DALLAS, Aug. 02, 2016 (GLOBE NEWSWIRE) -- A. H. Belo Corporation (NYSE:AHC) today reported second quarter 2016 net income attributable to A. H. Belo Corporation (the “Company”) of $0.7 million, or $0.03 per fully diluted share. For the same period in 2015, the Company reported net loss attributable to A. H. Belo Corporation of $(0.6) million, or $(0.03) per share.
In the second quarter of 2016, on a non-GAAP basis, the Company reported operating income excluding certain items (adjusted operating income) of $5.8 million, an increase of $3.1 million, or 112 percent, over the second quarter of 2015.
Jim Moroney, chairman, president and Chief Executive Officer, said, “We were extremely pleased with our second quarter 2016 operating results. The revenue gains attributed to our marketing services segment nearly offset the declines associated with the print publishing segment and in tandem with our ongoing efforts to align expenses with revenues, made this a very successful quarter."
Second Quarter Results from Continuing Operations
Total revenue was $66.6 million in the second quarter of 2016, a decrease of $0.1 million, essentially flat when compared to the prior year period.
Total digital and marketing services revenue increased 20.9 percent to $12.1 million primarily due to organic growth associated with Speakeasy and DMV. DMV revenue increased $1.7 million, or 90.9 percent, compared to the prior year period. For the second quarter of 2016, total digital and marketing services revenue was 31.8 percent of total advertising and marketing services revenue, reflecting a 570 basis point increase when compared to the 26.1 percent reported in the second quarter of 2015. Total digital advertising and marketing services revenue was approximately 18.1 percent of total revenue, reflecting a 310 basis point increase when compared to the 15.0 percent reported in the second quarter of 2015. The growth in digital advertising and marketing services revenue mostly offset declines in print advertising revenue.
Revenue from advertising and marketing services, including print and digital revenues, was $38.0 million in the second quarter of 2016, down $0.3 million, essentially flat when compared to the $38.3 million reported in the second quarter of 2015.
Circulation revenue was $19.8 million, a decrease of $1.0 million, or 4.8 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 increased 15.4 percent to $8.8 million in the second quarter of 2016, primarily due to an increase of $0.8 million resulting from the timing of Savor, hosted by CrowdSource, Dallas’ four-day celebration of food, wine and spirits, which, in 2015, occurred in the first quarter. In 2016, the festival occurred in April.
Total consolidated operating expense in the second quarter was $64.0 million, a decrease of $3.2 million, or 4.8 percent, compared to the prior year period, primarily due to a decrease in newsprint, ink and other supplies of $1.4 million, a decrease in distribution expenses of $0.5 million and a decrease in employee compensation and benefits of $0.3 million.
The Company’s newsprint expense in the second quarter was $3.4 million, a decrease of 20.5 percent, compared to the prior year period. Newsprint consumption declined 13.8 percent to approximately 6,806 metric tons. Compared to the same period in 2015, newsprint cost per metric ton decreased 2.8 percent and the average purchase price per metric ton for newsprint decreased 1.9 percent.
Non-GAAP Financial Measures
A reconciliation of operating income (loss) to adjusted operating income is included in the exhibits to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on Tuesday, August 2, 2016, at 9:00 a.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 1-800-475-6701 (USA) or 320-365-3844 (International) from 11:00 a.m. CDT on August 2, 2016 until 11:59 p.m. CDT on August 9, 2016. The access code for the replay is 397086.
About A. H. Belo Corporation
A. H. Belo Corporation (NYSE:AHC) 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 is able to deliver news and information in innovative ways to a broad spectrum of audiences with diverse interests and lifestyles. For additional information, visit 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 June 30, | Six Months Ended June 30, | |||||||||||||||||
| In thousands, except share and per share amounts (unaudited) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net Operating Revenue: | ||||||||||||||||||
| Advertising and marketing services | $ | 38,040 | $ | 38,266 | $ | 73,277 | $ | 75,097 | ||||||||||
| Circulation | 19,821 | 20,816 | 40,173 | 41,854 | ||||||||||||||
| Printing, distribution and other | 8,765 | 7,594 | 15,659 | 15,161 | ||||||||||||||
| Total net operating revenue | 66,626 | 66,676 | 129,109 | 132,112 | ||||||||||||||
