· Digital subscriptions grew by 8,036
subscribers, or 44.2 percent, in 2018 compared to 2017·
Operating expense decreased $10.2 million, or
15.5 percent, in 2018 compared to 2017
A. H. Belo Corporation (NYSE:AHC) today reported first quarter 2018
net loss of $(4.0) million, or $(0.19) per share. In the
first quarter of 2017, A. H. Belo Corporation (the
“Company”) reported net loss of $(4.4) million, or $(0.21) per
share.
In the first quarter of 2018, on a non-GAAP basis,
the Company reported operating loss adjusted for certain items
(“adjusted operating loss”) of $(2.5) million, a decrease of
$1.7 million, or 198.7 percent, when compared to adjusted
operating loss of $(0.8) million reported for the first
quarter of 2017.
Jim Moroney, chairman, president and Chief Executive Officer,
said, “During the first quarter, we grew our paid digital
subscriber base by 8,036 subscribers, or 44.2 percent, over
the first quarter 2017, ending the first quarter 2018 with 26,206
paid digital subscribers. It is imperative that we continue to
build our base of consumer revenue and our results in the first
quarter show real progress. Also, we continued to decrease our
dependence on print advertising revenue. For the first quarter,
total digital and marketing services revenue, excluding the impact
of the new revenue guidance, was 41.1 percent of total
advertising and marketing services revenue, reflecting a 430 basis
point increase when compared to the 36.8 percent reported in
the first quarter of 2017. Total digital and marketing services
revenue was 22.4 percent of total revenue, reflecting a 110
basis point increase when compared to the 21.3 percent
reported in the first quarter of 2017. Fortunately, we had
implemented strong cost reduction actions in 2017, which
contributed to total adjusted operating expense being
10.8 percent lower than the first quarter in the prior
year.”
First Quarter Results
Total revenue was $49.5 million in the first quarter of
2018, a decrease of $11.4 million, or 18.8 percent, when
compared to the first quarter of 2017.
Revenue from advertising and marketing services, including print
and digital revenues, was $25.7 million in the first quarter
of 2018, a decrease of $9.5 million, or 26.9 percent,
when compared to the first quarter of 2017. The Company adopted the
new revenue guidance (Topic 606) as of January 1, 2018, which
requires revenue to be recorded net for certain transactions where
the Company acted as an agent. Prior to adoption, such revenue was
generally recorded gross. As a result of adopting this new
guidance, advertising and marketing services revenue was reduced by
$2.9 million for the three months ended March 31, 2018, with
the offsetting change recorded as a reduction to operating
expense.
Excluding the impact of the new revenue guidance, advertising
and marketing services revenue decreased $6.6 million, or
18.8 percent, when compared to the prior year period. For the
first quarter of 2018, total digital and marketing services revenue
was 41.1 percent of total advertising and marketing services
revenue, reflecting a 430 basis point increase when compared to the
36.8 percent reported in the first quarter of 2017. Total
digital and marketing services revenue was 22.4 percent of
total revenue, reflecting a 110 basis point increase when
compared to the 21.3 percent reported in the first quarter of
2017.
Circulation revenue was $17.7 million, a decrease of
$1.4 million, or 7.4 percent, when compared to the first
quarter of 2017. The decline was primarily due to a decrease in
home delivery and single copy volume. In addition, circulation
revenue was reduced by $0.3 million for the three months ended
March 31, 2018, as a result of adopting the new revenue guidance,
which requires revenue to be reduced by any non-payment for the
grace period in which newspapers are delivered after a subscription
expires. Prior to adoption, non-payment was recorded as bad debt to
operating expense.
Printing, distribution and other revenue decreased
$0.6 million, or 8.7 percent, to $6.0 million, due
to a $0.3 million decrease in commercial printing revenue and
a decrease of $0.2 million related to a discontinued product
line.
