AHC - Earnings call transcript Q3 2017

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Q3 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, your conference is being recorded. to President, conference Katy like and to now Vice Senior Murray. would turn over the CFO I Please go ahead.

Katy Murray

am Moroney, Thank you, will Moise, quarter I Executive third Welcome assist to by Louis, and today’s good XXXX morning, me in conference call. Officer, Chief Executive our everyone. leading our joined who release Jim Grant Vice Dallas the also press is Q&A. After our Morning market issued A. last announcing available Belo we and Corporation XXXX H. of quarter News President General of night, closed results. Manager third for a call.

posted operations. We operations third continuing the comparisons quarter Unless release used have Relations specified, continuing from performance against this under third on our otherwise measure XXXX Investor quarter website on XXXX call today’s from section. performance

statements. today include discussion will forward-looking Our

uncertainties this factors Company to communication, in could from Forward-looking that actual differ update subject The except those otherwise results by statements. statements to information are and obligation other law. to materially required this as no risks, assumes cause

these publicly available Additional information the and press with factors Company’s the about SEC. filings releases in detailed is

increase of the reported is Belo of severance million management. non-GAAP which provided of in the most On our year-over-year accordance increase $X.X fully afternoon, was operating H. plan The We with attributable $X.X share to our measures primarily quarter Reconciliations will assist in per measures. Yesterday quarter useful third of to excludes third non-GAAP expense, basis, $X.XX $X.X million, income million performance presented the of financial result settlement the supplemental pension non-GAAP comparable operating expense a million, directly $X.XX to XXXX. investors increase that per Finally, of today’s comparisons loss GAAP adjusted on Corporation an Relations measures share, and an in $X.X income income of discussion depreciation, under A. to information section. financial the are include to amortization, the to or financial Investor believe diluted adjusted compared website determining XXXX. we compared net reported provide peers.

or X.X% place third copy compared to decreased also primarily of the highlights the delivery year. put in expense or partially total reported million, the single million last compared a the was to increase decline million million an The revenue by when marketing $XX.X the to $XX.X an X% quarter, compared represents revenue. year. X.X% increase third services million of a a compared was of and and in compared of XXXX. volume, decrease of third of in to was or driven quarter other decline decline last flat reported for year. last Single in operating net in representing quarter Turning to million to or of $XX.X revenue which $X.X revenue was of in $X.X a million, to X% to $XX.X XXX,XXX, million, revenue quarter quarter quarter copy the by year. third due offset in consolidated reflects decrease November XXXX. $X.X distribution, home Total daily Advertising quarter net revenue for the of the copy we single XXX,XXX this third the year, a Circulation remains an third Printing, of $XX.X compared which prior decrease revenue when when XXXX, prior rate, reported

expense XXXX. and is decline $X.X plan was million, depreciation employee of of operating Excluding compared to and benefits, services, a loss expense. decrease and in reported in third to The of the compensation distribution, $XX.X temporary and decreases million, $XX.X newsprint expense or million of adjusted of due adjusted operating severance primarily million, X.X% of expense $X.X settlement quarter in expense $X.X amortization expense XXX,XXX, million pension

Turning September planned cash Through capital spent of the our no later we and to as year. capital This equivalents $X.X debt. have cash the for XX, sheet, to this the and million of $XX September XX, expenditures million $XX for includes this of had new million move we balance headquarters of the quarter.

as is Our approximately $XX cash million. balance of today

at XX, X,XXX year. of had of from September As X,XXX we reflects the of we last X.X% of the XX headcount decrease which or XX had September

headcount Excluding decreased and when to year temporary the period. or conversion production XX.X% the XX, the of at of DMV FTEs compared the by of five prior hiring the XXX Company’s

labor reminder, our In strategy our pension a our to facility. costs continue temporary execute we As of production conversion on employees plans. our QX, in lowered our de-risk made contribution has full-time to of insurance those $XX.X voluntary we million pension approximately additional funds company. $XX liabilities a an assets and $XX.X plan, the using million and of to from of We to transferred million

proceeds taxes lots quarter, to tax on In impact we in As the closed participants pension on XX%. two do expect approximately million no the and other for a of result, a lots. reduced number we the this Company assuming seeing second announce rate lots have return we will our replaced and the At and total, $X that XXXX contribution our mandatory are XXX net million. changes in rate sales. contribution September, cover plan asset we that approximately a we minute. our received $XX.X the be until not we In discuss one of of the and plan this time, I in month has when I sold downtown three currently interest In by or those of we the would

quickly we we we that excited and very the all diligence on the of weeks attention move decision in we that also step been can once so not our employees moved by a new next headquarters, property, this that our we of turn decision. on have Once engaged made various will yet is are to end while expect our existing couple have make our move a due the a will we headquarters to in have relocation year. completely our will start We

