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8K Earning Release-Q3

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): October 30, 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 October 30, 2018, A. H. Belo Corporation announced its consolidated financial results for the three months ended September 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 October 30, 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:

October 30, 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 October 30, 2018


EX 991-Q3

Exhibit 99.1



Picture 2



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



DALLAS - A. H. Belo Corporation (NYSE: AHC) today reported a  third quarter 2018 net loss of $1.0 million,  or $(0.05) per share.  In the third quarter of 2017,  the Company reported net income of $2.6 million, or $0.12 per fully diluted share.

For the third 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 $1.6 million, or 39.0 percent, when compared to adjusted operating income of $4.2 million reported for the third quarter of 2017.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, The forces at work in the newspaper industry continue to affect advertising revenues at The Dallas Morning News. And while circulation levels are fairly stable, the benefits of increased investment in both digital and print circulation are just beginning to be defined. The Management Committee and leaders throughout The Morning News are well along in building the framework for a sustainably profitable newspaper in the digital world, with specific initiatives being developed for 2019 and beyond. I'm convinced that A. H. Belo has the right leadership focusing on the right questions in order to achieve this long-term result.

Operating results at Belo + Company in the third quarter did not meet expectations, as the replenishment of contracts that terminated at the end of 2017 and early in 2018 moved at a slower pace than anticipated. However, the basic attributes of our digital marketing business continue to be compelling as Belo + Company meets the needs of a very large market comprising companies of $5 million to $100 million in revenue. We are counting on improved results in 2019.


 

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

October 30, 2018

Page 2

 

 

Attention to A. H. Belo's non-core assets continues to be a major priority for the Board of Directors and the Management Committee. We are very pleased to have announced yesterday the sale of the former Dallas Morning News campus for $33 million. The transaction involves capable buyers who are cognizant of the importance of this site. The transaction is scheduled to close on December 28 and the Company expects to realize cash proceeds of approximately $32 million. As a result of previously-discussed tax loss carry-forwards, the proceeds will be tax free; at year-end 2018, A. H. Belo will have cash in excess of $85 million on its balance sheet and no debt.



Third Quarter Results





Total revenue was $49.1 million in the third quarter of 2018,  a decrease of $11.5 million, or 19.0 percent, when compared to the third quarter of 2017. 

Revenue from advertising and marketing services, including print and digital revenues, was $25.3 million in the  third quarter of 2018,  a decrease of $9.6 million, or 27.6 percent, when compared to the third quarter 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 $3.0 million for the three months ended September 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 $6.6 million, or 18.9 percent, when compared to the prior year period. For the third quarter of 2018, total digital and marketing services revenue was 41.6 percent of total advertising and marketing services revenue, up from the 39.3 percent reported in the third quarter of 2017. Total digital and marketing services revenue was 22.5 percent of total


 

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

October 30, 2018

Page 3

 

 

Company revenue, flat when compared to the third quarter of 2017.

Circulation revenue was $17.9 million, a decrease of $0.9 million, or 5.0 percent, when compared to the third 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;  under the new guidance, revenue is directly reduced.

Printing, distribution and other revenue decreased $0.9 million, or 13.8 percent, to  $5.9 million, primarily due to a  $0.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 third quarter of 2018, on a GAAP basis, was $50.4 million, a decrease of $10.2 million, or 16.8 percent, compared to the third quarter of 2017.  Excluding the expense decrease related to the adoption of the new revenue guidance, consolidated operating expense decreased $6.9 million, or 11.4 percent, when compared to the prior year period. The improvement was primarily due to decreases of $3.5 million in employee compensation and benefits expense, $1.8 million in distribution expense,  $0.4 million in advertising and promotion expense, and $0.2 million in legal fees.

In the third quarter of 2018, on a non-GAAP basis, total consolidated operating expense adjusted for certain items (adjusted operating expense”) was  $49.8 million, an improvement of $6.6 million, or 11.7 percent, compared to $56.4 million of adjusted operating expense reported in the third quarter of 2017. The improvement is primarily due to expense decreases in employee compensation and benefits,  distribution,  advertising and promotion, and legal fees.


 

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

October 30, 2018

Page 4

 

 

Non-GAAP Financial Measures





Reconciliations of operating income (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 Third Quarter 2018 Financial Results

October 30, 2018

Page 5

 

 

Financial Results Conference Call





A. H. Belo Corporation will conduct a conference call on Wednesday,  October 31, 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 651-291-5254 (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 October 31,  2018 until 11:59 p.m. CST on November 7,  2018. The access code for the replay is 455876.



 


 

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

October 30, 2018

Page 6

 

 

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 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 September 30,

 

Nine Months Ended September 30,

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

 

2018

 

2017

 

2018

 

2017

Net Operating Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing services

 

$

25,260 

 

$

34,875 

 

$

77,398 

 

$

106,101 

Circulation

 

 

17,896 

 

 

18,845 

 

 

53,564 

 

 

57,099 

Printing, distribution and other

 

 

5,896 

 

 

6,839 

 

 

18,712 

 

 

21,349 

Total net operating revenue

 

 

49,052 

 

 

60,559 

 

 

149,674 

 

 

184,549 

Operating Costs and Expense:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

21,174 

 

 

24,642 

 

 

67,375 

 

 

79,088 

Other production, distribution and operating costs

 

 

20,939 

 

 

27,460 

 

 

66,786 

 

 

85,522 

Newsprint, ink and other supplies

 

 

5,528 

 

 

5,648 

 

