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8-K Q2 Earnings Release

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): July 27, 2020

 

Picture 2 

(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) 977-7342

(Address of principal executive offices, including zip code)

 

(Registrant’s telephone number, including area code)

 

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))



Securities registered pursuant to Section 12(b) of the Act:



 

 

 

 



 

 

 

 



 

 

 

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Series A Common Stock, $0.01 par value

 

AHC

 

New York Stock Exchange



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.  


 

Item 2.02.  Results of Operations and Financial Condition.

On July 27, 2020, A. H. Belo Corporation announced its consolidated financial results for the three months ended June 30, 2020. 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 July 27, 2020


 



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.

 



 

 

 

 

 

 



 

 

 

 

 

 

Date: July 27, 2020

 

 

 

A. H. BELO CORPORATION



 

 

 



 

 

 

By:

 

/s/ Katy Murray



 

 

 

 

 

Katy Murray



 

 

 

 

 

Executive Vice President/Chief Financial Officer




 

EXHIBIT INDEX

Exhibit No. 99.1   Press Release issued by A. H. Belo Corporation on July 27, 2020 

 


EX 991-Q2 2020 Earnings Release

Exhibit 99.1

Picture 2



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



DALLAS –  A. H. Belo Corporation (NYSE: AHC) today reported a  second quarter 2020 net loss of $3.4 million, or $(0.16) per share.  In the second quarter of 2019,  the Company reported net income of $16.5 million, or $0.77 per fully diluted share. Second quarter 2019 net income was driven by a pretax gain of $25.9 million from the sale of real estate previously used as the Company’s headquarters, which for tax purposes is fully offset by net operating loss carryforwards.

For the second quarter of 2020, on a non-GAAP basis, A. H. Belo reported an operating loss adjusted for certain items (adjusted operating income (loss)) of $2.5 million,  a decline of $2.7 million when compared to adjusted operating income of $0.2 million reported in the second quarter of 2019.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, Given the many effects of the coronavirus pandemic, A. H. Belo has more than held its own during the first six months of 2020. Colleagues throughout the entire Company have made fast-paced, smart adjustments to how we publish content across platforms and deliver crucial news and information to the communities that rely on The Dallas Morning News. The leadership provided by Grant Moise, Katy Murray and their management teams has been exemplary. The Company's financial performance for the second quarter is in line with the revised 2020 Financial Plan reviewed with the Board in April and we are optimistic that revenue conditions can improve during the second half as we are presently projecting.


 

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

July 27, 2020

Page 2

 

 

Second Quarter Results



Total revenue was $35.4 million in the second quarter of 2020,  a decrease of $11.7 million or 24.8 percent when compared to the second quarter of 2019. 

Revenue from advertising and marketing services, including print and digital revenues, was $15.6 million in the  second quarter of 2020,  a decrease of $9.7 million or 38.4 percent when compared to the $25.3 million reported for the second quarter of 2019.

Circulation revenue was $15.7 million, a decrease of $1.3 million or 7.6 percent when compared to the second 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 24.1 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $0.7 million, or 14.6 percent, to $4.1 million, primarily due to a reduction in brokered and commercial printing, partially offset by an increase in shared mail packaging revenue.

Total consolidated operating expense in the second quarter of 2020, on a GAAP basis, was $39.8 million, an increase of $15.5 million or 64.0 percent compared to the second quarter of 2019.  Excluding the 2019 gain of $25.9 million from the real estate sale,  operating expense improved $10.4 million. The improvement is primarily due to decreases of $2.8 million in employee compensation and benefits expense, $2.7 million in outside services expense, $1.8 million in newsprint, ink and other supplies expense, and $1.4 million in distribution expense.

In the second quarter of 2020, on a non-GAAP basis, adjusted operating expense was $38.9 million, an improvement of $11.2 million or 22.4 percent when compared to $50.1 million of adjusted operating expense in the second quarter of 2019. The improvement is primarily due to expense decreases in employee compensation and benefits,  newsprint expense, distribution expense, and reductions from continued management of discretionary spending.


 

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

July 27, 2020

Page 3

 

 

As of June 30, 2020,  the Company had 769 employees, a decrease of 110 or 12.5 percent when compared to the prior year period. Cash and cash equivalents were $42.3 million and the Company had no debt.


 

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

July 27, 2020

Page 4

 

 

Non-GAAP Financial Measures





Reconciliations of operating income (loss) to adjusted operating income (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.

 


 

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

July 27, 2020

Page 5

 

 

Financial Results Conference Call





A. H. Belo Corporation will conduct a conference call on Tuesday, July 28, 2020, 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 1-844-291-6358 and enter the following access code when prompted: 8250158.  A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on July 28, 2020 until 11:59 p.m. CDT on August 3, 2020.  The access code for the replay is 8288468.