Total consolidated operating expense in the first quarter of
2018, on a GAAP basis, was $55.7 million, a decrease of
$10.2 million, or 15.5 percent, compared to the first
quarter of 2017. Excluding the expense decrease related to the
adoption of the new revenue guidance, consolidated operating
expense decreased $7.1 million, or 10.8 percent, when
compared to the prior year period. The decline was primarily due to
decreases of $4.1 million in employee compensation and
benefits expense, $1.4 million in distribution expense,
$0.6 million in newsprint expense, $0.4 million in
consulting expense and $0.4 million in temporary services
expense.
In the first quarter of 2018, on a non-GAAP basis, total
consolidated operating expense adjusted for certain items
(“adjusted operating expense”) was $55.1 million, a decrease
of $6.7 million, or 10.8 percent, compared to
$61.7 million of adjusted operating expense reported in the
first quarter of 2017. The decline is primarily due to decreases in
employee compensation and benefits, distribution, newsprint,
consulting and temporary services expense.
The Company’s newsprint expense in the first quarter of 2018 was
$2.9 million, a decrease of 6.6 percent, compared to the
first quarter of 2017, due to lower circulation volumes. Newsprint
consumption declined 14.3 percent to 4,999 metric tons.
Compared to the first quarter of 2017, newsprint cost per metric
ton increased 8.0 percent and the average purchase price per
metric ton for newsprint increased 9.8 percent.
Non-GAAP Financial Measures
Reconciliations of operating loss to adjusted operating loss,
total net operating revenue to adjusted operating revenue and total
operating costs and expense to adjusted operating expense are
included in the exhibits to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on
Wednesday, May 2, 2018, 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 1-866-233-3843
(USA) or 651-224-7472 (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, 2018 until 11:59 p.m. CDT on May
9, 2018. The access code for the replay is 447524.
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) |
|
2018 |
|
2017 |
Net Operating
Revenue: |
|
|
|
|
|
|
Advertising and marketing services |
|
$ |
25,741 |
|
|
$ |
35,204 |
|
Circulation |
|
|
17,747 |
|
|
|
19,166 |
|
Printing,
distribution and other |
|
|
5,965 |
|
|
|
6,531 |
|
Total net
operating revenue |
|
|
49,453 |
|
|
|
60,901 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
24,672 |
|
|
|
28,734 |
|
Other
production, distribution and operating costs |
|
|
23,014 |
|
|
|
28,326 |
|
Newsprint, ink and other supplies |
|
|
5,311 |
|
|
|
5,901 |
|
Depreciation |
|
|
2,473 |
|
|
|
2,506 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
Asset
impairments |
|
|
— |
|
|
|
228 |
|
Total
operating costs and expense |
|
|
55,670 |
|
|
|
65,895 |
|
Operating
loss |
|
|
(6,217 |
) |
|
|
(4,994 |
) |
Other
income, net |
|
|
888 |
|
|
|
522 |
|
Loss Before
Income Taxes |
|
|
(5,329 |
) |
|
|
(4,472 |
) |
Income
tax benefit |
|
|
(1,315 |
) |
|
|
(42 |
) |
Net
Loss |
|
$ |
(4,014 |
) |
|
$ |
(4,430 |
) |
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
Net
loss |
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.19 |
) |
|
$ |
(0.21 |
) |
Number of
common shares used in the per share calculation: |
|
|
|
|
|
|
Basic and
diluted |
|
|
21,716,419 |
|
|
|
21,690,371 |
|
A. H. Belo Corporation and
SubsidiariesConsolidated Balance
Sheets
|
|
March 31, |
|
December 31, |
In thousands (unaudited) |
|
2018 |
|
2017 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
53,975 |
|
$ |
57,660 |
Accounts
receivable, net |
|
|
