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A. H. Belo Corporation Announces First Quarter 2014 Financial Results from Continuing Operations

Monday 05. May 2014 - A. H. Belo Corporation (NYSE: AHC) today reported a first quarter net loss from continuing operations of $0.18 per share, an improvement of $0.09 per share compared to the first quarter of 2013, due to strong expense management and growth in circulation, printing and distribution, and marketing services revenue. The first quarter 2014 net loss includes a $0.9 million net investment-related loss for the partial impairment of the Company's investment in Wanderful Media.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization (“EBITDA”) from continuing operations with net investment-related losses added back, was $3.2 million in the first quarter of 2014, an increase of $2.3 million or 256 percent compared to the prior year period due primarily to continued expense containment.
As of March 31, 2014, cash and cash equivalents were $82.5 million, and the Company had no debt.
Jim Moroney, chairman, president and Chief Executive Officer, said, “First quarter total revenue decreased 1 percent compared to prior year, the lowest year-over-year first quarter decline since our spin-off in 2008. This improved rate of decline reflects our continued focus on diversifying revenue streams, and was driven by continued growth in marketing services revenue and increased printing and distribution revenues in Dallas and Providence, respectively.”
First Quarter Results from Continuing Operations
Total revenue was $85.6 million in the first quarter of 2014, a decrease of 1 percent compared to the prior year period.
Revenue from advertising and marketing services, including print and digital revenues, decreased 5 percent. Digital revenue increased 18 percent over the prior year quarter, primarily due to continued growth in automotive digital revenue at The Dallas Morning News and marketing services revenue associated with 508 Digital and Speakeasy. Increases in digital revenue were offset by declines in display, preprint and classified advertising revenues which decreased 16 percent, 5 percent and 2 percent, respectively.
Advertising revenue from niche publications, which is a component of the display, preprint, classified and digital revenues reported above, decreased 5 percent compared to the prior year period due primarily to lower advertising revenue at The Morning News’ Spanish-language publication Al Día.
Circulation revenue increased 1 percent to $29.3 million in the first quarter of 2014 compared to the prior year period due to increased rates for home delivery at The Providence Journal.
Printing and distribution revenue increased 9 percent to $9.4 million in the first quarter of 2014 due primarily to the impact of the previously announced contract to print the Fort Worth Star-Telegram, additional printing of local community newspapers in Dallas and the expansion of the distribution of third-party newspapers at The Providence Journal. These increases were partially offset by lower printing revenue from national publications due to declines in volumes.
Total consolidated operating expense in the first quarter was $88.3 million, a 4 percent decrease compared to the prior year period as employee compensation and benefits, newsprint, distribution and depreciation expenses all decreased.
The Company’s newsprint expense in the first quarter was $6.4 million, a decrease of 13 percent compared to the prior year period. Newsprint consumption dropped 10 percent to approximately 11,000 metric tons. Compared to the prior year period, newsprint cost per metric ton and the average purchase price per metric ton for newsprint decreased 3 percent and 2 percent, respectively.
Corporate and non-operating unit expenses in the first quarter were $5.2 million, a decrease of 26 percent compared to the prior year period as employee related expenses, legal, technology and depreciation expenses all decreased.
As of March 31, 2014, A. H. Belo had approximately 1,500 full-time equivalent employees, a decrease of approximately 5 percent compared to the prior year period.
Investments
In April 2014, the Company received distribution proceeds of approximately $18.9 million following the sale of Apartments.com by Classified Ventures and recorded a gain of approximately $18.5 million. The Company expects related federal income taxes on such gain to be minimal as a result of previously incurred net operating losses and is finalizing its estimate of state taxes.
The Company continues to explore a potential sale of The Providence Journal with the assistance of its investment bank, Stephens Inc.
2014 Guidance
A. H. Belo anticipates full-year 2014 EBITDA from continuing operations in the range of $28.0 million to $32.0 million, exclusive of gains or losses from asset dispositions.
For the full-year 2014, total capital expenditures are expected to be in the range of $8.0 million to $10.0 million.
Non-GAAP Financial Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA from continuing operations are included as exhibits to this release.