A. H. Belo Corporation Announces Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Summary

A. H. Belo Corporation (NYSE: AHC) reported a net loss of $1.7 million, or $(0.08) per share, in Q4 2020, compared to a loss of $1.1 million in Q4 2019. Full-year net loss for 2020 was $6.9 million, down from a profit of $9.3 million in 2019. Total revenue for Q4 2020 was $40.8 million, a 12.8% decline from Q4 2019, primarily due to decreased advertising revenue. The company is focusing on digital growth and plans to regain NYSE compliance after failing to meet market capitalization and equity requirements. Cash reserves stood at $42 million with no debt.

Positive

• Adjusted operating income improved by $0.4 million in Q4 2020 compared to Q4 2019.
• Digital-only subscription revenue increased by 39.7% in Q4 2020.

Negative

• Total revenue decreased by $29.3 million, or 15.9%, for the full year 2020.
• Advertising revenue fell by $23.6 million, or 24.7%, in 2020 compared to 2019.
• The company has been non-compliant with NYSE listing requirements since Q3 2020.

DALLAS, March 08, 2021 (GLOBE NEWSWIRE) -- A. H. Belo Corporation (NYSE: AHC) today reported a fourth quarter 2020 net loss of $1.7 million, or $(0.08) per share, and an operating loss of $4.0 million. In the fourth quarter of 2019, the Company reported a net loss of $1.1 million, or $(0.05) per share, and an operating loss of $2.4 million.

For the fourth quarter of 2020, on a non-GAAP basis, A. H. Belo reported operating income adjusted for certain items (“adjusted operating income (loss)”) of $0.5 million, an improvement of $0.4 million when compared to adjusted operating income of $0.1 million reported in the fourth quarter of 2019.

For the full year 2020, the Company reported a net loss of $6.9 million, or $(0.32) per share, and an operating loss of $15.6 million. For the full year 2019, the Company reported net income of $9.3 million, or $0.43 per fully diluted share, and operating income of $9.5 million. 2019 income was driven by a pretax gain of $25.9 million from the sale of real estate previously used as the Company’s headquarters.

For the full year 2020, on a non-GAAP basis, the Company reported an adjusted operating loss of $4.9 million, a decline of $2.8 million when compared to an adjusted operating loss of $2.1 million reported for the full year 2019.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, “The Company's business activities stabilized to some extent in the second half of 2020 as the effects of the pandemic became clearer, enabling our management teams to make further operating adjustments that will enable A. H. Belo and The Dallas Morning News to carry on during another year of challenging conditions in 2021. The Board views these two calendar years as a single time frame during which the Company is responding ably to significant revenue and market pressures.

“I am extraordinarily proud of the way every colleague has acclimated to the realities imposed by the pandemic. Working remotely since one year ago this month, our News Department, Belo + Company, and our business operations teams have excelled. The News Department has admirably fulfilled the vital, front-line role of providing meaningful news, information and insight when our region and our country have needed these most. Our 300-plus colleagues at the North Plant have worked tirelessly to print and distribute The News without missing a cycle, while tending to their personal situations away from work.

“Throughout 2020, the Board supported management's recommendations to continue making investments in operations that will enable the Company to emerge from the pandemic as a sustainably profitable digital news organization. Grant Moise and Katy Murray are leading efforts internally during 2021 aimed at defining this path forward.

“A key corporate objective for 2021 is to address the Company's compliance with New York Stock Exchange listing requirements. A. H. Belo became non-compliant at the end of the third quarter of 2020 when the Company did not meet the NYSE minimums for market capitalization and shareholders' equity. We have been in steady contact with the NYSE and are studying options to regain compliance. Management is discussing these with the Board and expects to have a plan for proceeding soon.

“The outstanding balance of the Company's note to Charter Holdings in connection with the 2019 sale of our former headquarters in Downtown Dallas is due on June 30 of this year. Charter made its most recent interest payment on the note timely and continues to confirm its commitment to fulfilling its obligation to A. H. Belo. However, new commercial real estate development everywhere has been impacted by the economic effects of the pandemic, so we are monitoring this situation closely and are in contact with Charter's principal.”

Fourth Quarter Results

Total revenue was $40.8 million in the fourth quarter of 2020, a decrease of $6.0 million or 12.8 percent when compared to the fourth quarter of 2019.

