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

Rhea-AI Summary

A. H. Belo Corporation (NYSE: AHC) reported a net loss of $0.1 million for Q3 2020, improving from a net loss of $4.0 million in Q3 2019. Revenue totaled $37.7 million, down 12.3% from the previous year, with advertising and marketing revenues down 19.2%. Circulation revenue fell 4.2%, though digital-only subscriptions rose 34.5%. Total operating expenses decreased by 19.7% to $40.2 million. The company holds $43.2 million in cash with no debt. CEO Robert W. Decherd highlighted ongoing challenges from the pandemic but noted improvements in operational management.

Positive

• Improved net loss: $0.1 million in Q3 2020 vs $4.0 million in Q3 2019.
• Adjusted operating loss improved by 92.2% year-over-year.
• Digital-only subscription revenue increased by 34.5%.

Negative

• Total revenue decreased by 12.3% year-over-year.
• Advertising and marketing revenue dropped by 19.2%.

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.

FAQ

What were AHC's earnings in Q3 2020?

A. H. Belo reported a net loss of $0.1 million, or $(0.00) per share.

How much did AHC's revenue decline in Q3 2020?

Total revenue for Q3 2020 was $37.7 million, down 12.3% from the prior year.

What is AHC's outlook for the next quarter?

The company expects operating conditions to remain mostly the same in the upcoming months.

When is AHC's financial results conference call?

The conference call is scheduled for October 27, 2020, at 9:00 a.m. CDT.