be in the range of $8.0 million to $10.0 million.
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 29
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
1-800-230-1059 (USA) or 612-332-0430 (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 29 until 11:59
p.m. CDT on May 6, 2014. The access code for the replay is
324154.
About A. H. Belo
Corporation
A. H. Belo Corporation (NYSE: AHC), headquartered in Dallas,
Texas, is a distinguished newspaper publishing and local news and
information company that owns and operates three daily
newspapers and related websites. A. H. Belo
publishes The Dallas Morning News, Texas’
leading newspaper and winner of nine Pulitzer Prizes; The
Providence Journal, the oldest continuously-published daily
newspaper in the United States and winner of four Pulitzer Prizes;
and the Denton Record-Chronicle. The Company publishes various
niche publications targeting specific audiences, and
its investments include Classified Ventures, owner of
Cars.com, and Wanderful Media, owner of FindnSave.com. A. H.
Belo offers digital marketing solutions through 508 Digital and
Speakeasy and also owns and operates commercial printing,
distribution and direct mail service businesses. Additional
information is available at www.ahbelo.com or by
contacting Alison K. Engel, Senior Vice President/Chief Financial
Officer, at 214-977-2248.
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, 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;
and 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 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) 2014
2013 Net Operating Revenue Advertising
and marketing services $ 46,860 $ 49,214 Circulation 29,347 28,944
Printing and distribution 9,379 8,582 Total net
operating revenue 85,586 86,740
Operating Costs and Expense
Employee compensation and benefits 36,837 39,342 Other production,
distribution and operating costs 34,525 34,905 Newsprint, ink and
other supplies 11,706 12,049 Depreciation 4,062 4,813 Amortization
1,123 1,123 Total operating costs and expense 88,253
92,232 Loss from operations (2,667 ) (5,492 )
Other Income (Expense), Net Gains (losses) on equity method
investments, net (408 ) 549 Interest expense (1 ) (411 ) Other
income (loss), net 118 (104 ) Total other income (expense),
net (291 ) 34
Loss from Continuing Operations Before
Income Taxes (2,958 ) (5,458 ) Income tax provision 907
436
Loss from Continuing Operations (3,865 ) (5,894 )
Loss from discontinued operations — (2,199 ) Gain (loss) related to
the divestiture of discontinued operations, net (178 ) — Tax
benefit from discontinued operations — (17 )
Loss from
Discontinued Operations, Net (178 ) (2,182 )
Net Loss
(4,043 ) (8,076 ) Net loss attributable to noncontrolling interests
(6 ) (54 )
Net Loss Attributable to A. H. Belo Corporation $
(4,037 ) $ (8,022 )
Per Share Basis Basic and
Diluted Continuing operations $ (0.18 ) $ (0.27 ) Discontinued
operations (0.01 ) (0.10 ) Net loss attributable to A. H. Belo
Corporation $ (0.19 ) $ (0.37 )
Weighted average shares
outstanding Basic and Diluted 21,918,800 22,032,803
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
March 31, December 31, In thousands
(unaudited) 2014 2013
Assets Current assets: Cash and cash equivalents $ 82,540 $
82,193 Accounts receivable, net 32,606 41,174 Other current assets
21,092 15,685 Assets of discontinued operations 778 1,633
Total current assets 137,016 140,685 Property, plant and equipment,
net 94,257 97,112 Intangible assets, net 28,801 29,924 Other assets
10,902 11,497 Total assets $ 270,976 $ 279,218
Liabilities and Shareholders’ Equity Current liabilities:
Accounts payable $ 14,950 $ 15,488 Accrued expenses 18,126 17,640
Advance subscription payments 19,748 19,184 Liabilities of
discontinued operations 628 2,028 Total current liabilities
53,452 54,340 Long-term pension liabilities 47,257 50,082 Other
liabilities 6,592 6,020 Total shareholders’ equity 163,675
168,776 Total liabilities and shareholders’ equity $ 270,976
$ 279,218
A. H. Belo Corporation
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA from
Continuing Operations Three Months Ended March
31, In thousands (unaudited)
2014 2013 Net Loss Attributable to
A. H. Belo Corporation $ (4,037 ) $ (8,022 ) Less: Loss from
discontinued operations, net (178 ) (2,182 ) Plus: Net loss
attributable to noncontrolling interests (6 ) (54 ) Loss from
Continuing Operations (3,865 ) (5,894 ) Depreciation and
amortization 5,185 5,936 Interest expense 1 411 Income tax
provision 907 436
EBITDA from Continuing
Operations $ 2,228 $ 889 Addback: Net
investment-related losses $ 934 $ —
Adjusted
EBITDA from Continuing Operations $ 3,162 $ 889
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, as applicable, by adding back to EBITDA non-cash
impairment expense and net investment-related losses.
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. Adjusted EBITDA is also used
by management to evaluate the cash flows available for capital
spending, investing, pension contributions (required and
voluntary), dividends and other equity-related transactions.
Neither EBITDA nor Adjusted EBITDA should be considered in
isolation or as a substitute for cash flows provided by operating
activities or other income or cash flow data prepared in accordance
with GAAP, and these non-GAAP measures may not be comparable to
similarly-titled measures of other companies.
In previous periods, the Company added back pension expense in
the determination of Adjusted EBITDA. Management reassessed this
measurement and no longer excludes pension expense from Adjusted
EBITDA.
A. H. Belo CorporationAlison K. Engel, 214-977-2248Senior Vice
President/Chief Financial Officer
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