August 2, 2017 Last Updated 4:49 pm

Tronc Q2 total revenue falls 8.6%, but expenses are cut 10% producing rise in net earnings

Margins remain very tight as print ad revenues continue to fall… but, after six months, the publisher of the LA Times and Chicago Tribune can report still being in the black

CHICAGO, Ill. — August 2, 2017  — tronc, Inc. today announced financial results for the second quarter ended June 25, 2017.

LA TimesSecond Quarter 2017 Financial Summary and Highlights:

  • Digital only subscribers were 220,000 in second quarter 2017, up 89% year-over-year
  • Total revenues of $369.8 million, down 8.6% compared to second quarter 2016
  • Total operating expenses decreased $38.8 million compared to second quarter 2016
  • Net income was $6.8 million, or $0.21 per share, compared to $4.1 million, or $0.12 per share, in second quarter 2016
  • Adjusted EBITDA was $44.0 million, up slightly from prior year quarter
  • Cash on the balance sheet was $174.2 million providing substantial liquidity for the Company to execute its strategy in 2017 and beyond

“Our solid bottom line performance during the quarter reflects our continued efforts to manage the business more efficiently,” said tronc CEO Justin Dearborn.  “While we anticipate ongoing industry-level revenue challenges, we are optimistic about the Company’s future and remain focused on continuing to execute our growth strategy.”

Second Quarter 2017 Results
Total revenues for second quarter 2017 decreased 8.6% to $369.8 million, compared to $404.5 million for second quarter 2016.  Second quarter 2017 advertising revenue was down 15% on a year-over-year basis, however, circulation revenue experienced an increase of 2% compared to same period of the prior year, with the majority of the growth attributed to digital only subscribers and the Los Angeles Times.

Total operating expenses, including depreciation and amortization, for second quarter 2017 were $351.3 million, down 10%, compared to $390.2 million for second quarter of 2016, reflecting continued cost reduction efforts.

Net income for second quarter 2017 was $6.8 million, or $0.21 per share, compared to $4.1 million, or $0.12 per share, for second quarter of 2016.  Adjusted EPS for second quarter 2017 was $0.36, up 3% on a year-over-year basis.

Adjusted EBITDA for second quarter 2017 was $44.0 million, compared to $43.5 million for second quarter 2016.

Net cash provided by operating activities was $24.4 million for second quarter 2017.  Capital expenditures totaled $5.0 million for the quarter.  Debt and pension liabilities were reduced by $7.9 millionduring the quarter, compared to first quarter 2017.  Cash balance grew to $174.2 million.

Segment Results
The Company operates in two segments: troncM, which is comprised of the Company’s media groups excluding their digital revenues and related expenses, except digital subscription revenues when bundled with a print subscription, and troncX, which includes all digital revenues and related expenses of the Company from local tronc websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency, The Daily Meal and forsalebyowner.com.

Included in the tables below is segment reporting for troncM and troncX for the second quarters of 2017 and 2016. Second quarter 2017 troncM total revenues decreased 9% to $312.4 million, compared to second quarter 2016.  Advertising revenue declined by 17%, which was partially offset by a slight increase in circulation revenues.  Operating expenses declined by $25.7 million, or 8%, compared to the prior-year quarter, primarily due to decreases in compensation expense.  Income from operations for troncM was $21.8 million or a 22% decline from the prior-year quarter.  Adjusted EBITDA for troncM for the second quarter 2017 was $34.7 million, down 2% on a year-over-year basis.

Total revenues for troncX for the second quarter of 2017 were $58.2 million, down 5% from prior-year quarter.  Advertising revenues for troncX declined by 9%, while content revenues, which includes digital only subscriptions and content syndication, increased by 14.3%.  Income from operations for troncX was $8.4 million, an increase of 35% from the prior-year period. Adjusted EBITDA for second quarter 2017 was $12.9 million, up 21% compared to second quarter 2016.

Total second quarter 2017 average monthly unique visitors were 55 million, down 9% from the prior-year quarter, while digital only subscribers grew to 220,000, up 89% from the prior year and up 22% sequentially.

Other Activity
Subsequent to the end of the second quarter 2017, the Company sold all of its ownership interest in the CIPS Marketing Group.

2017 Outlook
2017 Full Year Guidance for total revenues has been confirmed as a range of $1.54 to $1.56 billion and adjusted EBITDA has been updated to a range of $189 to $195 million.

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