February 12, 2014 Last Updated 9:03 am

A.H. Belo reports ad revenue down modestly, digital grows 18% for the year

Publisher of The Dallas Morning News reports income from continuing operations after sale of the The Press-Enterprise (Riverside, California)

Press Release:

DALLAS, Texas – February 12, 2014 — A. H. Belo Corporation today reported fourth quarter net income from continuing operations of $0.36 per share, an increase from $0.23 per share in the fourth quarter of 2012, due to strong expense management and continued growth in advertising and marketing services revenue from new business initiatives. For the full-year 2013, the Company’s net income from continuing operations was $0.31 per share, a decrease from $0.37 per share in 2012, due to declines in total revenue, which outpaced declines in expenses. Fourth quarter comparisons benefited from the continued expansion of new product initiatives launched in late 2012.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) from continuing operations was $14.0 million in the fourth quarter of 2013, an increase of 21 percent compared to the prior year period. For the full-year 2013, EBITDA from continuing operations was $31.6 million, a decrease of 14 percent compared to the prior year.

On November 21, 2013, the Company completed the sale of the newspaper operations of The Press-Enterprise (including the production facility and related land) for $27.25 million, plus an estimated working capital adjustment of $0.8 million. The sale of The Press-Enterprise and its results of operations are reported as discontinued operations in the Company’s financial statements.

As of December 31, 2013, cash and cash equivalents were $82.2 million, and the Company had no debt.

Jim Moroney, chairman, president and Chief Executive Officer, said, “Our 2013 operating performance reflects our continued focus on diversifying revenue streams, managing expenses and generating cash. At The Dallas Morning News, growth in revenues from new products and services offset about 60 percent of the core print advertising revenue declines in the fourth quarter and about 70 percent of these declines for the full-year 2013.

“The sale of The Press-Enterprise in the fourth quarter of 2013 further strengthened our balance sheet, as we continue our focus on investing and growing in Dallas. We begin 2014 with a strong balance sheet and the flexibility to deploy cash in the long-term interests of the Company, its shareholders and employees.”

Fourth Quarter Results from Continuing Operations

Total revenue was $98.2 million in the fourth quarter of 2013, a decrease of 1 percent compared to the prior year period. This rate of decline is the lowest year-over-year quarterly decline since our spin-off in 2008.

Revenue from advertising and marketing services, including print and digital revenues, decreased 4 percent as display, preprint and classified advertising revenues decreased 8 percent, 4 percent and 3 percent, respectively.

Digital revenue increased 7 percent over the prior year quarter, as a 9 percent increase at The Dallas Morning News was offset by a decline at The Providence Journal. The increase in digital revenue at The Dallas Morning News was primarily due to the continued growth in marketing services revenue associated with 508 Digital and Speakeasy.

Advertising revenue from niche publications, which is a component of the display, preprint, classified and digital revenues reported above, increased 4 percent compared to the prior year period. This increase primarily resulted from higher advertising revenue at The Dallas Morning News’ free, home-delivered condensed print news product Briefing.

Circulation revenue increased 2 percent to $31.0 million in the fourth quarter of 2013 compared to the prior year period due to increased rates for home delivery at The Providence Journal.

Printing and distribution revenue increased 6 percent to $9.7 million in the fourth quarter of 2013 primarily due to expansion of the distribution of third-party newspapers at The Providence Journal.

Total consolidated operating expense in the fourth quarter was $89.9 million, a 5 percent decrease compared to the prior year period as employee compensation and benefits, outside services and depreciation expenses all decreased.

The Company’s newsprint expense in the fourth quarter was $7.6 million, a decrease of 5 percent compared to the prior year period. Newsprint consumption dropped 4 percent to approximately 12,000 metric tons. Compared to the prior year period, newsprint cost per metric ton remained flat and the average purchase price per metric ton for newsprint decreased 5 percent.

Corporate and non-operating unit expenses in the fourth quarter were $2.1 million, a decrease of 58 percent compared to the prior year period as employee related expenses, legal and technology expenses all decreased.

Full-Year Results from Continuing Operations

Total revenue was $366.3 million in 2013, a decrease of 2 percent compared to the prior year. This rate of decline is the lowest year-over-year decline since our spin-off in 2008 and was driven by growth in digital revenue at The Dallas Morning News and increased printing and distribution revenues at The Providence Journal.

Advertising and marketing services revenue, including print and digital revenues, decreased 3 percent compared to the prior year, the lowest year-over-year decline since our spin-off in 2008. Increases in digital revenue were offset by declines in display, preprint and classified advertising revenues which decreased 8 percent, 3 percent and 10 percent, respectively.

Digital revenue increased 18 percent over the prior year, as a 24 percent increase at The Dallas Morning News was offset by a decline at The Providence Journal. Increases in digital revenue at The Dallas Morning News were primarily due to the continued growth in marketing services revenue associated with 508 Digital and Speakeasy. In 2013, 508 Digital and Speakeasy generated $5.8 million in revenue. Almost 600 local advertisers signed on with 508 Digital in 2013, an increase of 33 percent compared to the prior year, in which 508 Digital commenced operations in the second quarter of 2012. Speakeasy signed on almost 60 new clients in 2013, its first full year of business as it began selling services late in the third quarter of 2012.

Advertising revenue from niche publications, which is a component of the display, preprint, classified and digital revenues reported above, increased 3 percent to $24.6 million.

Circulation revenue was $120.3 million in 2013, a decrease of 2 percent compared to 2012 due to lower subscriber counts partially offset by higher subscription rates.

Printing and distribution revenue was $37.0 million in 2013, an increase of 5 percent compared to the prior year due primarily to expanded distribution of new and existing third-party newspapers in Providence.

Total consolidated operating expense was $359.9 million in 2013, a 2 percent decrease compared to the prior year. This decrease was primarily driven by lower pension costs, due to the cessation of the Pension Transition Supplement Plan in the first quarter of 2013, medical benefits, newsprint, and depreciation expenses.

In 2013, the Company’s newsprint expense was $29.2 million, a decrease of 5 percent compared to the prior year. Newsprint consumption decreased 3 percent to approximately 48,000 metric tons. Compared to the prior year, 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 were $19.0 million, a 19 percent decrease, as legal, technology, communication and depreciation expenses all decreased.

As of December 31, 2013, A. H. Belo had approximately 1,550 full-time equivalent employees, a decrease of approximately 4 percent compared to the prior year.

Discontinued Operations

In 2013, income from discontinued operations was $8.8 million, which included a pretax gain of $13.4 million from the disposition of The Press-Enterprise and a pretax loss of $4.7 million from its operations.

Pension Plans

In 2013, the Company made required contributions to its pension plans of $7.4 million and voluntary contributions of $4.6 million.

On December 31, 2013, the composite discount rate for the plans’ liability was 4.6 percent, compared to 3.7 percent on December 31, 2012. As a result of an increase in the discount rate and favorable investment performance, the net unfunded position of the pension plans was $50.1 million as of December 31, 2013, an improvement of $72.7 million from the prior year.

At the end of 2013, A. H. Belo recorded a $57.2 million benefit to accumulated other comprehensive loss due to a decrease in the net unfunded position of the pension plans.

The Company anticipates that required cash contributions to its pension plans will total approximately $10.0 million in 2014. The Company made a $1.9 million required contribution in January, expects to make a required contribution of $2.2 million in the second quarter and the remaining required contributions in the second half of 2014.

Belo-earnings-2013

Comments are closed.