Tribune Publishing reports lower net income as ad revenue dips 5.7% in Q1 2015 earnings report
Digital revenue rises 6.6 percent, but newly spun-off publishing company is hit with $6 million in interest expense
The recently created Tribune Publishing, the publisher of the Los Angeles Times and Chicago Tribune, today reported its first quarter earnings for 2015.
The publisher reported that ad revenue fell 5.7 percent to $220 million, while circulation revenue rose 1.8 percent to $109 million. Digital revenue grew 6.6 percent to $49 million. But net income from operations fell to $10.89 million, from $20.77 million in the same quarter of the prior year, despite the company taking a one-time $8 million gain from changes in post-retirement benefits.
But the real thing to look for is what I warned about a year or so ago: the debt that was laid on the new publishing company. According to the Tribune Publishing earnings statement, interest expense was $5.867 million in the quarter, which drove down net income to $2.515 million.
Here is the earnings announcement from the company:
CHICAGO, Ill. – May 6, 2015 – Tribune Publishing Company today reported financial results for its first quarter ended March 29, 2015. Management uses non-GAAP measures to improve comparability of operating results.
Tribune Publishing’s Chief Executive Officer Jack Griffin said, “The first quarter of 2015 represents our second full quarter as a publicly traded company. Our results were in line with expectations and reflect the early initiatives of our five-point transformation plan. We also continued to make strides in re-organizing our national advertising sales efforts, integrating once-disparate print and digital teams to offer marketers the full continuum of multiplatform solutions.
“Our Company remains vigilantly focused on controlling costs and this is reflected in the first quarter. We also initiated a comprehensive strategic sourcing program that leverages the collective purchasing power of all of our brands. This initiative complements the extensive zero-based budgeting process that we conducted in late 2014.”
Commitment to Premium Content: Pulitzer Prize Awards and Additional Recognition
In the first several months of 2015, a number of Tribune Publishing’s premier local news and information brands were honored with distinguished industry and peer awards. The Los Angeles Times earned two Pulitzer Prizes — in the category of criticism for insightful coverage of the television industry, and in the category of feature writing for significant coverage of the drought’s impact on communities in the state’s Central Valley. The LA Times, Chicago Tribune and The Baltimore Sun were also named finalists in several other key Pulitzer categories. Additionally, Chicago Tribune earned the prestigious Nieman Fairness Award for two significant investigations; the Daily News in Newport News received the Virginia Press Association’s coveted “First Amendment Award,” and The Baltimore Sun earned two National Headliner awards for investigative reporting, as well as a first-place award from the Education Writers Association. “Premium journalism has always been the cornerstone of Tribune Publishing, and it is gratifying when our peers recognize the superb work of our editorial teams,” Griffin said.
2015 FIRST QUARTER RESULTS
Total Revenues in the first quarter 2015 were $396 million compared to $417 million in the first quarter of 2014, a decline of 4.9%. Advertising revenues were $220 million in the first quarter of 2015 down 5.7% from first quarter of prior year. Circulation revenues of $109 million were up 1.8% in the quarter compared to prior year. First quarter 2015 Commercial Print and Delivery revenues of $33 million were down from $45 million in the prior year quarter due to contractual changes, primarily in Chicago and Los Angeles. All other revenues, including Direct Mail, Digital Marketing Services and Content Syndication, were $34 million, an increase of 9.5%, compared to the first quarter of 2014. Revenues from acquired properties in the first quarter of 2015 totaled $17 million.
Total Operating Expenses, including depreciation and amortization, for first quarter 2015 were $385 million, down $10 million or 2.6% from first quarter of 2014. First quarter acquired property expenses were $14 million in 2015. In the first quarter, circulation distribution expenses were $67 million and newsprint/ink expenses were $31 million, for a combined total decrease of $11 million from the prior year, a portion of which is volume related. Cash operating expenses on a “same-store” basis were reduced by $17 million or 6% versus prior year. The Company defines “same-store” expenses as operating expenses excluding: circulation distribution; newsprint/ink expenses; acquired properties expenses; $8 million gain from changes in post-retirement benefits; and the impact of items listed in the Non-GAAP reconciliations below.
Income from operations for first quarter 2015 was $11 million compared to $21 million in the prior year quarter, primarily due to revenue and expense variances described above, as well as higher depreciation and amortization expenses of $8 million related to the spin-off transaction.
Interest expense, net was $6 million in the first quarter of 2015.
Net income for the first quarter was $3 million compared to $12 million in first quarter of 2014 and
variances are described above.
Net Cash Provided by Operating Activities for first quarter of 2015 was $21 million.
Pro Forma Adjusted EBITDA for the first quarter of 2015 was $30 million, up $2 million from $28 million in the first quarter of 2014. In the first quarter of 2015, Pro Forma Adjusted EBITDA includes the non-cash benefit of $8 million related to certain changes in post-retirement plans.