A. H. Belo Corporation (NYSE:AHC) today reported fourth quarter
2016 net loss attributable to A. H. Belo Corporation (the
“Company”) of $(18.9) million, or $(0.87) per share. In
the fourth quarter of 2015, the Company reported net loss
attributable to A. H. Belo Corporation of
$(13.7) million, or $(0.64) per share. The fourth quarter 2016
loss was driven by a goodwill impairment charge of
$22.7 million, while the fourth quarter 2015 loss was
primarily attributable to a pension settlement charge of $15.0
million.
In the fourth quarter of 2016, on a non-GAAP basis,
the Company reported operating income excluding certain items
(“adjusted operating income”) of $1.8 million, a decrease of
$6.8 million, or 79.3 percent, when compared to the
fourth quarter of 2015.
For the full year 2016, net loss attributable to
A. H. Belo Corporation was $(19.3) million, or
$(0.90) per share. For the full year 2015, the Company reported net
loss attributable to A. H. Belo Corporation of
$(17.8) million, or $(0.84) per share. The full year 2016 loss
was driven by a goodwill impairment charge of $22.7 million, while
the full year 2015 loss was primarily attributable to a pension
settlement charge of $15.0 million.
For the full year 2016, on a non-GAAP basis, the
Company reported adjusted operating income of $11.6 million, a
decrease of $0.8 million, or 6.4 percent, when compared
to the full year 2015.
Jim Moroney, chairman, president and Chief
Executive Officer, said, “I am proud of what we accomplished in
2016, especially in how we continued to diversify our sources of
revenue to make us less dependent on print related revenues. DMV,
which we acquired in January 2015, grew its revenue by 86.6
percent, or $7.8 million, in 2016. In addition, Speakeasy, our
content marketing agency, which we founded in 2012, grew its
revenue by 44.1 percent, or $2.1 million. Led by these
two companies, our total digital and marketing services revenue,
which includes digital advertising revenue in the Company’s
publishing segment, grew by 20.0 percent to $51.0 million
and now represents 33.9 percent of our total advertising and
marketing services revenue, a 680 basis point improvement over
27.1 percent, where it stood at the end of 2015. These
accomplishments validate our strategy that through leveraging the
trust in our brand and the relationships with our legacy customers,
and by providing them with ROI-based marketing solutions, we can
earn larger shares of their marketing budgets, help them sell more
of their goods and services and accelerate the growth of companies
we acquire, or build organically.
"In order to support the scale and the quality of
journalism we publish daily, we have to keep making progress
towards returning our company to year-over-year revenue growth. We
are making important progress in the ways I just described, and we
will continue to build on this momentum in 2017.
"Also, I want to point out that we have made
considerable progress in rebuilding our revenues and we have done
it without the help of digital subscriptions. We just launched a
meter in May 2016 and we are very focused on growing our paid
digital subscriber base throughout 2017, which will add an
important component to the diversification of our revenues.
Finally, notwithstanding a challenging fourth quarter, first
quarter 2017 revenue trends favorably with the revenue trends we
saw in the first nine months of 2016."
Full Year Results from Continuing
Operations
Total revenue was $260.0 million for the full
year of 2016, a decrease of $12.1 million, or
4.5 percent, when compared to the prior year period.
Revenue from advertising and marketing services,
including print and digital revenues, was $150.3 million for
the full year of 2016, a decrease of $6.5 million, or 4.1 percent,
when compared to the $156.8 million reported for the full year
of 2015. Within advertising and marketing services, total digital
and marketing services revenue, which includes digital advertising
revenue in the Company’s publishing segment, increased
20.0 percent to $51.0 million primarily due to organic
growth associated with Speakeasy and DMV. DMV revenue increased
$7.8 million, or 86.6 percent, compared to the prior
year. For the full year of 2016, total digital and marketing
services revenue was 33.9 percent of total advertising and
marketing services revenue, reflecting a 680 basis point
increase when compared to the 27.1 percent reported for the
full year of 2015. Total digital advertising and marketing services
revenue was approximately 19.6 percent of total revenue,
reflecting a 400 basis point increase when compared to the
15.6 percent reported for the full year of 2015.
