July 29, 2019
A. H. Belo Corporation Announces Second Quarter 2019 Financial Results
DALLAS – A. H. Belo Corporation (NYSE: AHC) today reported second quarter 2019 net income of $16.9 million, or $0.78 per fully diluted share. In the second quarter of 2018, the Company reported a net loss of $0.5 million, or $(0.03) per share. Second quarter 2019 net income was driven by $28.0 million in proceeds from the sale of real estate previously used as the Company’s headquarters, resulting in a pretax gain of $25.9 million which for tax purposes is fully offset by net operating loss carryforwards.
For the second quarter of 2019, on a non-GAAP basis, A. H. Belo reported operating income adjusted for certain items (“adjusted operating income”) of $0.2 million, a decline of $1.5 million, or 87.5 percent, from $1.8 million reported in the second quarter of 2018. The decline was primarily due to $1.9 million of expense related to a strategy review with an outside consulting firm.
On July 18, the Company established a single operations decision-making structure to include Belo + Company, beginning a leadership transition that results in Tim Storer, Belo + Company's president, assuming an advisory role at this time and departing A. H. Belo at the end of the year.
Robert W. Decherd, chairman, president and Chief Executive Officer, said, “The Company’s operating results in the second quarter are encouraging on several levels. The Dallas Morning News is finding its footing in pursuing its digital subscription objectives and is well along in its plan to launch a new website on the Arc platform in September. The creation of a single decision-making structure for all of the Company’s operations under Grant Moise, including digital marketing services, gives additional lift to these initiatives. I want to thank Tim Storer for everything he has done over the past five years to establish a dynamic digital marketing services capability for our Company and for the extraordinarily constructive role he has played on our Management Committee.
“The Board and I have worked closely with a leading global management consulting firm over the past year to deepen our understanding of A. H. Belo’s highest potential in the competitive digital media world that will define the Company’s future. I am optimistic that we are heading in the right direction and that over the course of the next several years, we can achieve a sustainable and profitable operating model that well serves shareholders, consumers of our content, and customers.”
Second Quarter Results
Total revenue for the second quarter of 2019 was $47.7 million, a decrease of $3.4 million, or 6.7 percent, when compared to the second quarter of 2018.
Revenue from advertising and marketing services, including print and digital revenues, was $25.9 million in the second quarter of 2019, a decrease of $0.5 million, or 1.8 percent, when compared to $26.4 million reported for the second quarter of 2018.
Circulation revenue was $17.0 million, a decrease of $0.9 million, or 5.1 percent, when compared to the second quarter of 2018. The decline was 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 26.3 percent, in digital-only subscription revenue.
Printing, distribution and other revenue decreased $2.0 million, or 29.9 percent, to $4.8 million, primarily due to a decrease of $1.5 million related to restructuring the Company’s brokered and commercial printing business in the first quarter of 2019, and a decrease of $0.6 million related to event sponsorships.
Total consolidated operating expense in the second quarter of 2019, on a GAAP basis, was $24.9 million, a decrease of $27.6 million or 52.5 percent, compared to the second quarter of 2018. Excluding the gain of $25.9 million from the real estate sale, the improvement was primarily due to decreases of $1.7 million in employee compensation and benefits expense and $1.4 million in newsprint, ink and other supplies expense, partially offset by an increase of $1.9 million of expense related to the consulting engagement.
In the second quarter of 2019, on a non-GAAP basis, total consolidated operating expense adjusted for certain items (“adjusted operating expense”) was $50.1 million, an improvement of $2.5 million, or 4.7 percent, compared to $52.6 million of adjusted operating expense in the second quarter of 2018. The improvement is primarily due to decreases in employee compensation and benefits expense and newsprint expense.
As of June 30, 2019, the Company had 879 employees, a decrease of 151 or 14.7 percent compared to the prior year period. Cash and cash equivalents were $52.0 million and the Company had no debt.
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.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on Tuesday, July 30, 2019, 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 1-800-230-1093 (USA) or 612-288-0329 (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 July 30, 2019 until 11:59 p.m. CDT on August 6, 2019. The access code for the replay is 470064.
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 firstname.lastname@example.org.
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.