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8K Earning Release-Q2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 8-K





CURRENT REPORT



PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of earliest event reported): August 8, 2018





Picture 1



(Exact name of registrant as specified in its charter)





Commission file number: 1-33741





 

 

Texas

 

38-3765318

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)



 

 

P. O. Box 224866, Dallas, Texas 75222-4866

 

(214) 977-8222

(Address of principal executive offices, including zip code)

 

(Registrant’s telephone number, including area code)







Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 


 

Item 2.02. Results of Operations and Financial Condition.



On August 8, 2018, A. H. Belo Corporation announced its consolidated financial results for the three months ended June 30, 2018.  A copy of the announcement press release is furnished with this report as Exhibit 99.1.



Item 9.01. Financial Statements and Exhibits.



(d) Exhibits.



99.1

Press Release issued by A. H. Belo Corporation on August 8, 2018



 


 

SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





 

 

 

 



 

 

A. H. BELO CORPORATION



 

 

 

 

Date:

August 8, 2018

 

By:

/s/  Katy Murray



 

 

 

      Katy Murray



 

 

 

      Senior Vice President/Chief Financial Officer



 

 

 

 





 


 

EXHIBIT INDEX



Exhibit No. 99.1  Press Release issued by A. H. Belo Corporation on August 8, 2018


EX 99.1-Q2

Exhibit 99.1

Picture 2





A. H. Belo Corporation Announces Second Quarter 2018 Financial Results



   Digital subscriptions grew by 6,407 subscribers, or 31.6 percent, in 2018 compared to 2017

 Operating expense decreased $11.8 million, or 18.4 percent, in 2018 compared to 2017



DALLAS - A. H. Belo Corporation (NYSE: AHC) today reported a  second quarter 2018 net loss of $0.5 million,  or $(0.03) per share.  In the second quarter of 2017,  A. H. Belo Corporation (the “Company”) reported a  net loss of $0.8 million, or $(0.04) per share.

In the second quarter of 2018, on a non-GAAP basis, the Company reported operating income adjusted for certain items (adjusted operating income)  of $2.7 million,  a  decrease of $0.1 million, or 3.4 percent, when compared to adjusted operating income of $2.8 million reported for the second quarter of 2017.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, I am very excited to return the Company as CEO and am confident A. H. Belo is well-positioned financially to address the challenges and opportunities in our markets. As a Board member for many years, I am keenly aware of the exceptional talent of the Company’s leadership team, which is the most important aspect to successfully defining A. H. Belo’s future.

In May, the Company announced the hiring of Susan “Sue” Kerr as vice president of Print Audience, a newly created position reporting to Grant Moise, Publisher and President of The Dallas Morning News.  Moise said, “I wanted to make sure we have the best talent in the industry leading our print audience division.  Sue brings over three decades of customer service and subscription expertise to our company, and I have a tremendous amount of confidence that she will substantially improve this important part of our business. Sue’s customer-centric philosophy fits very well with what we are building.”


 

A. H. Belo Corporation Announces Second Quarter 2018 Financial Results

August 8, 2018

Page 2

 

 

Second Quarter Results





Total revenue was $51.2 million in the second quarter of 2018,  a  decrease of $11.9 million, or 18.9 percent,  when compared to the second quarter of 2017. 

Revenue from advertising and marketing services, including print and digital revenues, was $26.4 million in the  second quarter of 2018,  a decrease of $9.6 million, or 26.7 percent, when compared to the second 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 June 30, 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 $6.7 million,  or 18.7 percent, when compared to the prior year period. For the second quarter of 2018, total digital and marketing services revenue was 40.9 percent of total advertising and marketing services revenue, up from the 38.5 percent reported in the second quarter of 2017. Total digital and marketing services revenue was 22.0 percent of total revenue, flat when compared to the second quarter of 2017.

Circulation revenue was $17.9 million, a decrease of $1.2 million, or 6.1 percent, when compared to the second quarter of 2017.  The decline was primarily due to a decrease in home delivery and single copy volumes, partially offset by single copy rate increases. Circulation revenue was also affected by the adoption of the new revenue guidance, including a decline of $0.3 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; however, under the new guidance revenue is reduced.