Circulation revenue was $79.6 million, a
decrease of $4.0 million, or 4.7 percent, primarily due
to lower home delivery and single copy volumes, partially offset by
an increase in home delivery subscription rates. In addition, the
daily single copy rate for the newspaper was raised from $1.50 to
$2.00 on November 14, 2016, which had a negligible impact on the
Company’s full year circulation revenue.
Printing, distribution and other revenue decreased
$1.7 million, or 5.3 percent, to $30.1 million for
the full year of 2016, primarily due to a decrease of
$1.2 million related to CrowdSource events that occurred in
2015, which the Company did not host in 2016, and a decrease in
commercial printing revenue of $0.5 million.
Total consolidated operating expense for the full
year was $283.7 million, a decrease of $6.7 million, or
2.3 percent, compared to the prior year, primarily due to a
pension settlement charge of $15.0 million in 2015, a
reduction in newsprint, ink and supplies expense of
$5.3 million and other operating expense reductions, partially
offset by a goodwill impairment charge of $22.7 million in
2016.
Total consolidated operating expense excluding
certain items (“adjusted operating expense”) for the full year 2016
was $248.4 million, a decrease of $11.3 million, or 4.4
percent, compared to $259.7 million of adjusted operating
expense reported for the full year 2015. The decrease in adjusted
operating expense is a result of the Company’s continued focus on
operating efficiency. The Company had 1,221 employees, an increase
of 6.7 percent, compared to the prior year. Excluding hiring
at DMV and a conversion of production headcount from temporary to
permanent employees, the Company’s headcount decreased by 24, or
3.0 percent, when compared to 2015.
The Company’s newsprint expense in 2016 was
$13.5 million, a decrease of 17.7 percent, compared to
the prior year. Newsprint consumption declined 14.1 percent to
26,752 metric tons. Compared to the prior year, newsprint cost per
metric ton decreased 3.4 percent and the average purchase
price per metric ton for newsprint increased 0.7 percent.
Fourth Quarter Results from Continuing
Operations
Total revenue was $66.1 million in the fourth
quarter of 2016, a decrease of $7.0 million, or 9.6 percent,
when compared to the fourth quarter of 2015.
Revenue from advertising and marketing services,
including print and digital revenues, was $38.7 million in the
fourth quarter of 2016, a decrease of $3.8 million, or
8.9 percent, when compared to the $42.5 million reported
in the fourth quarter of 2015. Within advertising and marketing
services, total digital and marketing services revenue, which
includes digital advertising revenue in the Company’s publishing
segment, increased 17.4 percent to $13.4 million
primarily due to organic growth associated with Speakeasy and DMV.
DMV revenue increased $2.3 million, or 81.0 percent,
compared to the fourth quarter of 2015. For the fourth quarter of
2016, total digital and marketing services revenue was
34.5 percent of total advertising and marketing services
revenue, reflecting a 770 basis point increase when compared to the
26.8 percent reported in the fourth quarter of 2015. Total
digital advertising and marketing services revenue was
approximately 20.2 percent of total revenue, reflecting a
460 basis point increase when compared to the
15.6 percent reported in the fourth quarter of 2015.
Circulation revenue was $19.8 million, a
decrease of $1.6 million, or 7.6 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
17.3 percent, to $7.5 million in the fourth quarter of
2016, primarily due to a decrease of $1.4 million related to
CrowdSource events that occurred in the fourth quarter of 2015,
which the Company did not host in the fourth quarter of 2016.
Total consolidated operating expense in the fourth
quarter was $90.2 million, an increase of $7.6 million,
or 9.2 percent, compared to the fourth quarter of 2015,
primarily due to a goodwill impairment charge of $22.7 million
in the fourth quarter of 2016, partially offset by a pension
settlement charge of $15.0 million in the fourth quarter of
2015.
Adjusted operating expense in the fourth quarter of
2016 was $64.3 million, a decrease of $0.2 million, or
0.2 percent, compared to $64.5 million of adjusted
operating expense reported in the fourth quarter of 2015.
The Company’s newsprint expense in the fourth
quarter of 2016 was $3.5 million, a decrease of
7.0 percent, compared to the fourth quarter of 2015. Newsprint
consumption declined 15.6 percent to 6,730 metric tons.
Compared to the fourth quarter of 2015, newsprint cost per metric
ton increased 10.4 percent and the average purchase price per
metric ton for newsprint increased 14.2 percent.