This sale of the of pension quarter those of capital approach, using deductible we this properties. tax calculate three The income our while of tax will gains. taxable XXX% we gains contribution and rate offset all continue on to provision had is method our

addition cash the at In tax we losses continue and margin operating million. to only annual had at we $X.X generate taxes the net tax approximately

Jim pleased now very made are this would liabilities. with accomplishments the estate and Moroney. pension real we call our We the assets reducing I monetizing our and turn over quarter

James Moroney

digital In and we services marketing to Thank good you, digital around morning, in which built and positive Katy, and are momentum third continue the strategies, see our advertising growth quarter, everyone. subscriptions. revenue

results grew over growth of to reflect in of QX continue up services revenue, XXXX. is DMV, strong million marketing of XX.X%, which especially of QX services XXX% third experienced that and from the advertising marketing the this XXXX digital against revenue one or revenue $X against quarter DMV XXXX DMV quarter our Our coming growth

the Additionally, sales Morning News like third sales in of X.X%. contribution important quarter continues sales. emphasize growth here though generated that quarter. of to services digital what XXXX, to to will The marketing our the to is more in make of in Dallas compares also is XXX meaningful increase Speakeasy XXX the to an absolute sales a DMV revenue. revenue XXX and third advertising generated team This the our most number I'd

represents marketing quarter digital XXX $XX.X period million, revenue and For marketing services from a XX.X% of advertising the revenue year, same compared in of advertising XX.X% was total last point the improvement. which total third quarter our third to services basis XXXX

and total the in for revenue same period the third of that XXX revenue. our compared reported advertising the total of to digital year, million revenue for which $XX.X revenue $XX.X million XX.X% period. year-to-date This marketing comparable improvement. or XX.X% quarter XX% addition, basis, of in for In total was represents basis point period XX.X% a XXXX, represented services $XX.X total of compares last million On

front the are financial we opportunity grow us to segment pleased We it Company's meaningful and to our more business continue in part our make with of new very performance. of due of that market a see

subscribers, the also at growth encouraged X% which digital a a a are in quarter end base steady made a X,XXX, third XX,XXX gain digital to the or of year-over-year subscribers quarter increased progress when digital the grew compared third digital subscribers the year. of end and at On the the quarter quarter, the X,XXX or the subscriptions, with of subscribers the of building XX.X%, of second sequential basis, this this of total to of end of at of We year. total pay on we last basis XX,XXX

games for Football XX pass of coverage each access which paid School the subscription site we including access capitalized we to separate be to September, narrow we've XXX this a first School local on which bundle. up offer niche we we available, from Football a all This that paid there more is from High all verticals a Digital that digital suggest offered signed can gives separate season to all School season of followings the access by early High High of provide popularity subscribers results quarter, our have making Football our play-by-play, can that the service. the new for other than a This passionate week. access bundle. subscribers In Texas live also These month paid to time our special pass digital

opens sold access, allow our for up future. passes. our look season of in XX avenue time-based access access and kind will to paid access. the ways addition which paid we XX-hour digital game passes, month, we game for with this experimented In In with This experiment for pass, another first more single offer to we

growth and look to give continue are ways are will of priority As we our to we we consumers digital practices to the have for. discussed they willing pay adopt subscriptions making for highest innovative best previously, paid content and

have we and digital By that we share previously. am growth with a digital also accomplishments Katy sheet $X.XX then the will services pleased balance of both described of and seen will our in the the in special quarter, marketing paying restarting that our being the be with very buyback growth dividend that fourth to addition advertising program. be announcing In we in subscriptions revenue, and pleased I

them We Louis, we are we are continue and now have letting support confidence. appreciate listened our questions. to we shareholders know to ready that that their for and

Operator

Thank Securities. First is Chris question Wedbush from you. Instructions] [Operator Mooney go Please from ahead.

Christopher Mooney

all. morning, Good

James Moroney

Chris. morning, Good

Katy Murray

Good morning, Chris.

Christopher Mooney

you or or $X.XX can or $X.XX, whatever? why Just instead us, of for enlighten $X.XX fun $X.XX

James Moroney

we of dividend and a our cap it kind of that point about been of Chris, to special market as we median of in the and decided peg that of number doing public research that X% terms would pick companies little most was going and cap, for did I'm then but what X% to $X.XX, late distributions go a to have market median we asked we and that’s $X.XX. we're kept stay median, comes how to going so that the we so at I no, so should there $X got said to glad because that's are do the there. right we you stat thinking translated about million with about and we at

Christopher Mooney

bit. repurchase or see imagine returning can shares Okay. talked Glad a that to reinstated? you that about thoughts beyond share Any the you proposed X the million as being

