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

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.

Katy Murray

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
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 
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 
Advertising contra expense  3,012   3,380   5,400   9,116 
Circulation contra expense  104   48   205   368 
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.

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