As of December 31, 2016, cash and cash equivalents
increased $1.7 million to $80.1 million and the Company
had no debt. In December 2016, the Company signed an operating
lease to move the corporate headquarters to The Statler Library,
commencing mid-year 2017.
Non-GAAP Financial Measures
A reconciliation of operating loss to adjusted
operating income 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 Friday, March 3, 2017, at 9:00 a.m. CST 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
1-800-288-8960 (USA) or 612-332-0342 (International). A replay line
will be available at 1-800-475-6701 (USA) or 320-365-3844
(International) from 11:00 a.m. CST on March 3, 2017 until 11:59
p.m. CST on March 10, 2017. The access code for the replay is
417885.
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
Subsidiaries |
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
|
Twelve Months Ended
December 31, |
In thousands, except share and per share amounts
(unaudited) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Net Operating
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
38,734 |
|
|
$ |
42,509 |
|
|
$ |
150,315 |
|
|
$ |
156,790 |
|
Circulation |
|
|
19,813 |
|
|
|
21,448 |
|
|
|
79,619 |
|
|
|
83,581 |
|
Printing,
distribution and other |
|
|
7,548 |
|
|
|
9,131 |
|
|
|
30,050 |
|
|
|
31,737 |
|
Total net
operating revenue |
|
|
66,095 |
|
|
|
73,088 |
|
|
|
259,984 |
|
|
|
272,108 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
26,592 |
|
|
|
39,169 |
|
|
|
104,009 |
|
|
|
120,818 |
|
Other
production, distribution and operating costs |
|
|
30,986 |
|
|
|
32,792 |
|
|
|
119,830 |
|
|
|
125,829 |
|
Newsprint, ink and other supplies |
|
|
6,756 |
|
|
|
7,617 |
|
|
|
25,590 |
|
|
|
30,892 |
|
Depreciation |
|
|
2,988 |
|
|
|
2,820 |
|
|
|
10,713 |
|
|
|
11,515 |
|
Amortization |
|
|
226 |
|
|
|
242 |
|
|
|
906 |
|
|
|
1,349 |
|
Goodwill
impairment |
|
|
22,682 |
|
|
|
— |
|
|
|
22,682 |
|
|
|
— |
|
Total
operating costs and expense |
|
|
90,230 |
|
|
|
82,640 |
|
|
|
283,730 |
|
|
|
290,403 |
|
Operating
loss |
|
|
(24,135 |
) |
|
|
(9,552 |
) |
|
|
(23,746 |
) |
|
|
(18,295 |
) |
Other Income
(Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
equity method investments, net |
|
|
— |
|
|
|
(777 |
) |
|
|
— |
|
|
|
(1,065 |
) |
Other
income (expense), net |
|
|
1,693 |
|
|
|
508 |
|
|
|
2,294 |
|
|
|
(404 |
) |
Total
other income (expense), net |
|
|
1,693 |
|
|
|
(269 |
) |
|
|
2,294 |
|
|
|
(1,469 |
) |
Loss from
Continuing Operations Before Income Taxes |
|
|
(22,442 |
) |
|
|
(9,821 |
) |
|
|
(21,452 |
) |
|
|
(19,764 |
) |
Income
tax provision (benefit) |
|
|
(3,633 |
) |
|
|
4,031 |
|
|
|
(2,272 |
) |
|
|
(1,570 |
) |
Loss from
Continuing Operations |
|
|
(18,809 |
) |
|
|
(13,852 |
) |
|
|
(19,180 |
) |
|
|
(18,194 |
) |
Loss from
divestiture of discontinued operations |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(63 |
) |
Loss from
Discontinued Operations |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(63 |
) |
Net
Loss |
|
|
(18,809 |
) |
|
|
(13,853 |
) |
|
|
(19,180 |
) |
|
|
(18,257 |
) |
Net
income (loss) attributable to noncontrolling interests |
|
|
65 |
|
|
|
(196 |
) |
|
|
130 |
|
|
|
(415 |
) |
Net Loss
Attributable to A. H. Belo Corporation |
|
$ |
(18,874 |
) |
|
$ |
(13,657 |
) |
|
$ |
(19,310 |
) |
|
$ |
(17,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to A. H. Belo Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.87 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.90 |
) |
|
$ |
(0.84 |
) |
Number of