 

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

July 27, 2020

Page 6

 

 

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 June 30,

 

Six Months Ended June 30,

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

 

2020

 

2019

 

2020

 

2019

Net Operating Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing services

 

$

15,591 

 

$

25,300 

 

$

34,918 

 

$

49,341 

Circulation

 

 

15,723 

 

 

17,013 

 

 

32,137 

 

 

34,286 

Printing, distribution and other

 

 

4,101 

 

 

4,802 

 

 

8,703 

 

 

10,077 

Total net operating revenue

 

 

35,415 

 

 

47,115 

 

 

75,758 

 

 

93,704 

Operating Costs and Expense:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

16,997 

 

 

19,828 

 

 

36,013 

 

 

40,952 

Other production, distribution and operating costs

 

 

18,659 

 

 

23,845 

 

 

39,651 

 

 

46,029 

Newsprint, ink and other supplies

 

 

2,271 

 

 

4,022 

 

 

5,542 

 

 

8,769 

Depreciation

 

 

1,802 

 

 

2,333 

 

 

3,567 

 

 

4,719 

Amortization

 

 

64 

 

 

140 

 

 

128 

 

 

216 

Gain on sale/disposal of assets, net

 

 

 —

 

 

(25,908)

 

 

(5)

 

 

(25,908)

Total operating costs and expense

 

 

39,793 

 

 

24,260 

 

 

84,896 

 

 

74,777 

Operating income (loss)

 

 

(4,378)

 

 

22,855 

 

 

(9,138)

 

 

18,927 

Other income, net

 

 

1,331 

 

 

1,133 

 

 

2,683 

 

 

1,962 

Income (Loss) Before Income Taxes

 

 

(3,047)

 

 

23,988 

 

 

(6,455)

 

 

20,889 

Income tax provision (benefit)

 

 

367 

 

 

7,460 

 

 

(1,420)

 

 

6,496 

Net Income (Loss)

 

$

(3,414)

 

$

16,528 

 

$

(5,035)

 

$

14,393 



 

 

 

 

 

 

 

 

 

 

 

 

Per Share Basis

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.16)

 

$

0.77 

 

$

(0.24)

 

$

0.67 

Number of common shares used in the per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

21,410,423 

 

 

21,525,971 

 

 

21,410,423 

 

 

21,578,014 



 


 

 

A. H. Belo Corporation and Subsidiaries

Consolidated Balance Sheets





 

 

 

 

 

 



 

 

 

 

 

 



 

June 30,

 

December 31,

In thousands (unaudited)

 

2020

 

2019

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,310 

 

$

48,626 

Accounts receivable, net

 

 

13,019 

 

 

18,441 

Notes receivable

 

 

22,775 

 

 

 —

Other current assets

 

 

11,610 

 

 

7,737 

Total current assets

 

 

89,714 

 

 

74,804 

Property, plant and equipment, net

 

 

15,181 

 

 

18,453 

Operating lease right-of-use assets

 

 

21,871 

 

 

21,371 

Intangible assets, net

 

 

191 

 

 

319 

Deferred income taxes, net

 

 

22 

 

 

50 

Long-term note receivable

 

 

 —

 

 

22,400 

Other assets

 

 

3,627 

 

 

3,648 

Total assets

 

$

130,606 

 

$

141,045 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,903 

 

$

6,103 

Accrued compensation and other current liabilities

 

 

12,092 

 

 

13,337 

Contract liabilities

 

 

14,012 

 

 

12,098 

Total current liabilities

 

 

31,007 

 

 

31,538 

Long-term pension liabilities

 

 

20,275 

 

 

23,039 

Long-term operating lease liabilities

 

 

23,051 

 

 

23,120 

Other liabilities

 

 

5,702 

 

 

5,611 

Total liabilities

 

 

80,035 

 

 

83,308 

Total shareholders' equity

 

 

50,571 

 

 

57,737 

Total liabilities and shareholders’ equity

 

$

130,606 

 

$

141,045 

 


 

 

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

Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss)







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended June 30,

 

Six Months Ended June 30,

In thousands (unaudited)

 

2020

 

2019

 

2020

 

2019

Total net operating revenue

 

$

35,415 

 

$

47,115 

 

$

75,758 

 

$

93,704 

Total operating costs and expense

 

 

39,793 

 

 

24,260 

 

 

84,896 

 

 

74,777 

Operating Income (Loss)

 

$

(4,378)

 

$

22,855 

 

$

(9,138)

 

$

18,927 



 

 

 

 

 

 

 

 

 

 

 

 

Total net operating revenue

 

$

35,415 

 

$

47,115 

 

$

75,758 

 

$

93,704 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra revenue

 

 

934 

 

 

3,084 

 

 

2,388 

 

 

5,736 

Circulation contra revenue

 

 

63 

 

 

145 

 

 

101 

 

 

320 

Adjusted Operating Revenue

 

$

36,412 

 

$

50,344 

 

$

78,247 

 

$

99,760 



 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expense

 

$

39,793 

 

$

24,260 

 

$

84,896 

 

$

74,777 

Addback:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising contra expense

 

 

934 

 

 

3,084 

 

 

2,388 

 

 

5,736 

Circulation contra expense

 

 

63 

 

 

145 

 

 

101 

 

 

320 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

1,802 

 

 

2,333 

 

 

3,567 

 

 

4,719 

Amortization

 

 

64 

 

 

140 

 

 

128 

 

 

216 

Severance expense

 

 

17 

 

 

800 

 

 

203 

 

 

1,401 

Gain on sale/disposal of assets, net

 

 

 —

 

 

(25,908)

 

 

(5)

 

 

(25,908)

Adjusted Operating Expense

 

$

38,907 

 

$

50,124 

 

$

83,492 

 

$

100,405 



 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating revenue

 

$

36,412 

 

$

50,344 

 

$

78,247 

 

$

99,760 

Adjusted operating expense

 

 

38,907 

 

 

50,124 

 

 

83,492 

 

 

100,405 

Adjusted Operating Income (Loss)

 

$

(2,495)

 

$

220 

 

$

(5,245)

 

$

(645)



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.