20,450 |
|
|
26,740 |
Assets
held for sale |
|
|
1,089 |
|
|
1,089 |
Other
current assets |
|
|
18,383 |
|
|
16,905 |
Total
current assets |
|
|
93,897 |
|
|
102,394 |
Property,
plant and equipment, net |
|
|
30,541 |
|
|
31,706 |
Intangible assets, net |
|
|
3,873 |
|
|
4,073 |
Goodwill |
|
|
13,973 |
|
|
13,973 |
Deferred
income taxes, net |
|
|
6,974 |
|
|
5,355 |
Other
assets |
|
|
4,575 |
|
|
5,347 |
Total
assets |
|
$ |
153,833 |
|
$ |
162,848 |
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
7,737 |
|
$ |
10,303 |
Accrued
compensation and other current liabilities |
|
|
12,685 |
|
|
12,518 |
Advance
subscription payments |
|
|
12,233 |
|
|
11,670 |
Total
current liabilities |
|
|
32,655 |
|
|
34,491 |
Long-term
pension liabilities |
|
|
21,941 |
|
|
23,038 |
Other
liabilities |
|
|
7,113 |
|
|
7,620 |
Total
liabilities |
|
|
61,709 |
|
|
65,149 |
Total
shareholders' equity |
|
|
92,124 |
|
|
97,699 |
Total liabilities and shareholders’ equity |
|
$ |
153,833 |
|
$ |
162,848 |
A. H. Belo Corporation - Non-GAAP
Financial MeasuresReconciliation of Operating Loss
to Adjusted Operating Loss
|
|
Three Months Ended March 31, |
In thousands (unaudited) |
|
2018 |
|
2017 |
Total net
operating revenue |
|
$ |
49,453 |
|
|
$ |
60,901 |
|
Total
operating costs and expense |
|
|
55,670 |
|
|
|
65,895 |
|
Operating
Loss |
|
$ |
(6,217 |
) |
|
$ |
(4,994 |
) |
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
49,453 |
|
|
$ |
60,901 |
|
Addback: |
|
|
|
|
|
|
Advertising contra revenue |
|
|
2,853 |
|
|
|
— |
|
Circulation contra revenue |
|
|
258 |
|
|
|
— |
|
Adjusted
Operating Revenue |
|
$ |
52,564 |
|
|
$ |
60,901 |
|
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
55,670 |
|
|
$ |
65,895 |
|
Addback: |
|
|
|
|
|
|
Advertising contra expense |
|
|
2,853 |
|
|
|
— |
|
Circulation contra expense |
|
|
258 |
|
|
|
— |
|
Pension
and post-employment benefit |
|
|
(930 |
) |
|
|
(859 |
) |
Less: |
|
|
|
|
|
|
Depreciation |
|
|
2,473 |
|
|
|
2,506 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
Severance
expense |
|
|
123 |
|
|
|
367 |
|
Asset
impairments |
|
|
— |
|
|
|
228 |
|
Adjusted
Operating Expense |
|
$ |
55,055 |
|
|
$ |
61,735 |
|
|
|
|
|
|
|
|
Adjusted
operating revenue |
|
$ |
52,564 |
|
|
$ |
60,901 |
|
Adjusted
operating expense |
|
|
55,055 |
|
|
|
61,735 |
|
Adjusted
Operating Loss |
|
$ |
(2,491 |
) |
|
$ |
(834 |
) |
The Company adopted the new revenue guidance (Topic 606) using
the modified retrospective approach as of January 1, 2018. Results
for reporting periods beginning after January 1, 2018, are
presented in accordance with the new guidance, while prior period
amounts are not restated. While the Company adjusts operating
revenue and expense, for comparative purposes, these adjustments
have no effect on adjusted operating income (loss). In addition,
the Company adopted the new retirement benefits guidance (Topic
715) as of January 1, 2018, which requires net periodic pension and
other post-employment expense (benefit) to be included in
non-operating income (expense). As a result of adopting this new
guidance, total operating costs and expense increased $930 and $859
for the three months ended March 31, 2018 and 2017,
respectively.
The Company calculates adjusted operating income (loss) by
adjusting operating income (loss) to include pension and
post-employment benefit and exclude depreciation, amortization,
severance expense and asset impairments (“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 income (loss), 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 Murray214-977-8869
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