common shares used in the per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
21,676,260 |
|
|
|
21,460,241 |
|
|
|
21,620,539 |
|
|
|
21,408,940 |
|
A. H. Belo Corporation and
Subsidiaries |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
December 31, |
In thousands (unaudited) |
|
2016 |
|
2015 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
80,071 |
|
$ |
78,380 |
Accounts
receivable, net |
|
|
29,114 |
|
|
31,502 |
Other
current assets |
|
|
12,939 |
|
|
13,467 |
Total
current assets |
|
|
122,124 |
|
|
123,349 |
Property,
plant and equipment, net |
|
|
43,759 |
|
|
51,358 |
Intangible assets, net |
|
|
4,872 |
|
|
5,778 |
Goodwill |
|
|
14,201 |
|
|
36,883 |
Other
assets |
|
|
7,775 |
|
|
4,133 |
Total
assets |
|
$ |
192,731 |
|
$ |
221,501 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
9,036 |
|
$ |
12,736 |
Accrued
compensation and other current liabilities |
|
|
14,975 |
|
|
11,812 |
Advance
subscription payments |
|
|
13,243 |
|
|
14,424 |
Total
current liabilities |
|
|
37,254 |
|
|
38,972 |
Long-term
pension liabilities |
|
|
54,843 |
|
|
57,446 |
Other
liabilities |
|
|
8,812 |
|
|
4,812 |
Total
liabilities |
|
|
100,909 |
|
|
101,230 |
Noncontrolling interest - redeemable |
|
|
2,670 |
|
|
1,421 |
Total
shareholders’ equity attributable to A. H. Belo Corporation |
|
|
87,918 |
|
|
117,781 |
Noncontrolling interests |
|
|
1,234 |
|
|
1,069 |
Total
shareholders' equity |
|
|
89,152 |
|
|
118,850 |
Total
liabilities and shareholders’ equity |
|
$ |
192,731 |
|
$ |
221,501 |
A.
H. Belo Corporation - Non-GAAP Financial Measures |
Reconciliation of Operating Loss to Adjusted Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, |
|
Twelve Months Ended
December 31, |
In thousands (unaudited) |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Total net
operating revenue |
|
$ |
66,095 |
|
|
$ |
73,088 |
|
|
$ |
259,984 |
|
|
$ |
272,108 |
|
Total
operating costs and expense |
|
|
90,230 |
|
|
|
82,640 |
|
|
|
283,730 |
|
|
|
290,403 |
|
Operating
Loss |
|
$ |
(24,135 |
) |
|
$ |
(9,552 |
) |
|
$ |
(23,746 |
) |
|
$ |
(18,295 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
90,230 |
|
|
$ |
82,640 |
|
|
$ |
283,730 |
|
|
$ |
290,403 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,988 |
|
|
|
2,820 |
|
|
|
10,713 |
|
|
|
11,515 |
|
Amortization |
|
|
226 |
|
|
|
242 |
|
|
|
906 |
|
|
|
1,349 |
|
Severance
expense |
|
|
24 |
|
|
|
145 |
|
|
|
1,073 |
|
|
|
2,891 |
|
Pension
plan settlement loss |
|
|
— |
|
|
|
14,964 |
|
|
|
— |
|
|
|
14,964 |
|
Goodwill
impairment |
|
|
22,682 |
|
|
|
— |
|
|
|
22,682 |
|
|
|
— |
|
Adjusted
Operating Expense |
|
$ |
64,310 |
|
|
$ |
64,469 |
|
|
$ |
248,356 |
|
|
$ |
259,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
66,095 |
|
|
$ |
73,088 |
|
|
$ |
259,984 |
|
|
$ |
272,108 |
|
Adjusted
operating expense |
|
|
64,310 |
|
|
|
64,469 |
|
|
|
248,356 |
|
|
|
259,684 |
|
Adjusted
Operating Income |
|
$ |
1,785 |
|
|
$ |
8,619 |
|
|
$ |
11,628 |
|
|
$ |
12,424 |
|
The Company calculates adjusted operating income by
adjusting operating loss to exclude depreciation, amortization,
severance expense, pension plan settlement loss and goodwill
impairment (“adjusted operating income”). 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 is not a measure of
financial performance under generally accepted accounting
principles (“GAAP”). Management uses adjusted operating income 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 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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