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.”
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.
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.
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 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.
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.
Contact:Katy Murray214-977-8869
A. H. Belo Corporation and
SubsidiariesConsolidated 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
SubsidiariesConsolidated 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 MeasuresReconciliation 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.
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