A. H. Belo Corporation (NYSE: AHC) today reported fourth quarter
2018 net income of $0.2 million, or $0.01 per fully
diluted share. In the fourth quarter of 2017, the Company reported
net income of $12.8 million, or $0.58 per fully diluted share,
primarily driven by the sale of real estate.
For the fourth quarter of 2018, on a non-GAAP
basis, A. H. Belo reported operating income adjusted for certain
items (“adjusted operating income”) of $2.6 million, a
decrease of $2.9 million, or 52.6 percent, when compared
to adjusted operating income of $5.5 million reported for the
fourth quarter of 2017.
For the full year 2018, the Company reported a net
loss of $5.4 million, or $(0.26) per share. For the full year
2017, the Company reported net income of $10.2 million, or
$0.46 per fully diluted share. Full year 2017 income was driven by
the sale of real estate.
For the full year 2018, on a non-GAAP basis, the
Company reported adjusted operating income of $5.4 million, a
decrease of $6.3 million, or 53.9 percent, compared to
adjusted operating income of $11.7 million reported for the
full year 2017.
Robert W. Decherd, chairman, president and Chief
Executive Officer, said, “2018 was a challenging year for
newspapers across the country as print advertising declined steeply
across all categories. The Dallas Morning News felt this
impact beginning early in the first quarter. Meanwhile, the loss of
three key accounts at the end of 2017 interrupted revenue growth at
Belo + Company until the fourth quarter, when new business filled
the gaps and momentum was reestablished.
“The Board and Management Committee devoted the
last half of 2018 to addressing the secular changes in the
newspaper business and ensuring that Belo + Company has the
resources needed to grow consistently over time. This work
continues in 2019. Several specific actions have been taken,
including a significant product repositioning at The Dallas
Morning News; a shift of internal resources at The
News to support a range of subscriber initiatives;
enhancements to The News’ commercial printing business;
refinements to Belo + Company’s sales organization and
expansion of creative services capabilities; and, streamlining
of the corporate and operating unit financial organization.
“2019 is off to a good start across the Company and
we are encouraged that the efforts undertaken over the past year
will yield important benefits. The implementation of the Arc
platform at The Dallas Morning News in the third quarter
of 2019 will be the culmination of work throughout the newspaper to
launch a new digital product design that complements changes made
to the print product in January 2019, further emphasizing the
importance of subscriber revenue.
“The Company’s balance sheet continues to be an
advantage in many ways and we are fully re-engaged in the process
of monetizing the former headquarters campus in downtown
Dallas.”
Full Year Results
Total revenue was $202.3 million for the full year of 2018,
a decrease of $46.3 million, or 18.6 percent, when compared to
the prior year period.
Revenue from advertising and marketing services, including print
and digital revenues, was $105.4 million in 2018, a decrease
of $37.8 million, or 26.4 percent, when compared to the
$143.2 million reported for the full year of 2017. The Company
adopted the new revenue standard (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 $11.7 million for the year ended December 31, 2018,
with the offsetting change recorded as a reduction to operating
expense.
Circulation revenue was $71.9 million, a decrease of
$5.0 million, or 6.5 percent, when compared to the prior
year period, primarily due to lower home delivery and single copy
volumes, partially offset by rate increases and an increase of
$1.2 million, or 42.9 percent, in digital-only
subscription revenue. Circulation revenue was also affected by the
adoption of the new revenue guidance, including a decline of
$1.0 million related to the grace period for home delivery
subscriptions where the Company records revenue for newspapers
delivered after a subscription expires. Prior to adoption,
non-payment of grace was recorded as bad debt to operating expense;
under the new guidance, revenue is directly reduced.
Printing, distribution and other revenue decreased
$3.6 million, or 12.5 percent, to $24.9 million for
the full year of 2018, primarily due to a decrease in commercial
printing revenue of $1.4 million and a decrease of
$1.9 million in event-related and other revenue.
