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A. H. Belo Corporation Announces Second Quarter 2016 Net Income from Continuing Operations

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.

Katy Murray
(214) 977-8869

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A. H. Belo Corporation
AHC (Common Stock)
ExchangeNYSE (US Dollar)
Price$4.90
Change (%)0.00 (0.00%)
Volume8,860
Data as of 01/18/18 1:52 p.m. ET
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