May 3, 2017
A. H. Belo Corporation Announces First Quarter 2017 Financial Results
Digital and marketing services revenue grew 12.4 percent in 2017 compared to 2016, primarily from DMV, which grew $2.1 million, or 66.8 percent
- Digital and marketing services revenue represented 36.8 percent of 2017 total advertising and marketing services revenue compared to 32.7 percent in 2016
- Total advertising and marketing services revenue of $35.2 million in 2017 was flat compared to 2016
- Acquired the remaining interests in DMV Digital Holdings Company and Your Speakeasy, LLC
DALLAS - A. H. Belo Corporation (NYSE: AHC) today reported first quarter 2017 net loss attributable to A. H. Belo Corporation (the "Company") of $(4.4) million, or $(0.21) per share. In the first quarter of 2016, the Company reported net loss attributable to A. H. Belo Corporation of $(0.6) million, or $(0.03) per share.
In the first quarter of 2017, on a non-GAAP basis, the Company reported operating loss excluding certain items ("adjusted operating income (loss)") of $(0.8) million, a decrease of $2.7 million, or 145.8 percent, when compared to adjusted operating income of $1.8 million reported in the first quarter of 2016.
Jim Moroney, chairman, president and Chief Executive Officer, said, "As I mentioned during the 2016 earnings calls, we continue to work to decrease our dependency on print related revenues. To that end, in the first quarter of 2017 we purchased the remaining interests in both DMV and Speakeasy. As you heard me say repeatedly last year, the growth in these companies, and their ability to provide ROI-based marketing solutions to our customers, has been exceptional. With the remaining acquisition of these companies now complete, we can resume looking for investments which complement our current suite of marketing services and improve our ability to earn our customers a return on their marketing investment with our company.
"Digital and marketing services grew 12.4 percent in 2017 compared to 2016, driven primarily by revenue growth from DMV, which grew $2.1 million, or 66.8 percent, on top of revenue growth of 65.6 percent in the first quarter of 2016. Our digital and marketing services revenue now represents 36.8 percent of our total advertising and marketing services revenue, compared to 32.7 percent in 2016 and 26.8 percent in the fourth quarter of 2015, which was the first time we reported this metric.
"We are making the steady progress that we expect from the consistent execution of our revenue diversification strategy."
First Quarter Results from Continuing Operations
Total revenue was $60.9 million in the first quarter of 2017, a decrease of $1.6 million, or 2.5 percent, when compared to the first quarter of 2016.
Revenue from advertising and marketing services, including print and digital revenues, was $35.2 million in the first quarter of 2017, flat when compared to the first quarter of 2016. Within advertising and marketing services, total digital and marketing services revenue, which includes digital advertising revenue in the Company's publishing segment, increased 12.4 percent to $13.0 million primarily due to organic growth associated with DMV. DMV revenue increased $2.1 million, or 66.8 percent, compared to the first quarter of 2016, which was 65.6 percent over the first quarter of 2015. For the first quarter of 2017, total digital and marketing services revenue was 36.8 percent of total advertising and marketing services revenue, reflecting a 410 basis point increase when compared to the 32.7 percent reported in the first quarter of 2016. Total digital advertising and marketing services revenue was approximately 21.3 percent of total revenue, reflecting a 280 basis point increase when compared to the 18.5 percent reported in the first quarter of 2016.
Circulation revenue was $19.2 million, a decrease of $1.2 million, or 5.8 percent. The decline was primarily due to a decrease in home delivery volume. Single copy revenue remained relatively flat to prior year, driven by a decrease in single copy volume that was offset by an increase in the daily single copy rate.
Printing, distribution and other revenue decreased $0.4 million, or 5.3 percent, in the first quarter of 2017, primarily due to a decrease of $0.2 million related to distribution of outside publications and a $0.1 million decrease in commercial printing revenue.
Total consolidated operating expense in the first quarter was $65.0 million, an increase of $0.8 million, or 1.2 percent, compared to the first quarter of 2016, primarily due to an increase of $0.9 million in employee compensation and benefits expense driven by DMV headcount growth.
In the first quarter of 2017, on a non-GAAP basis, total consolidated operating expense excluding certain items ("adjusted operating expense") was $61.7 million, an increase of $1.1 million, or 1.8 percent, compared to $60.7 million of adjusted operating expense reported in the first quarter of 2016, primarily due to an increase in DMV's revenue related expenses.
The Company's newsprint expense in the first quarter of 2017 was $3.1 million, a decrease of 4.4 percent, compared to the first quarter of 2016.
Newsprint consumption declined 11.4 percent to 5,835 metric tons. Compared to the first quarter of 2016, newsprint cost per metric ton increased 11.9 percent and the average purchase price per metric ton for newsprint increased 10.5 percent.
Non-GAAP Financial Measures
A reconciliation of operating loss to adjusted operating income (loss) and of total operating costs and expense to adjusted operating expense is included in the exhibits to this release.
Financial Results Conference Call
A. H. Belo Corporation will conduct a conference call on Wednesday, May 3, 2017, 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 1-877-209-9920 (USA) or 612-332-0802 (International). A replay line will be available at 1-800-475-6701 (USA) or 320-365-3844 (International) from 11:00 a.m. CDT on May 3, 2017 until 11:59 p.m. CDT on May 10, 2017. The access code for the replay is 421913.
About A. H. Belo Corporation
A. H. Belo Corporation is a leading local news and information publishing company with commercial printing, distribution and direct mail capabilities, as well as expertise in emerging media and digital marketing. With a continued focus on extending the Company's media platform, A. H. Belo Corporation delivers news and information in innovative ways to a broad spectrum of audiences with diverse interests and lifestyles. For additional information, visit www.ahbelo.com or email firstname.lastname@example.org.
Statements in this communication concerning A. H. Belo Corporation's business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, capital expenditures, investments, dispositions, impairments, business initiatives, acquisitions, pension plan contributions and obligations, real estate sales, working capital, future financings 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; technology obsolescence; 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.