 

A. H. Belo Corporation Announces Second Quarter 2018 Financial Results

August 8, 2018

Page 3

 

 

Printing, distribution and other revenue decreased $1.1 million, or 14.1 percent, to $6.9 million,  due to a  $0.6 million decrease related to event sponsorships and a decrease of $0.4 million in commercial printing revenue.

Total consolidated operating expense in the second quarter of 2018, on a GAAP basis, was $52.5 million, a decrease of $11.8 million, or 18.4 percent, compared to the second quarter of 2017.  Excluding the expense decrease related to the adoption of the new revenue guidance, consolidated operating expense decreased $8.7 million, or 13.4 percent, when compared to the prior year period. The improvement was primarily due to decreases of $4.2 million in employee compensation and benefits expense, $1.6 million in distribution expense,  $1.0 million in advertising and promotion expense, $0.5 million in newsprint expense and $0.3 million in temporary services expense.

In the second quarter of 2018, on a non-GAAP basis, total consolidated operating expense adjusted for certain items (adjusted operating expense”) was  $51.7 million, an improvement of $8.6 million,  or 14.3 percent, compared to $60.3 million of adjusted operating expense reported in the second quarter of 2017. The improvement is primarily due to decreases in employee compensation and benefits,  distribution,  advertising and promotion, newsprint and temporary services expense.

The Company’s newsprint expense in the second quarter of 2018 was $3.0 million, an improvement of 6.8 percent compared to the second quarter of 2017, due to lower circulation volumes. Newsprint consumption declined 15.3 percent to 5,014 metric tons. Compared to the second quarter of 2017, newsprint cost per metric ton increased 14.9 percent and the average purchase price per metric ton for newsprint increased 20.3 percent.




 

A. H. Belo Corporation Announces Second Quarter 2018 Financial Results

August 8, 2018

Page 4

 

 

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.

 


 

A. H. Belo Corporation Announces Second Quarter 2018 Financial Results

August 8, 2018

Page 5

 

 

Financial Results Conference Call





A. H. Belo Corporation will conduct a conference call on Thursday,  August 9, 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 1-800-230-1085 (USA) or 612-234-9960 (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 August 9,  2018 until 11:59 p.m. CDT on August 16,  2018. The access code for the replay is 452076.



 


 

A. H. Belo Corporation Announces Second Quarter 2018 Financial Results

August 8, 2018

Page 6

 

 

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 June 30,

 

Six Months Ended June 30,

In thousands, except share and per share amounts (unaudited)

 

2018

 

2017

 

2018

 

2017

Net Operating Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing services

 

$

26,397 

 

$

36,022 

 

$

52,138 

 

$

71,226 

Circulation

 

 

17,921 

 

 

19,088 

 

 

35,668 

 

 

38,254 

Printing, distribution and other

 

 

6,851 

 

 

7,979 

 

 

12,816 

 

 

14,510 

Total net operating revenue

 

 

51,169 

 

 

63,089 

 

 

100,622 

 

 

123,990 

Operating Costs and Expense:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

21,529 

 

 

25,712 

 

 

46,201 

 

 

54,446 

Other production, distribution and operating costs

 

 

22,833 

 

 

29,736 

 

 

45,847 

 

 

58,062 

Newsprint, ink and other supplies

 

 

5,461 

 

 

5,993 

 

 

10,772 

 

 

11,894 

Depreciation

 

 

2,535 

 

 

2,727 

 

 

5,008 

 

 

5,233 

Amortization

 

 

200 

 

 

199 

 

 

400 

 

 

399 

Asset impairments

 

 

(22)

 

 

 —

 

 

(22)

 

 

228 

Total operating costs and expense

 

 

52,536 

 

 

64,367 

 

 

108,206 

 

 

130,262 

Operating loss

 

 

(1,367)

 

 

(1,278)

 

 

(7,584)

 

 

(6,272)

Other income, net

 

 

891 

 

 

766 

 

 

1,779 

 

 

1,288 

Loss Before Income Taxes

 

 

(476)

 

 

(512)

 

 

(5,805)

 

 

(4,984)

Income tax provision (benefit)

 

 

58 

 

 

293 

 

 

(1,257)

 

 

251 

Net Loss

 

$

(534)

 

$

(805)

 

$

(4,548)

 

$

(5,235)



 

 

 

 

 

 

 

 

 

 

 

 