Total consolidated operating expense for the full year of 2018,
on a GAAP basis, was $212.2 million, a decrease of
$44.0 million, or 17.2 percent, compared to full year
2017. Excluding the expense decrease related to the adoption of the
new revenue guidance, consolidated operating expense decreased
$31.3 million, or 12.2 percent, when compared to the
prior year period, primarily due to expense reductions in employee
compensation and benefits of $14.2 million, $6.1 million
in distribution, $3.4 million in revenue-related expenses,
$1.9 million in advertising and promotion, $1.5 million
in newsprint, ink, and other supplies, and $1.1 million in
temporary services. In addition, in 2017 the Company recorded asset
impairment charges of $3.3 million.
For the full year 2018, on a non-GAAP basis, total consolidated
operating expense adjusted for certain items (“adjusted operating
expense”) was $209.6 million, a decrease of
$27.3 million, or 11.5 percent, compared to
$237.0 million of adjusted operating expense reported for full
year 2017. The decrease in adjusted operating expense is a result
of the Company’s continued focus on operating efficiency, which was
reflected by the expense reductions in employee compensation and
benefits, distribution, advertising and promotion, newsprint and
temporary services.
As of December 31, 2018, the Company had 982 employees, a
decrease of 108, or 9.9 percent, compared to the prior year
period. Cash and cash equivalents were $55.3 million and the
Company had no debt.
Fourth Quarter Results
Total revenue was $52.6 million in the fourth quarter of
2018, a decrease of $11.5 million, or 17.9 percent, when
compared to the fourth quarter of 2017.
Revenue from advertising and marketing services, including print
and digital revenues, was $28.0 million in the fourth quarter
of 2018, a decrease of $9.1 million, or 24.5 percent,
when compared to the $37.1 million reported for the fourth
quarter of 2017. As a result of adopting the new revenue guidance,
advertising and marketing services revenue was reduced by
$2.9 million for the three months ended December 31, 2018,
with the offsetting change recorded as a reduction to operating
expense.
Circulation revenue was $18.4 million, a decrease of
$1.4 million, or 7.2 percent, when compared to the fourth
quarter of 2017. The decline was primarily due to a decrease in
home delivery and single copy volumes, partially offset by rate
increases and an increase of $0.3 million, or
36.7 percent, in digital-only subscription revenue.
Circulation revenue was also affected by the adoption of the new
revenue guidance, including a decline of $0.2 million related
to the grace period for home delivery subscriptions.
Printing, distribution and other revenue decreased
$0.9 million, or 12.8 percent, to $6.2 million,
primarily due to decreases of $0.3 million in commercial
printing revenue and $0.6 million in event-related and other
revenue.
Total consolidated operating expense in the fourth quarter of
2018, on a GAAP basis, was $53.6 million, a decrease of
$11.8 million, or 18.0 percent, compared to the fourth
quarter of 2017. Excluding the expense decrease related to the
adoption of the new revenue guidance, consolidated operating
expense decreased $8.6 million, or 13.2 percent, when
compared to the prior year period. The improvement was primarily
due to decreases of $2.5 million in employee compensation and
benefits expense, $1.2 million in distribution expense,
$0.6 million in revenue-related expenses, $0.3 million in
temporary services expense, and $0.3 million in newsprint, ink
and other supplies expense. In addition, in the fourth quarter of
2017 the Company recorded an asset impairment charge of
$3.1 million.
In the fourth quarter of 2018, on a non-GAAP basis, adjusted
operating expense was $53.2 million, an improvement of
$5.4 million, or 9.2 percent, compared to
$58.6 million of adjusted operating expense reported in the
fourth quarter of 2017. The improvement is primarily due to expense
decreases in employee compensation and benefits, distribution,
revenue-related expenses, temporary services, newsprint, and
reductions from continued management of discretionary spending.
Non-GAAP Financial Measures
Reconciliations of operating loss to adjusted operating income,
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 Friday,
March 8, 2019, at 10:00 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 1-800-230-1059
(USA) or 612-234-9960 (International). A replay line will be
available at 1-800-475-6701 (USA) or 320-365-3844 (International)
from 12:00 p.m. CST on March 8, 2019 until 11:59 p.m. CDT on
March 15, 2019. The access code for the replay is 464458.
