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A. H. Belo Corporation Announces First Quarter 2020 Financial Results

DALLAS, June 05, 2020 (GLOBE NEWSWIRE) -- A. H. Belo Corporation (NYSE: AHC) today reported a first quarter 2020 net loss of $1.6 million, or $(0.08) per share. In the first quarter of 2019, the Company reported a net loss of $2.1 million, or $(0.10) per share.

For the first quarter of 2020, on a non-GAAP basis, A. H. Belo reported an operating loss adjusted for certain items (“adjusted operating loss”) of $2.8 million, a decline of $1.9 million when compared to an adjusted operating loss of $0.9 million reported in the first quarter of 2019.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, “As noted in our investor call on May 12, A. H. Belo is making significant progress toward our goal of becoming a sustainably profitable digital newspaper company that plays a meaningful role in the communities served by The Dallas Morning News and the digital extensions of its content. While this will take time, the end result is potentially a valuable media franchise.

“Events surrounding the pandemic have stressed the systems that support A. H. Belo’s operations. And while digital subscription revenue grew in the first quarter, advertising revenue began to soften toward the end of the quarter. Our Board and management team have responded quickly to these pressures to ensure that The News is able to report essential and reliable information to its audiences in a timely manner. We recognize in such circumstances our journalists are asked to do their best work under duress and we are striving to keep our colleagues healthy and safe.

“As I outlined on our investor call, A. H. Belo has the financial flexibility to weather the pandemic’s effects in the months ahead.”

First Quarter Results

Total revenue was $40.3 million in the first quarter of 2020, a decrease of $6.2 million or 13.4 percent when compared to the first quarter of 2019.

Revenue from advertising and marketing services, including print and digital revenues, was $19.3 million in the first quarter of 2020, a decrease of $4.7 million or 19.6 percent when compared to the $24.0 million reported for the first quarter of 2019.

Circulation revenue was $16.4 million, a decrease of $0.9 million or 5.0 percent when compared to the first quarter of 2019. The decline is 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 28.3 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $0.7 million, or 12.8 percent, to $4.6 million, primarily due to a reduction in brokered and commercial printing, partially offset by an increase in shared mail packaging revenue generated from mailed advertisements for business customers.

Total consolidated operating expense in the first quarter of 2020, on a GAAP basis, was $45.1 million, a decrease of $5.4 million or 10.7 percent compared to the first quarter of 2019. The improvement is primarily due to decreases of $2.1 million in employee compensation and benefits expense, $1.5 million in newsprint, ink and other supplies expense, and $0.9 million in outside services expenses.

In the first quarter of 2020, on a non-GAAP basis, adjusted operating expense was $44.6 million, an improvement of $5.7 million or 11.3 percent when compared to $50.3 million of adjusted operating expense in the first quarter of 2019. The improvement is primarily due to expense decreases in employee compensation and benefits, newsprint expense, and reductions from continued management of discretionary spending.

As of March 31, 2020, the Company had 788 employees, a decrease of 130 or 14.2 percent when compared to the prior year period. Cash and cash equivalents were $44.0 million and the Company had no debt.

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.

About A. H. Belo Corporation

A. H. Belo Corporation is the leading local news and information publishing company in Texas. The Company has 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, revenues, expenses, 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; cybersecurity incidents; technological obsolescence; and the current and future impacts of the COVID-19 public health crisis. Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters; 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 March 31,
In thousands, except share and per share amounts (unaudited)   2020     2019  
Net Operating Revenue:            
Advertising and marketing services   $ 19,327     $ 24,041  
Circulation     16,414       17,273  
Printing, distribution and other     4,602       5,275  
Total net operating revenue     40,343       46,589  
Operating Costs and Expense:            
Employee compensation and benefits     19,016       21,124  
Other production, distribution and operating costs     20,992       22,184  
Newsprint, ink and other supplies     3,271       4,747  
Depreciation     1,765       2,386  
Amortization     64       76  
Gain on sale/disposal of assets, net     (5 )      
Total operating costs and expense     45,103       50,517  
Operating loss     (4,760 )     (3,928 )
Other income, net     1,352       829  
Loss Before Income Taxes     (3,408 )     (3,099 )
Income tax benefit     (1,787 )     (964 )
Net Loss   $ (1,621 )   $ (2,135 )
             
Per Share Basis            
Net loss            
Basic and diluted   $ (0.08 )   $ (0.10 )
Number of common shares used in the per share calculation:            
Basic and diluted     21,410,423       21,594,262  


A. H. Belo Corporation and Subsidiaries
Consolidated Balance Sheets

                 
    March 31,   December 31,
In thousands (unaudited)   2020   2019
Assets                
Current assets:                
Cash and cash equivalents   $ 43,934     $ 48,626  
Accounts receivable, net     14,946       18,441  
Other current assets     11,926       7,737  
Total current assets     70,806       74,804  
Property, plant and equipment, net     16,841       18,453  
Operating lease right-of-use assets     22,483       21,371  
Intangible assets, net     255       319  
Deferred income taxes, net     36       50  
Long-term note receivable     22,400       22,400  
Other assets     3,631       3,648  
Total assets   $ 136,452     $ 141,045  
Liabilities and Shareholders’ Equity                
Current liabilities:                
Accounts payable   $ 4,989     $ 6,103  
Accrued compensation and other current liabilities     11,517       13,337  
Contract liabilities     14,283       12,098  
Total current liabilities     30,789       31,538  
Long-term pension liabilities     21,657       23,039  
Long-term operating lease liabilities     23,694       23,120  
Other liabilities     5,690       5,611  
Total liabilities     81,830       83,308  
Total shareholders' equity     54,622       57,737  
Total liabilities and shareholders’ equity   $ 136,452     $ 141,045  


A. H. Belo Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Loss to Adjusted Operating Loss

             
    Three Months Ended March 31,
In thousands (unaudited)   2020     2019  
Total net operating revenue   $ 40,343     $ 46,589  
Total operating costs and expense     45,103       50,517  
Operating Loss   $  (4,760 )   $  (3,928 )
             
Total net operating revenue   $ 40,343     $ 46,589  
Addback:            
Advertising contra revenue     1,454       2,652  
Circulation contra revenue     38       175  
Adjusted Operating Revenue   $  41,835     $  49,416  
             
Total operating costs and expense   $ 45,103     $ 50,517  
Addback:            
Advertising contra expense     1,454       2,652  
Circulation contra expense     38       175  
Less:            
Depreciation     1,765       2,386  
Amortization     64       76  
Severance expense     186       601  
Gain on sale/disposal of assets, net     (5 )      
Adjusted Operating Expense   $  44,585     $  50,281  
             
Adjusted operating revenue   $ 41,835     $ 49,416  
Adjusted operating expense     44,585       50,281  
Adjusted Operating Loss   $  (2,750 )   $  (865 )

The Company calculates adjusted operating income (loss) by adjusting operating income (loss) to exclude depreciation, amortization, severance expense, (gain) loss on sale/disposal of assets, 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.

The Company adopted the new revenue guidance (Topic 606) using the modified retrospective approach as of January 1, 2018. While the Company adjusts operating revenue and expense for non-GAAP presentation, these adjustments have no effect on adjusted operating income (loss).

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 Murray
214-977-8869


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Source: A. H. Belo Corporation