Newspaper & Mailroom

A. H. Belo Corporation Announces Second Quarter 2013 Net Income

Tuesday 30. July 2013 - A. H. Belo Corporation (NYSE: AHC) today reported net income of $0.05 per share for the second quarter of 2013 compared to net income of $0.01 per share in the second quarter of 2012.

Second quarter 2013 results include a decline in advertising and marketing services revenues of 4 percent, the lowest year-over-year quarterly decline since the Company’s spin-off from Belo Corp. in 2008. This improvement was driven by a 1 percent increase in advertising and marketing services revenue at The Dallas Morning News, which is partly attributable to revenue diversification initiatives.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), was $8.7 million in the second quarter of 2013, compared to $10.5 million in the prior year period. As of June 30, 2013, cash and cash equivalents were $32.9 million, and the Company had no debt.
Robert W. Decherd, chairman, president and Chief Executive Officer, said, “The second quarter total revenue decrease of 4 percent is an improvement of one percentage point in the rate of decline compared to the first quarter. Our revenue diversification initiatives are driving these improvements. We plan to add more such initiatives in the second half of 2013 as well as into 2014.”
On June 19, Decherd announced that he will retire as Chief Executive Officer in September and remain on the Board of Directors. James M. Moroney III will become CEO at that time in addition to his current role as Publisher and CEO of The Dallas Morning News. Moroney will also be elected to the Company’s Board of Directors.
Second Quarter Results
Total revenue was $104.5 million in the second quarter of 2013, a decrease of 4 percent compared to the prior year period. Total revenue at The Dallas Morning News remained flat compared to prior year.
Revenue from advertising and marketing services, including print and digital revenues, decreased because improvements at The Dallas Morning News were more than offset by declines at The Providence Journal and The Press-Enterprise. Digital revenue increased 15 percent over the prior year quarter. When the impact of prior year revenue associated with a discontinued digital advertising platform is excluded, digital revenue increased 17 percent, primarily due to continued growth in automotive digital revenue at The Dallas Morning News and marketing services revenue associated with 508 Digital. Increases in digital revenue were offset by declines in display, preprint and classified advertising revenues which decreased 9 percent, 2 percent and 10 percent, respectively.
Advertising revenue from niche publications, which is a component of the display, preprint, classified and digital revenues reported above, decreased 3 percent compared to the prior year period.
Circulation revenue decreased 2 percent to $33.0 million in the second quarter of 2013 compared to the prior year period, due primarily to continued home delivery and single copy sales declines at The Dallas Morning News. The Company expects this trend to stabilize through the remainder of 2013 as circulation pricing and marketing initiatives are implemented.
Printing and distribution revenue decreased 13 percent to $9.7 million in the second quarter of 2013 primarily due to the cessation of unprofitable commercial printing products at The Press-Enterprise in Riverside, CA.
Total consolidated operating expense in the second quarter was $103.6 million, a 5 percent decrease compared to the prior year period as salaries, wages and benefits, newsprint and depreciation expenses decreased.
The Company’s newsprint expense in the second quarter was $9.0 million, a decrease of 11 percent compared to the prior year period. Newsprint consumption dropped 9 percent to approximately 14,700 metric tons. Compared to the prior year period, newsprint cost per metric ton and the average purchase price per metric ton for newsprint decreased 2 percent and 4 percent, respectively.
Corporate and non-operating unit expenses in the second quarter were $5.3 million, a decrease of 1 percent compared to the prior year period.
Capital expenditures totaled $1.6 million in the second quarter. The Company anticipates full-year 2013 capital expenditures to be approximately $10 million.
As of June 30, 2013, A. H. Belo had approximately 1,900 full-time equivalent employees, a decrease of approximately 6 percent compared to the prior year period.
Real Estate
On July 17, the Company completed the sale of its five-story office building and certain related assets in Riverside, California to the County of Riverside for $30 million. Proceeds to the Company were approximately $28.6 million after selling costs of approximately $1.4 million. In the third quarter of 2013, the Company will record a gain for financial reporting purposes of approximately $4 to $5 million related to this transaction. However, this transaction will not result in a taxable gain to the Company.
The Company is also actively marketing ancillary real estate facilities formerly used by The Press-Enterprise for products and services that have been discontinued. This property is expected to generate proceeds in the $1.4 to $1.6 million range.
In the third quarter of 2013, the Company is expected to close on the sale of a public parking lot in downtown Providence, Rhode Island, generating estimated net proceeds of $0.4 million and a gain of $0.2 million.
Other Dispositions
On July 8, The Press-Enterprise sold certain equipment which was idled in 2012 when the newspaper ceased printing certain unprofitable commercial products. This transaction generated net proceeds of $0.5 million and a gain of $0.3 million.
Non-GAAP Financial Measures
Reconciliations of net income (loss) to EBITDA are included as exhibits to this release.