Revenue from advertising and marketing services, including print and digital revenues, was $19.8 million in the fourth quarter of 2020, a decrease of $5.1 million or 20.4 percent when compared to the $24.9 million reported for the fourth quarter of 2019. The decline is primarily due to a $3.7 million reduction in print advertising revenue, which has been significantly impacted by the COVID-19 pandemic.

Circulation revenue was $16.7 million, a decrease of $0.5 million or 2.8 percent when compared to the fourth quarter of 2019. Home delivery revenue decreased 3.7 percent and single copy revenue decreased 25.7 percent, primarily due to the significantly reduced number of locations selling newspapers as a result of the pandemic, partially offset by an increase of $0.5 million or 39.7 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $0.4 million, or 9.5 percent, to $4.3 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 fourth quarter of 2020, on a GAAP basis, was $44.8 million, an improvement of $4.4 million or 8.9 percent compared to the fourth quarter of 2019. The improvement is primarily due to expense decreases of $1.7 million in newsprint, ink and other supplies, $1.6 million in outside services, $0.5 million in distribution, $0.4 million in employee compensation and benefits, and $0.3 million in travel and entertainment.

In the fourth quarter of 2020, on a non-GAAP basis, adjusted operating expense was $46.1 million, an improvement of $2.6 million or 5.4 percent when compared to $48.7 million of adjusted operating expense in the fourth quarter of 2019. The improvement is primarily due to expense decreases in newsprint, distribution, employee compensation and benefits, and reductions from continued management of discretionary spending.

Full Year Results

Total revenue was $154.3 million for the full year 2020, a decrease of $29.3 million or 15.9 percent when compared to the prior year period.

Revenue from advertising and marketing services, including print and digital revenues, was $72.2 million in 2020, a decrease of $23.6 million or 24.7 percent when compared to the $95.9 million reported for the full year 2019. Print advertising revenue declined $15.9 million. Digital advertising and marketing services revenue decreased $7.7 million, primarily due to the termination of The Dallas Morning News’ affiliate relationship with Cars.com in September 2019.

Circulation revenue was $64.9 million, a decrease of $3.3 million or 4.9 percent when compared to the prior year period. Home delivery revenue decreased 5.5 percent and single copy revenue decreased 24.7 percent, primarily as a result of the pandemic, partially offset by an increase of $1.6 million or 32.0 percent in digital-only subscription revenue.

Printing, distribution and other revenue decreased $2.3 million, or 11.8 percent, to $17.2 million for the full year 2020, primarily due to a reduction in brokered and commercial printing.

Total consolidated operating expense for the full year 2020, on a GAAP basis, was $169.9 million, an improvement of $4.2 million or 2.4 percent compared to full year 2019. Excluding the 2019 gain of $25.9 million from the real estate sale, operating expense improved $30.1 million or 15.0 percent. The improvement is primarily due to expense decreases of $8.4 million in employee compensation and benefits, $6.4 million in newsprint, ink and other supplies, $6.3 million in outside services, $2.0 million in depreciation, $1.4 million in distribution, $1.2 million in advertising and promotion, and $0.9 million in travel and entertainment.

For the full year 2020, on a non-GAAP basis, adjusted operating expense was $170.6 million, an improvement of $26.6 million or 13.5 percent when compared to $197.2 million of adjusted operating expense reported for full year 2019. The improvement is primarily due to expense decreases in employee compensation and benefits, newsprint, distribution, and reductions from continued management of discretionary spending including additional measures the Company has taken this year in order to mitigate the financial impact of the pandemic.

As of December 31, 2020, the Company had 743 employees, a decrease of 87 or 10.5 percent when compared to the prior year period. Cash and cash equivalents were $42.0 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, March 9, 2021, at 9:00 a.m. CST 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 1-844-291-5490 and enter the following access code when prompted: 5801403. A replay line will be available at 1-866-207-1041 from 12:00 p.m. CST on March 9, 2021 until 11:59 p.m. CDT on March 15, 2021. The access code for the replay is 3114516.