About A. H. Belo Corporation
A. H. Belo Corporation is the leading local news and information
publishing company in Texas with commercial printing, distribution
and direct mail capabilities, as well as a presence in emerging
media and digital marketing. While focusing on extending the
Company’s media platforms, A. H. Belo delivers news and information
in innovative ways to a broad range 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) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Operating
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising and
marketing services |
|
$ |
28,030 |
|
|
$ |
37,146 |
|
|
$ |
105,428 |
|
|
$ |
143,247 |
|
Circulation |
|
|
18,355 |
|
|
|
19,785 |
|
|
|
71,919 |
|
|
|
76,884 |
|
Printing,
distribution and other |
|
|
6,228 |
|
|
|
7,146 |
|
|
|
24,940 |
|
|
|
28,495 |
|
Total net
operating revenue |
|
|
52,613 |
|
|
|
64,077 |
|
|
|
202,287 |
|
|
|
248,626 |
|
Operating Costs
and Expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee
compensation and benefits |
|
|
21,929 |
|
|
|
24,407 |
|
|
|
89,304 |
|
|
|
103,495 |
|
Other
production, distribution and operating costs |
|
|
23,381 |
|
|
|
29,072 |
|
|
|
90,167 |
|
|
|
114,594 |
|
Newsprint, ink and other supplies |
|
|
5,726 |
|
|
|
6,019 |
|
|
|
22,026 |
|
|
|
23,561 |
|
Depreciation |
|
|
2,380 |
|
|
|
2,575 |
|
|
|
9,902 |
|
|
|
10,415 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
|
|
799 |
|
|
|
799 |
|
Asset
impairments |
|
|
— |
|
|
|
3,116 |
|
|
|
(22 |
) |
|
|
3,344 |
|
Total
operating costs and expense |
|
|
53,616 |
|
|
|
65,389 |
|
|
|
212,176 |
|
|
|
256,208 |
|
Operating
loss |
|
|
(1,003 |
) |
|
|
(1,312 |
) |
|
|
(9,889 |
) |
|
|
(7,582 |
) |
Other
income, net |
|
|
1,250 |
|
|
|
7,607 |
|
|
|
3,891 |
|
|
|
11,483 |
|
Income (Loss)
Before Income Taxes |
|
|
247 |
|
|
|
6,295 |
|
|
|
(5,998 |
) |
|
|
3,901 |
|
Income
tax provision (benefit) |
|
|
96 |
|
|
|
(6,521 |
) |
|
|
(565 |
) |
|
|
(6,260 |
) |
Net Income
(Loss) |
|
$ |
151 |
|
|
$ |
12,816 |
|
|
$ |
(5,433 |
) |
|
$ |
10,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Basis |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
0.01 |
|
|
$ |
0.58 |
|
|
$ |
(0.26 |
) |
|
$ |
0.46 |
|
Number of
common shares used in the per share calculation: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
21,661,199 |
|
|
|
21,740,374 |
|
|
|
21,747,633 |
|
|
|
21,721,497 |
|
Diluted |
|
|
21,661,843 |
|
|
|
21,741,814 |
|
|
|
21,747,633 |
|
|
|
21,723,002 |
|
A. H. Belo Corporation and
Subsidiaries |
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
In thousands (unaudited) |
|
2018 |
|
2017 |
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
55,313 |
|
|
$ |
57,660 |
|
Accounts
receivable, net |
|
|
22,057 |
|
|
|
26,740 |
|
Assets
held for sale |
|
|
1,089 |
|
|
|
1,089 |
|
Other
current assets |
|
|
8,935 |
|
|
|
16,905 |
|
Total
current assets |
|
|
87,394 |
|
|
|
102,394 |
|
Property,
plant and equipment, net |
|
|
26,261 |
|
|
|
31,706 |
|
Intangible assets, net |
|
|
3,274 |
|
|
|
4,073 |
|
Goodwill |
|
|
13,973 |
|
|
|
13,973 |
|
Deferred
income taxes, net |
|
|
6,417 |
|
|
|
5,355 |
|
Other
assets |
|
|
5,029 |
|
|
|
5,347 |
|
Total
assets |
|
$ |
142,348 |
|
|
$ |
162,848 |
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
6,334 |
|
|
$ |
10,303 |
|
Accrued
compensation and other current liabilities |
|
|
13,880 |
|
|
|
12,518 |
|
Advance
subscription payments |
|
|
11,449 |
|
|
|
11,670 |
|
Total
current liabilities |
