August 1, 2017
A. H. Belo Corporation Announces Second Quarter 2017 Financial Results
Digital and marketing services revenue grew 14.8 percent in 2017 compared to 2016, primarily from DMV, which grew $1.8 million, or 50.3 percent
- Digital and marketing services revenue represented 38.5 percent of 2017 total advertising and marketing services revenue compared to 31.8 percent in 2016
- Operating expense decreased $0.5 million compared to 2016
DALLAS - A. H. Belo Corporation (NYSE: AHC) today reported second quarter 2017 net loss attributable to A. H. Belo Corporation (the "Company") of $(0.8) million, or $(0.04) per share. In the second quarter of 2016, the Company reported net income attributable to A. H. Belo Corporation of $0.7 million, or $0.03 per fully diluted share.
In the second quarter of 2017, on a non-GAAP basis, the Company reported operating income excluding certain items ("adjusted operating income") of $2.8 million, a decrease of $3.0 million, or 51.6 percent, when compared to adjusted operating income of $5.8 million reported in the second quarter of 2016.
Jim Moroney, chairman, president and Chief Executive Officer, said, "While the second quarter decline in print-related revenues was challenging, we continue to see excellent growth from digital marketing services as revenue improved by 14.8 percent over the prior year, primarily driven by DMV's growth of 50.3 percent compared to the second quarter of 2016. In addition, we are making steady progress in building a base of paid digital subscribers which increased to 20,270 at the end of the second quarter, a gain of 2,101 subscribers, or 11.6 percent, over the total at the end of the first quarter. These two areas of our business have significant upside opportunity and provide the basis for growing our way into a sustainable business model.
"On the news side, we were very pleased to be recognized with numerous awards. Most recently, we received a national Edward R. Morrow Award and were recognized as a finalist for the prestigious Pulitzer Prize for Breaking News reporting for our coverage on last summer's deadly ambush of police in downtown Dallas. In addition, we were also awarded fourteen National Headliner Awards, including four first-place prizes, for our work in 2016.
"I am confident that the work we are focused on now will continue to drive our strategy to diversify our revenue through organic growth and acquisitions that are focused on providing attributable ROI to our business customers and to deliver excellent journalism that gives us the ability to build an important base of paid digital subscribers."
Second Quarter Results from Continuing Operations
Total revenue was $63.1 million in the second quarter of 2017, a decrease of $3.5 million, or 5.3 percent, when compared to the second quarter of 2016.
Revenue from advertising and marketing services, including print and digital revenues, was $36.0 million in the second quarter of 2017, a decrease of $2.0 million, or 5.3 percent, when compared to the second 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 14.8 percent to $13.9 million primarily due to organic growth associated with DMV. DMV revenue increased $1.8 million, or 50.3 percent, compared to the second quarter of 2016. For the second quarter of 2017, total digital and marketing services revenue was 38.5 percent of total advertising and marketing services revenue, reflecting a 670 basis point increase when compared to the 31.8 percent reported in the second quarter of 2016. Total digital and marketing services revenue was 22.0 percent of total revenue, reflecting a 390 basis point increase when compared to the 18.1 percent reported in the second quarter of 2016.
Circulation revenue was $19.1 million, a decrease of $0.7 million, or 3.7 percent. The decline was primarily due to a decrease in home delivery revenue. Single copy revenue increased slightly compared to prior year, driven by an increase in the daily single copy rate, partially offset by a decrease in single copy volume.
Printing, distribution and other revenue decreased $0.8 million, or 9.0 percent, in the second quarter of 2017, primarily due to a decrease of $0.4 million in revenue related to events the Company did not host in the second quarter of 2017, a decrease of $0.1 million related to distribution of outside publications and a $0.1 million decrease in commercial printing revenue.
Total consolidated operating expense in the second quarter was $63.5 million, a decrease of $0.5 million, or 0.7 percent, compared to the second quarter of 2016, primarily due to a decrease of $1.0 million in outside services, $0.6 million in distribution expense and $0.5 million in newsprint expense, partially offset by an increase in DMV's revenue-related expenses. Excluding an increase of $0.5 million related to DMV's headcount additions and an increase of $0.4 million related to the conversion of production personnel from temporary to staff, employee compensation and benefits expense decreased $0.9 million when compared to the second quarter of 2016.
In the second quarter of 2017, on a non-GAAP basis, total consolidated operating expense excluding certain items ("adjusted operating expense") was $60.3 million, a decrease of $0.6 million, or 0.9 percent, compared to $60.9 million of adjusted operating expense reported in the second quarter of 2016. This expense decrease is primarily due to a decline in outside services, distribution and newsprint expense, partially offset by an increase in DMV's revenue-related expenses.
The Company's newsprint expense in the second quarter of 2017 was $3.2 million, a decrease of 4.8 percent, compared to the second quarter of 2016. Newsprint consumption declined 13.0 percent to 5,919 metric tons. Compared to the second quarter of 2016, newsprint cost per metric ton increased 7.1 percent and the average purchase price per metric ton for newsprint increased 5.4 percent.
Non-GAAP Financial Measures
A reconciliation of operating income (loss) to adjusted operating income 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 Tuesday, August 1, 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 1-866-233-3843 (USA) or 651-224-7472 (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 August 1, 2017 until 11:59 p.m. CDT on August 8, 2017. The access code for the replay is 426163.
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 email@example.com.
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.