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, including statements of the Company’s expectations relating to its plans to regain NYSE compliance, 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 December 31,								Years Ended December 31,
In thousands, except share and per share amounts (unaudited)		2020				2019				2020				2019
Net Operating Revenue:
Advertising and marketing services		$	19,822			$	24,899			$	72,214			$	95,856
Circulation			16,687				17,165				64,935				68,260
Printing, distribution and other			4,290				4,738				17,150				19,447
Total net operating revenue			40,799				46,802				154,299				183,563
Operating Costs and Expense:
Employee compensation and benefits			19,260				19,678				71,772				80,134
Other production, distribution and operating costs			21,050				23,473				80,008				90,673
Newsprint, ink and other supplies			2,150				3,829				10,168				16,570
Depreciation			1,696				1,975				7,016				8,983
Amortization			64				139				255				495
(Gain) loss on sale/disposal of assets, net			34				6				90				(24,540	)
Asset impairments			563				116				563				1,709
Total operating costs and expense			44,817				49,216				169,872				174,024
Operating income (loss)			(4,018	)			(2,414	)			(15,573	)			9,539
Other income, net			2,236				1,046				7,014				4,169
Income (Loss) Before Income Taxes			(1,782	)			(1,368	)			(8,559	)			13,708
Income tax provision (benefit)			(43	)			(272	)			(1,687	)			4,416
Net Income (Loss)		$	(1,739	)		$	(1,096	)		$	(6,872	)		$	9,292
Per Share Basis
Net income (loss)
Basic and diluted		$	(0.08	)		$	(0.05	)		$	(0.32	)		$	0.43
Number of common shares used in the per share calculation:
Basic and diluted			21,410,423				21,438,953				21,410,423				21,546,257

A. H. Belo Corporation and Subsidiaries
Consolidated Balance Sheets

		December 31,				December 31,
In thousands (unaudited)		2020				2019
Assets
Current assets:
Cash and cash equivalents		$	42,015			$	48,626
Accounts receivable, net			16,562				18,441
Notes receivable			22,775				—
Other current assets			6,754				7,737
Total current assets			88,106				74,804
Property, plant and equipment, net			11,959				18,453
Operating lease right-of-use assets			20,406				21,371
Intangible assets, net			64				319
Deferred income taxes, net			76				50
Long-term note receivable			—				22,400
Other assets			2,604				3,648
Total assets		$	123,215			$	141,045
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	7,759			$	6,103
Accrued compensation and other current liabilities			10,829				13,337
Contract liabilities			12,896				12,098
Total current liabilities			31,484				31,538
Long-term pension liabilities			18,520				23,039
Long-term operating lease liabilities			21,890				23,120
Other liabilities			4,913				5,611
Total liabilities			76,807				83,308
Total shareholders' equity			46,408				57,737
Total liabilities and shareholders’ equity		$	123,215			$	141,045

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

		Three Months Ended December 31,								Years Ended December 31,
In thousands (unaudited)		2020				2019				2020				2019
Total net operating revenue		$	40,799			$	46,802			$	154,299			$	183,563
Total operating costs and expense			44,817				49,216				169,872				174,024
Operating Income (Loss)		$	(4,018	)		$	(2,414	)		$	(15,573	)		$	9,539
Total net operating revenue		$	40,799			$	46,802			$	154,299			$	183,563
Addback:
Advertising contra revenue			5,643				1,897				11,043				11,013
Circulation contra revenue			110				84				315				452
Adjusted Operating Revenue		$	46,552			$	48,783			$	165,657			$	195,028
Total operating costs and expense		$	44,817			$	49,216			$	169,872			$	174,024
Addback:
Advertising contra expense			5,643				1,897				11,043				11,013
Circulation contra expense			110				84				315				452
Less:
Depreciation			1,696				1,975				7,016				8,983
Amortization			64				139				255				495
Severance expense			2,127				257				2,748				1,678
(Gain) loss on sale/disposal of assets, net			34				6				90				(24,540	)
Asset impairments			563				116				563				1,709
Adjusted Operating Expense		$	46,086			$	48,704			$	170,558			$	197,164
Adjusted operating revenue		$	46,552			$	48,783			$	165,657			$	195,028
Adjusted operating expense			46,086				48,704				170,558				197,164
Adjusted Operating Income (Loss)		$	466			$	79			$	(4,901	)		$	(2,136	)

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.

Contact:
Katy Murray
214-977-8869

FAQ

What were AHC's fourth quarter 2020 earnings results?

A. H. Belo reported a net loss of $1.7 million, or $(0.08) per share, in Q4 2020.

How did AHC perform financially in 2020?

A. H. Belo had a full-year net loss of $6.9 million in 2020, down from a profit of $9.3 million in 2019.

What were the revenue figures for AHC in Q4 2020?

In Q4 2020, A. H. Belo reported total revenue of $40.8 million, a decrease of 12.8% compared to Q4 2019.

What is the outlook for AHC regarding NYSE compliance?

A. H. Belo is in discussions to regain compliance with NYSE listing requirements after becoming non-compliant in Q3 2020.