A. H. Belo Corporation Announces Third Quarter 2014 Net Income from Continuing Operations
“The Board and management continue to focus on capital allocation, including potential investments and acquisitions in the advertising and marketing services arena, as we consider deployment of the cash proceeds from these and other transactions. We are optimistic about opportunities to diversify and grow revenues and EBITDA and reduce our reliance on core print advertising revenue which remain challenged.”
In conjunction with the completed sale of the newspaper operations in
Adjusted EBITDA, or earnings before interest, taxes, depreciation and
amortization ("EBITDA") from continuing operations, excluding
investment-related gains, was
As of
Third Quarter Results from Continuing Operations
Total revenue was
Revenue from advertising and marketing services, including print and digital revenues, decreased 8.6 percent. Digital revenue, which comprised 22.0 percent of advertising and marketing services revenue, increased 9.6 percent over the prior year quarter primarily due to continued growth in marketing services revenue associated with Speakeasy. Increases in digital revenue were offset by declines in print display, preprint and classified advertising revenues which decreased 19.2 percent, 8.1 percent and 8.1 percent, respectively.
Advertising revenue from niche publications, which is a component of the display, preprint, classified and digital revenues reported above, decreased slightly in the third quarter of 2014.
Circulation revenue decreased 2.6 percent to
Commercial printing and distribution revenue increased 46.9 percent to
Total operating expense in the third quarter was
The Company’s newsprint expense in the third quarter was
Corporate and non-operating expense in the third quarter was
As of
Discontinued Operations
In the third quarter of 2014, the Company completed the sale of
substantially all of the assets comprising the newspaper operations of
Total third quarter gain from discontinued operations, including the
2014 gain on the sale of
Pension Plans
In the third quarter of 2014, the Company made required contributions of
During the third quarter of 2014, the Company sold its remaining real
estate in
The Company also sold 97 acres of undeveloped land in southern
Other
As previously announced, on
In September of 2014, the Company concluded the transition services
provided to
Non-GAAP Financial Measures
Reconciliations of net income to EBITDA and Adjusted EBITDA from continuing operations are included as exhibits to this release.
Financial Results Conference Call
About
Statements in this communication concerning A. H. Belo Corporation’s (the “Company’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, uncertainties and factors include, but are not limited
to, changes in capital market conditions and prospects, and other
factors such as changes in advertising demand and newsprint prices;
newspaper circulation trends and other circulation matters, including
changes in readership methods, patterns and demography; and audits and
related actions by the
| A. H. Belo Corporation | ||||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
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| In thousands, except share and per share amounts (unaudited) | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net Operating Revenue | ||||||||||||||||||||
| Advertising and marketing services | $ | 36,941 | $ | 40,402 | $ | 114,918 | $ | 122,288 | ||||||||||||
| Circulation | 21,219 | 21,787 | 63,458 | 64,024 | ||||||||||||||||
| Printing and distribution | 7,763 | 5,284 | 21,200 | 16,390 | ||||||||||||||||
| Total net operating revenue | 65,923 | 67,473 | 199,576 | 202,702 | ||||||||||||||||
| Operating Costs and Expense | ||||||||||||||||||||
| Employee compensation and benefits | 24,265 | 27,070 | 78,151 | 83,608 | ||||||||||||||||
| Other production, distribution and operating costs | 29,846 | 28,511 | 87,930 | 85,640 | ||||||||||||||||
| Newsprint, ink and other supplies | 7,910 | 8,370 | 24,012 | 25,484 | ||||||||||||||||
| Depreciation | 3,341 | 3,661 | 10,099 | 11,504 | ||||||||||||||||
| Amortization | 61 | 29 | 121 | 89 | ||||||||||||||||
| Total operating costs and expense | 65,423 | 67,641 | 200,313 | 206,325 | ||||||||||||||||
| Income (loss) from operations | 500 | (168 | ) | (737 | ) | (3,623 | ) | |||||||||||||
| Other Income (Expense), Net | ||||||||||||||||||||
| Gains (losses) on equity method investments, net | (953 | ) | 723 | 17,206 | 1,818 | |||||||||||||||
| Interest income (expense) | — | 108 | — | (311 | ) | |||||||||||||||
| Other income, net | 3,878 | 152 | 4,136 | 116 | ||||||||||||||||
| Total other income, net | 2,925 | 983 | 21,342 | 1,623 | ||||||||||||||||
| Income (Loss) from Continuing Operations Before Income Taxes | 3,425 | 815 | 20,605 | (2,000 | ) | |||||||||||||||
| Income tax provision | 1,156 | 384 | 3,475 | 1,373 | ||||||||||||||||
| Income (Loss) from Continuing Operations | 2,269 | 431 | 17,130 | (3,373 | ) | |||||||||||||||
| Income (loss) from discontinued operations | 643 | 87 | 3,766 | (3,202 | ) | |||||||||||||||