|
|
31,663 |
|
|
|
34,491 |
|
Long-term
pension liabilities |
|
|
31,889 |
|
|
|
23,038 |
|
Other
liabilities |
|
|
8,210 |
|
|
|
7,620 |
|
Total
liabilities |
|
|
71,762 |
|
|
|
65,149 |
|
Total
shareholders' equity |
|
|
70,586 |
|
|
|
97,699 |
|
Total liabilities and shareholders’ equity |
|
$ |
142,348 |
|
|
$ |
162,848 |
|
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) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Total net operating
revenue |
|
$ |
52,613 |
|
|
$ |
64,077 |
|
|
$ |
202,287 |
|
|
$ |
248,626 |
|
Total
operating costs and expense |
|
|
53,616 |
|
|
|
65,389 |
|
|
|
212,176 |
|
|
|
256,208 |
|
Operating
Loss |
|
$ |
(1,003 |
) |
|
$ |
(1,312 |
) |
|
$ |
(9,889 |
) |
|
$ |
(7,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
operating revenue |
|
$ |
52,613 |
|
|
$ |
64,077 |
|
|
$ |
202,287 |
|
|
$ |
248,626 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra revenue |
|
|
2,943 |
|
|
|
— |
|
|
|
11,720 |
|
|
|
— |
|
Circulation contra revenue |
|
|
217 |
|
|
|
— |
|
|
|
1,006 |
|
|
|
— |
|
Adjusted
Operating Revenue |
|
$ |
55,773 |
|
|
$ |
64,077 |
|
|
$ |
215,013 |
|
|
$ |
248,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating costs and expense |
|
$ |
53,616 |
|
|
$ |
65,389 |
|
|
$ |
212,176 |
|
|
$ |
256,208 |
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
Advertising contra expense |
|
|
2,943 |
|
|
|
— |
|
|
|
11,720 |
|
|
|
— |
|
Circulation contra expense |
|
|
217 |
|
|
|
— |
|
|
|
1,006 |
|
|
|
— |
|
Pension
and post-employment expense (benefit) |
|
|
(1,027 |
) |
|
|
(862 |
) |
|
|
(3,818 |
) |
|
|
2,471 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,380 |
|
|
|
2,575 |
|
|
|
9,902 |
|
|
|
10,415 |
|
Amortization |
|
|
200 |
|
|
|
200 |
|
|
|
799 |
|
|
|
799 |
|
Severance
expense |
|
|
17 |
|
|
|
84 |
|
|
|
773 |
|
|
|
1,259 |
|
Pension
plan settlement loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,911 |
|
Asset
impairments |
|
|
— |
|
|
|
3,116 |
|
|
|
(22 |
) |
|
|
3,344 |
|
Adjusted
Operating Expense |
|
$ |
53,152 |
|
|
$ |
58,552 |
|
|
$ |
209,632 |
|
|
$ |
236,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating revenue |
|
$ |
55,773 |
|
|
$ |
64,077 |
|
|
$ |
215,013 |
|
|
$ |
248,626 |
|
Adjusted
operating expense |
|
|
53,152 |
|
|
|
58,552 |
|
|
|
209,632 |
|
|
|
236,951 |
|
Adjusted
Operating Income |
|
$ |
2,621 |
|
|
$ |
5,525 |
|
|
$ |
5,381 |
|
|
$ |
11,675 |
|
|
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
guidance, total operating costs and expense increased $1,027 and
$3,818 for the three and twelve months ended December 31,
2018, respectively. For the three months ended December 31, 2017,
total operating costs and expense increased $862 and for the twelve
months ended December 31, 2017, expense decreased $2,471. In
the third quarter of 2017, the Company completed a de-risking
transaction to reduce the Company’s pension liability, which
resulted in a charge to pension expense of $5,911.
The Company calculates adjusted operating income (loss) by
adjusting operating income (loss) to include pension and
post-employment expense (benefit) and exclude depreciation,
amortization, severance expense, pension plan settlement loss, 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 versus 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
A H Belo (NYSE:AHC)
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From Sep 2024 to Oct 2024
A H Belo (NYSE:AHC)
Historical Stock Chart
From Oct 2023 to Oct 2024