| Operating Costs and Expense: | ||||||||||||||||||
| Employee compensation and benefits | 24,774 | 25,105 | 51,791 | 52,608 | ||||||||||||||
| Other production, distribution and operating costs | 29,898 | 31,015 | 58,229 | 62,475 | ||||||||||||||
| Newsprint, ink and other supplies | 6,461 | 7,843 | 12,519 | 16,009 | ||||||||||||||
| Depreciation | 2,605 | 2,875 | 5,237 | 5,915 | ||||||||||||||
| Amortization | 229 | 373 | 455 | 746 | ||||||||||||||
| Total operating costs and expense | 63,967 | 67,211 | 128,231 | 137,753 | ||||||||||||||
| Operating income (loss) | 2,659 | (535 | ) | 878 | (5,641 | ) | ||||||||||||
| Other Income (Expense): | ||||||||||||||||||
| Income from equity method investments, net | — | 690 | — | 276 | ||||||||||||||
| Other income (expense), net | 408 | (532 | ) | 487 | (423 | ) | ||||||||||||
| Total other income (expense), net | 408 | 158 | 487 | (147 | ) | |||||||||||||
| Income (Loss) from Continuing Operations Before Income Taxes | 3,067 | (377 | ) | 1,365 | (5,788 | ) | ||||||||||||
| Income tax provision (benefit) | 2,393 | 317 | 1,284 | (5,413 | ) | |||||||||||||
| Income (Loss) from Continuing Operations | 674 | (694 | ) | 81 | (375 | ) | ||||||||||||
| Gain (loss) from divestiture of discontinued operations | — | 2 | — | (10 | ) | |||||||||||||
| Gain (Loss) from Discontinued Operations | — | 2 | — | (10 | ) | |||||||||||||
| Net Income (Loss) | 674 | (692 | ) | 81 | (385 | ) | ||||||||||||
| Net income (loss) attributable to noncontrolling interests | (19 | ) | (100 | ) | 20 | (156 | ) | |||||||||||
| Net Income (Loss) Attributable to A. H. Belo Corporation | $ | 693 | $ | (592 | ) | $ | 61 | $ | (229 | ) | ||||||||
| Per Share Basis | ||||||||||||||||||
| Net income (loss) attributable to A. H. Belo Corporation | ||||||||||||||||||
| Basic and diluted | $ | 0.03 | $ | (0.03 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||||
| Number of common shares used in the per share calculation: | ||||||||||||||||||
| Basic | 21,614,260 | 21,747,635 | 21,564,200 | 21,758,382 | ||||||||||||||
| Diluted | 21,762,559 | 21,747,635 | 21,724,876 | 21,758,382 | ||||||||||||||
| A. H. Belo Corporation and Subsidiaries Consolidated Balance Sheets | ||||||
| June 30, | December 31, | |||||
| In thousands (unaudited) | 2016 | 2015 | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 82,384 | $ | 78,380 | ||
| Accounts receivable, net | 25,461 | 31,502 | ||||
| Other current assets | 15,473 | 13,467 | ||||
| Total current assets | 123,318 | 123,349 | ||||
| Property, plant and equipment, net | 49,295 | 51,358 | ||||
| Intangible assets, net | 5,323 | 5,778 | ||||
| Goodwill | 36,883 | 36,883 | ||||
| Other assets | 4,015 | 4,133 | ||||
| Total assets | $ | 218,834 | $ | 221,501 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 11,988 | $ | 12,736 | ||
| Accrued compensation and other current liabilities | 13,469 | 11,812 | ||||
| Advance subscription payments | 14,525 | 14,424 | ||||
| Total current liabilities | 39,982 | 38,972 | ||||
| Long-term pension liabilities | 55,703 | 57,446 | ||||
| Other liabilities | 7,754 | 4,812 | ||||
| Total liabilities | 103,439 | 101,230 | ||||
| Noncontrolling interest - redeemable | 1,335 | 1,421 | ||||
| Total shareholders’ equity attributable to A. H. Belo Corporation | 112,753 | 117,781 | ||||
| Noncontrolling interests | 1,307 | 1,069 | ||||
| Total shareholders' equity | 114,060 | 118,850 | ||||
| Total liabilities and shareholders’ equity | $ | 218,834 | $ | 221,501 | ||
| A. H. Belo Corporation - Non-GAAP Financial Measures Reconciliation of Operating Income (Loss) to Adjusted Operating Income | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| In thousands (unaudited) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Total net operating revenue | $ | 66,626 | $ | 66,676 | $ | 129,109 | $ | 132,112 | ||||||||
| Total operating costs and expense | 63,967 | 67,211 | 128,231 | 137,753 | ||||||||||||
| Operating Income (Loss) | $ | 2,659 | $ | (535 | ) | $ | 878 | $ | (5,641 | ) | ||||||
| Addback: | ||||||||||||||||
| Depreciation | $ | 2,605 | $ | 2,875 | $ | 5,237 | $ | 5,915 | ||||||||
| Amortization | 229 | 373 | 455 | 746 | ||||||||||||
| Severance expense | 258 | 5 | 1,000 | (50 | ) | |||||||||||
| Adjusted Operating Income | $ | 5,751 | $ | 2,718 | $ | 7,570 | $ | 970 | ||||||||
The Company calculates adjusted operating income by adjusting operating income (loss) to exclude depreciation, amortization, severance expense and pension plan settlement expense (“adjusted operating income”). The Company believes that such expenses and charges are not indicative of normal, ongoing operations and their inclusion 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 income from continuing operations, cash flows provided by 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.