 

16,300 

 

 

17,542 

Depreciation

 

 

2,514 

 

 

2,607 

 

 

7,522 

 

 

7,840 

Amortization

 

 

199 

 

 

200 

 

 

599 

 

 

599 

Asset impairments

 

 

 —

 

 

 —

 

 

(22)

 

 

228 

Total operating costs and expense

 

 

50,354 

 

 

60,557 

 

 

158,560 

 

 

190,819 

Operating income (loss)

 

 

(1,302)

 

 

 

 

(8,886)

 

 

(6,270)

Other income, net

 

 

862 

 

 

2,588 

 

 

2,641 

 

 

3,876 

Income (Loss) Before Income Taxes

 

 

(440)

 

 

2,590 

 

 

(6,245)

 

 

(2,394)

Income tax provision (benefit)

 

 

596 

 

 

10 

 

 

(661)

 

 

261 

Net Income (Loss)

 

$

(1,036)

 

$

2,580 

 

$

(5,584)

 

$

(2,655)



 

 

 

 

 

 

 

 

 

 

 

 

Per Share Basis

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.05)

 

$

0.12 

 

$

(0.26)

 

$

(0.13)

Number of common shares used in the per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

21,709,557 

 

 

21,753,166 

 

 

21,761,110 

 

 

21,729,212 

Diluted

 

 

21,709,557 

 

 

21,754,627 

 

 

21,761,110 

 

 

21,729,212 

 


 

 

A. H. Belo Corporation and Subsidiaries

Consolidated Balance Sheets





 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,

In thousands (unaudited)

 

2018

 

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,471 

 

$

57,660 

Accounts receivable, net

 

 

19,759 

 

 

26,740 

Assets held for sale

 

 

1,089 

 

 

1,089 

Other current assets

 

 

10,824 

 

 

16,905 

Total current assets

 

 

90,143 

 

 

102,394 

Property, plant and equipment, net

 

 

27,294 

 

 

31,706 

Intangible assets, net

 

 

3,474 

 

 

4,073 

Goodwill

 

 

13,973 

 

 

13,973 

Deferred income taxes, net

 

 

6,679 

 

 

5,355 

Other assets

 

 

4,123 

 

 

5,347 

Total assets

 

$

145,686 

 

$

162,848 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,064 

 

$

10,303 

Accrued compensation and other current liabilities

 

 

12,042 

 

 

12,518 

Advance subscription payments

 

 

11,095 

 

 

11,670 

Total current liabilities

 

 

30,201 

 

 

34,491 

Long-term pension liabilities

 

 

19,746 

 

 

23,038 

Other liabilities

 

 

8,698 

 

 

7,620 

Total liabilities

 

 

58,645 

 

 

65,149 

Total shareholders' equity

 

 

87,041 

 

 

97,699 

Total liabilities and shareholders’ equity

 

$

145,686 

 

$

162,848 













 

 

 

 

 

 







 


 

 





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

Reconciliation of Operating Income (Loss) to Adjusted Operating Income





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended September 30,

 

Nine Months Ended September 30,

In thousands (unaudited)

 

2018

 

2017

 

2018

 

2017

Total net operating revenue

 

$

49,052 

 

$

60,559 

 

$

149,674 

 

$

184,549 

Total operating costs and expense

 

 

50,354 

 

 

60,557 

 

 

158,560 

 

 

190,819 

Operating Income (Loss)

 

$

(1,302)

 

$

 

$

(8,886)

 

$

(6,270)



 

 

 

 

 

 

 

 

 

 

 

 

Total net operating revenue

 

$

49,052 

 

$

60,559 

 

$

149,674 

 

$

184,549 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra revenue

 

 

3,018 

 

 

 —

 

 

8,777 

 

 

 —

Circulation contra revenue

 

 

262 

 

 

 —

 

 

789 

 

 

 —

Adjusted Operating Revenue

 

$

52,332 

 

$

60,559 

 

$

159,240 

 

$

184,549 



 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expense

 

$

50,354 

 

$

60,557 

 

$

158,560 

 

$

190,819 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra expense

 

 

3,018 

 

 

 —

 

 

8,777 

 

 

 —

Circulation contra expense

 

 

262 

 

 

 —

 

 

789 

 

 

 —

Pension and post-employment expense (benefit)

 

 

(930)

 

 

5,051 

 

 

(2,791)

 

 

3,333 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

2,514 

 

 

2,607 

 

 

7,522 

 

 

7,840 

Amortization

 

 

199 

 

 

200 

 

 

599 

 

 

599 

Severance expense

 

 

222 

 

 

531 

 

 

756 

 

 

1,175 

Pension plan settlement loss

 

 

 —

 

 

5,911 

 

 

 —

 

 

5,911 

Asset impairments

 

 

 —

 

 

 —

 

 

(22)

 

 

228 

Adjusted Operating Expense

 

$

49,769 

 

$

56,359 

 

$

156,480 

 

$

178,399 



 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating revenue

 

$

52,332 

 

$

60,559 

 

$

159,240 

 

$

184,549 

Adjusted operating expense

 

 

49,769 

 

 

56,359 

 

 

156,480 

 

 

178,399 

Adjusted Operating Income

 

$

2,563 

 

$

4,200 

 

$

2,760 

 

$

6,150 







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 $930 and $2,791 for the three and nine months ended September 30, 2018, respectively, and expense decreased $5,051 and $3,333 for the three and nine months ended September 30, 2017, respectively. 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 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.