Per Share Basis

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.03)

 

$

(0.04)

 

$

(0.21)

 

$

(0.24)

Number of common shares used in the per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

21,738,545 

 

 

21,743,390 

 

 

21,756,678 

 

 

21,717,032 

 


 

 

A. H. Belo Corporation and Subsidiaries

Consolidated Balance Sheets





 

 

 

 

 

 



 

 

 

 

 

 



 

June 30,

 

December 31,

In thousands (unaudited)

 

2018

 

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

56,751 

 

$

57,660 

Accounts receivable, net

 

 

19,931 

 

 

26,740 

Assets held for sale

 

 

1,089 

 

 

1,089 

Other current assets

 

 

14,616 

 

 

16,905 

Total current assets

 

 

92,387 

 

 

102,394 

Property, plant and equipment, net

 

 

29,239 

 

 

31,706 

Intangible assets, net

 

 

3,673 

 

 

4,073 

Goodwill

 

 

13,973 

 

 

13,973 

Deferred income taxes, net

 

 

7,051 

 

 

5,355 

Other assets

 

 

4,311 

 

 

5,347 

Total assets

 

$

150,634 

 

$

162,848 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,254 

 

$

10,303 

Accrued compensation and other current liabilities

 

 

13,133 

 

 

12,518 

Advance subscription payments

 

 

11,525 

 

 

11,670 

Total current liabilities

 

 

31,912 

 

 

34,491 

Long-term pension liabilities

 

 

20,844 

 

 

23,038 

Other liabilities

 

 

8,081 

 

 

7,620 

Total liabilities

 

 

60,837 

 

 

65,149 

Total shareholders' equity

 

 

89,797 

 

 

97,699 

Total liabilities and shareholders’ equity

 

$

150,634 

 

$

162,848 













 

 

 

 

 

 







 


 

 





A. H. Belo Corporation - Non-GAAP Financial Measures

Reconciliation of Operating Loss to Adjusted Operating Income





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended June 30,

 

Six Months Ended June 30,

In thousands (unaudited)

 

2018

 

2017

 

2018

 

2017

Total net operating revenue

 

$

51,169 

 

$

63,089 

 

$

100,622 

 

$

123,990 

Total operating costs and expense

 

 

52,536 

 

 

64,367 

 

 

108,206 

 

 

130,262 

Operating Loss

 

$

(1,367)

 

$

(1,278)

 

 

(7,584)

 

 

(6,272)



 

 

 

 

 

 

 

 

 

 

 

 

Total net operating revenue

 

$

51,169 

 

$

63,089 

 

 

100,622 

 

 

123,990 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra revenue

 

 

2,906 

 

 

 —

 

 

5,759 

 

 

 —

Circulation contra revenue

 

 

269 

 

 

 —

 

 

527 

 

 

 —

Adjusted Operating Revenue

 

$

54,344 

 

$

63,089 

 

$

106,908 

 

$

123,990 



 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expense

 

$

52,536 

 

$

64,367 

 

$

108,206 

 

$

130,262 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra expense

 

 

2,906 

 

 

 —

 

 

5,759 

 

 

 —

Circulation contra expense

 

 

269 

 

 

 —

 

 

527 

 

 

 —

Pension and post-employment benefit

 

 

(931)

 

 

(859)

 

 

(1,861)

 

 

(1,718)

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

2,535 

 

 

2,727 

 

 

5,008 

 

 

5,233 

Amortization

 

 

200 

 

 

199 

 

 

400 

 

 

399 

Severance expense

 

 

411 

 

 

277 

 

 

534 

 

 

644 

Asset impairments

 

 

(22)

 

 

 —

 

 

(22)

 

 

228 

Adjusted Operating Expense

 

$

51,656 

 

$

60,305 

 

$

106,711 

 

$

122,040 



 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating revenue

 

$

54,344 

 

$

63,089 

 

$

106,908 

 

$

123,990 

Adjusted operating expense

 

 

51,656 

 

 

60,305 

 

 

106,711 

 

 

122,040 

Adjusted Operating Income

 

$

2,688 

 

$

2,784 

 

$

197 

 

$

1,950 





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 $931 and $1,861 for the three and six months ended June 30, 2018, respectively, and $859 and $1,718 for the three and six months ended June 30, 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.