| Gain related to the divestiture of discontinued operations, net | 17,134 | 4,746 | 17,109 | 4,746 | ||||||||||||||||
| Tax expense (benefit) from discontinued operations | 1,652 | (5 | ) | 1,698 | (138 | ) | ||||||||||||||
| Gain from Discontinued Operations, Net | 16,125 | 4,838 | 19,177 | 1,682 | ||||||||||||||||
| Net Income (Loss) | 18,394 | 5,269 | 36,307 | (1,691 | ) | |||||||||||||||
| Net loss attributable to noncontrolling interests | (50 | ) | (52 | ) | (80 | ) | (171 | ) | ||||||||||||
| Net Income (Loss) Attributable to A. H. Belo Corporation | $ | 18,444 | $ | 5,321 | $ | 36,387 | $ | (1,520 | ) | |||||||||||
| Per Share Basis | ||||||||||||||||||||
| Basic and Diluted | ||||||||||||||||||||
| Continuing operations | $ | 0.10 | $ | 0.02 | $ | 0.74 | $ | (0.15 | ) | |||||||||||
| Discontinued operations | 0.74 | 0.22 | 0.87 | 0.07 | ||||||||||||||||
| Net income (loss) attributable to A. H. Belo Corporation | $ | 0.84 | $ | 0.24 | $ | 1.61 | $ | (0.08 | ) | |||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||
| Basic | 21,890,754 | 21,943,876 | 21,927,920 | 22,005,705 | ||||||||||||||||
| Diluted | 21,991,716 | 22,069,511 | 22,039,248 | 22,005,705 | ||||||||||||||||
| A. H. Belo Corporation | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, | December 31, | |||||||
| In thousands (unaudited) | 2014 | 2013 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 108,063 | $ | 82,193 | ||||
| Accounts receivable, net | 25,095 | 32,270 | ||||||
| Other current assets | 15,204 | 11,246 | ||||||
| Assets of discontinued operations | 875 | 42,716 | ||||||
| Total current assets | 149,237 | 168,425 | ||||||
| Property, plant and equipment, net | 66,825 | 74,863 | ||||||
| Intangible assets, net | 25,315 | 24,823 | ||||||
| Other assets | 11,506 | 11,107 | ||||||
| Total assets | $ | 252,883 | $ | 279,218 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 11,929 | $ | 13,717 | ||||
| Accrued expenses and other current liabilities | 16,972 | 14,275 | ||||||
| Advance subscription payments | 14,416 | 14,842 | ||||||
| Liabilities of discontinued operations | 995 | 11,538 | ||||||
| Total current liabilities | 44,312 | 54,372 | ||||||
| Long-term pension liabilities | 37,500 | 50,082 | ||||||
| Other liabilities | 6,553 | 5,988 | ||||||
| Total shareholders’ equity | 164,518 | 168,776 | ||||||
| Total liabilities and shareholders’ equity | $ | 252,883 | $ | 279,218 | ||||
| A. H. Belo Corporation | ||||||||||||||||||||
|
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA from Continuing Operations |
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|
Three Months Ended |
Nine Months Ended |
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| In thousands (unaudited) | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| Net Income (Loss) Attributable to A. H. Belo Corporation | $ | 18,444 | $ | 5,321 | $ | 36,387 | $ | (1,520 | ) | |||||||||||
| Less: Gain from discontinued operations, net | 16,125 | 4,838 | 19,177 | 1,682 | ||||||||||||||||
| Plus: Net loss attributable to noncontrolling interests | (50 | ) | (52 | ) | (80 | ) | (171 | ) | ||||||||||||
| Income (Loss) from Continuing Operations | 2,269 | 431 | 17,130 | (3,373 | ) | |||||||||||||||
| Depreciation and amortization | 3,402 | 3,690 | 10,220 | 11,593 | ||||||||||||||||
| Interest expense (income) | — |
(108 |
) |
— | 311 | |||||||||||||||
| Income tax provision | 1,156 | 384 | 3,475 | 1,373 | ||||||||||||||||
| EBITDA from Continuing Operations | 6,827 | 4,397 | 30,825 | 9,904 | ||||||||||||||||
| Addback: | ||||||||||||||||||||
| Net investment-related gains | (2,603 | ) | — | (20,148 | ) | — | ||||||||||||||
| Adjusted EBITDA from Continuing Operations | $ | 4,224 | $ | 4,397 | $ | 10,677 | $ | 9,904 | ||||||||||||
The Company evaluates earnings before interest, taxes, depreciation and
amortization ( “EBITDA”) which is presented for continuing operations by
adjusting for discontinued operations and losses attributable to
noncontrolling interests. Adjusted EBITDA is calculated, as applicable,
by adding back to EBITDA non-cash impairment expense and net
investment-related gains and losses. The Company adjusted EBITDA for an
Neither EBITDA nor Adjusted EBITDA is a measure of financial performance under generally accepted accounting principles (“GAAP”). Management uses EBITDA, Adjusted EBITDA 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. Adjusted EBITDA is also used by management to evaluate the cash flows available for capital spending, investing, pension contributions (required and voluntary), dividends and other equity-related transactions. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for cash flows provided by operating activities or other income or cash flow data prepared in accordance with GAAP, and these non-GAAP measures may not be comparable to similarly-titled measures of other companies.
In previous periods, the Company added back pension expense in the determination of Adjusted EBITDA. Management reassessed this measurement and no longer excludes pension expense from Adjusted EBITDA.
Source:
A. H. Belo Corporation
Alison K. Engel, 214-977-2248
Senior
Vice President/Chief Financial Officer
www.ahbelo.com