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

A.H. Belo Corporation
·10-min read

DALLAS, Oct. 26, 2020 (GLOBE NEWSWIRE) -- A. H. Belo Corporation (NYSE: AHC) today reported a third quarter 2020 net loss of $0.1 million, or $(0.00) per share, and an operating loss of $2.4 million. In the third quarter of 2019, the Company reported a net loss of $4.0 million, or $(0.19) per share, and an operating loss of $7.0 million.

For the third quarter of 2020, on a non-GAAP basis, A. H. Belo reported an operating loss adjusted for certain items (“adjusted operating loss”) of $0.1 million, an improvement of $1.4 million or 92.2 percent when compared to an adjusted operating loss of $1.6 million reported in the third quarter of 2019.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, “The events of 2020 continue to create challenges for managing A. H. Belo’s businesses while we remain attentive to the longer term strategies that will enable the Company to become a sustainably profitable digital media enterprise. Colleagues throughout the Company have responded to the many effects of the coronavirus pandemic with ingenuity and resolve, and everyone has made sacrifices to ensure that our communities receive the highest quality news, information and insights possible. As the country enters the next phase of the pandemic this fall and winter, we expect operating conditions to remain mostly the same. The Company’s balance sheet continues to be a significant advantage.”

Third Quarter Results

Total revenue was $37.7 million in the third quarter of 2020, a decrease of $5.3 million or 12.3 percent when compared to the third quarter of 2019.

Revenue from advertising and marketing services, including print and digital revenues, was $17.5 million in the third quarter of 2020, a decrease of $4.1 million or 19.2 percent when compared to the $21.6 million reported for the third quarter of 2019.

Circulation revenue was $16.1 million, a decrease of $0.7 million or 4.2 percent when compared to the third 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 $0.4 million or 34.5 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $0.5 million, or 10.3 percent, to $4.2 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 third quarter of 2020, on a GAAP basis, was $40.2 million, a decrease of $9.9 million or 19.7 percent compared to the third quarter of 2019. Excluding the 2019 loss of $2.9 million from asset disposals and impairments, the improvement is primarily due to decreases of $3.0 million in employee compensation and benefits expense, $1.5 million in newsprint, ink and other supplies expense, and $1.1 million in outside services expense.

In the third quarter of 2020, on a non-GAAP basis, adjusted operating expense was $41.0 million, an improvement of $7.1 million or 14.7 percent when compared to $48.1 million of adjusted operating expense in the third quarter of 2019. The improvement is primarily due to expense decreases in employee compensation and benefits, newsprint expense, and reductions from continued management of discretionary spending.

As of September 30, 2020, the Company had 750 employees, a decrease of 120 or 13.8 percent when compared to the prior year period. Cash and cash equivalents were $43.2 million and the Company had no debt.

Non-GAAP Financial Measures

Reconciliations of operating income (loss) to adjusted operating 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, October 27, 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 1-877-226-8152 and enter the following access code when prompted: 4445036. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CDT on October 27, 2020 until 11:59 p.m. CST on November 2, 2020. The access code for the replay is 5679783.

About A. H. Belo Corporation

A. H. Belo Corporation is the leading local news and information publishing company in Texas. The Company has a growing presence in emerging media and digital marketing, and maintains capabilities related to commercial printing, distribution and direct mail. 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 Murray
214-977-8869


A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

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

2020

2019

2020

2019

Net Operating Revenue:

Advertising and marketing services

$

17,474

$

21,616

$

52,392

$

70,957

Circulation

16,111

16,809

48,248

51,095

Printing, distribution and other

4,157

4,632

12,860

14,709

Total net operating revenue

37,742

43,057

113,500

136,761

Operating Costs and Expense:

Employee compensation and benefits

16,499

19,504

52,512

60,456

Other production, distribution and operating costs

19,307

21,171

58,958

67,200

Newsprint, ink and other supplies

2,476

3,972

8,018

12,741

Depreciation

1,753

2,289

5,320

7,008

Amortization

63

140

191

356

(Gain) loss on sale/disposal of assets, net

61

1,362

56

(24,546

)

Asset impairments

1,593

1,593

Total operating costs and expense

40,159

50,031

125,055

124,808

Operating income (loss)

(2,417

)

(6,974

)

(11,555

)

11,953

Other income, net

2,095

1,161

4,778

3,123

Income (Loss) Before Income Taxes

(322

)

(5,813

)

(6,777

)

15,076

Income tax provision (benefit)

(224

)

(1,808

)

(1,644

)

4,688

Net Income (Loss)

$

(98

)

$

(4,005

)

$

(5,133

)

$

10,388

Per Share Basis

Net income (loss)

Basic and diluted

$

(0.00

)

$

(0.19

)

$

(0.24

)

$

0.48

Number of common shares used in the per share calculation:

Basic and diluted

21,410,423

21,476,029

21,410,423

21,553,625


A. H. Belo Corporation and Subsidiaries
Consolidated Balance Sheets

September 30,

December 31,

In thousands (unaudited)

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

43,174

$

48,626

Accounts receivable, net

15,174

18,441

Notes receivable

22,775

Other current assets

10,406

7,737

Total current assets

91,529

74,804

Property, plant and equipment, net

13,479

18,453

Operating lease right-of-use assets

21,496

21,371

Intangible assets, net

128

319

Deferred income taxes, net

27

50

Long-term note receivable

22,400

Other assets

2,608

3,648

Total assets

$

129,267

$

141,045

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

5,792

$

6,103

Accrued compensation and other current liabilities

12,613

13,337

Contract liabilities

14,860

12,098

Total current liabilities

33,265

31,538

Long-term pension liabilities

18,893

23,039

Long-term operating lease liabilities

22,555

23,120

Other liabilities

4,718

5,611

Total liabilities

79,431

83,308

Total shareholders' equity

49,836

57,737

Total liabilities and shareholders’ equity

$

129,267

$

141,045


A. H. Belo Corporation - Non-GAAP Financial Measures
Reconciliation of Operating Income (Loss) to Adjusted Operating Loss

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands (unaudited)

2020

2019

2020

2019

Total net operating revenue

$

37,742

$

43,057

$

113,500

$

136,761

Total operating costs and expense

40,159

50,031

125,055

124,808

Operating Income (Loss)

$

(2,417

)

$

(6,974

)

$

(11,555

)

$

11,953

Total net operating revenue

$

37,742

$

43,057

$

113,500

$

136,761

Addback:

Advertising contra revenue

3,012

3,380

5,400

9,116

Circulation contra revenue

104

48

205

368

Adjusted Operating Revenue

$

40,858

$

46,485

$

119,105

$

146,245

Total operating costs and expense

$

40,159

$

50,031

$

125,055

$

124,808

Addback:

Advertising contra expense

3,012

3,380

5,400

9,116

Circulation contra expense

104

48

205

368

Less:

Depreciation

1,753

2,289

5,320

7,008

Amortization

63

140

191

356

Severance expense

418

20

621

1,421

(Gain) loss on sale/disposal of assets, net

61

1,362

56

(24,546

)

Asset impairments

1,593

1,593

Adjusted Operating Expense

$

40,980

$

48,055

$

124,472

$

148,460

Adjusted operating revenue

$

40,858

$

46,485

$

119,105

$

146,245

Adjusted operating expense

40,980

48,055

124,472

148,460

Adjusted Operating Loss

$

(122

)

$

(1,570

)

$

(5,367

)

$

(2,215

)

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.