Katy Murray

now. for right I have Yes. X Chris we prior shares the mean, million authorization

number and right the as this bought I kind trend go start back, of that additional immediately. of and to the rules but to shares you’ve flowed we we back differ, we enough for think authorization, if us that to where for feel just can allows Board seen are the now. trade process Obviously, around see shares the that's like

Christopher Mooney

or kind is spending on headquarters new that you're Okay. it Series random questions. expensed capital? what of is The the being of being CapEx

Katy Murray

expense this service in into you'll and go statements. December see a cash now, that's of flow there go portion January. why in all you And service the will so right probably it seeing all cash will start in is quarter paid, but depreciation start It early or the then

Christopher Mooney

– And on me be CapEx spend the plan that could the guys Okay. this much CapEx you again number give year? you’ve would how

Katy Murray

plan was entire the So $XX million…

Christopher Mooney

$X.X Is million? that

Katy Murray

plan entire $XX million. was $X.X the we’ve million, spent so Right,

Christopher Mooney

Okay.

James Moroney

Why that the between don’t the you building operation? break up and

Katy Murray

the in will $X.X Yes. through the $X.X is approximately quarter. and the be that million The fourth of the new now to Stettler, million, coming rest headquarters right

Christopher Mooney

because write-down Okay. balance, said And didn't which you cash it. I think wasn’t that expecting I the currently I

Katy Murray

million. $XX

Christopher Mooney

Okay.

So the means you've lots. that closed two on

Katy Murray

Pension one fully was also we funded. it well. two two closed September, has the on as weeks contribution over in and on fully through closed ago other a gone We little Yes. funded and

We the paid voluntary $XX contribution. for the have million

a that So million number. is net $XX

Christopher Mooney

back old get the it? to question, are going with do we If you what Okay. to

James Moroney

this So question. on the that won't less sheet, address have so balance Chris, have we to should we

offering services that close but anything, companies some on are it them December kind a range. and in Just having about our are right And banking we're Storer, for customers. have has fill you DMV the he's paid the of Chris, focused of at that we best about will as to we it. led what And for fun, talked from by we space gaps I’m with before this – at make head that We're identified the we talk in our it We're marketing was having similar we have us have who attractive he when we some bought little some more trying we've to of some think firm been to out of been investment DMV. whole portfolio the to the very very on we Tim still and now. in year help acquisitions the as fun. have an to we're spoken supplement not looking, about in and that probably of that out we'll and board we looking know, acquisition, And meeting. been for

Christopher Mooney

Okay.

before nothing year? the of the So end

James Moroney

it. highly that happen. doubt think will I don't I

I in have cash that some our think we happens for but If the we on more need dialogue at that today and the don't quickly, December, anything that to remains will sheet. I balance priority it the think with all have board happen.

Christopher Mooney

I several have when lots, million $XX that range? to would million of the think, $XX.X I given noted so calls you to headquarters – at you is to feel with see. comfortable more, $XX or that had still million, Katy, Jim, a million the you’ve at you to – nice conference value $XX you million $XX ago, addressed talk you a Okay. believe

James Moroney

I comfortable that feel Yes. range. with

be this yet, to move where we been we As said, us others decision we we up Katy have put and make and of but quickly Chris a in haven’t lot can the to sale we’ve real due for a would and after year. to get property be and tells a hope doing the place be get diligence out moved of in least going fully me are by end I this we week by the of Katy out and of every which end actually the at that all employees the we’ll welcome. started to think year building,

we opportunity to think and forward about I looking that everybody us this gives how proceed really a decision then to make that is with the building.

Christopher Mooney

Okay.

James Moroney

due diligence number anything our done to that at us Nothing has out. you discourage that threw from

Christopher Mooney

there Certainly lot a Yes. Dallas. entire… is of Downtown, activity The

James Moroney

marvelous building, these them lots. Dallas foot job you think three square Katy has fortunate tell in we she that the as I we here will done I Yes. have will a prices see. of that highest sold some to and be parking wait seen with with for but Honestly, has this Downtown, maybe we’ll and

Christopher Mooney

Can are to not what necessarily glue, a those but give any going us indication become? lots you

Katy Murray

with in are One them of haven’t already. now do parking them of right two What lots two as now, lots going to is right parking open are discussions, in today. The but no, lots the buyers are that? active plaza. involved I been those

Christopher Mooney

Okay.

correctly, the if the was number? XX% side recall I a the year-over-year the growth, second quarter On number of XX% digital business, from

James Moroney

think even have higher in But than a think it XX% I to that. the XX% range. is little may I been

Katy Murray

talking a you're first DMV So specifically?

Christopher Mooney

Yes.

Katy Murray

out I and number the about you're would the of was third see I other a quarter, in we're third here's people vacations the about. the mean That say think I industry to and not when of and especially that what the unlike seasonality some the starting quarter lot that,

quarter, to So not third trend concern. on quarter well the or less seeing I a that number perspective than think the present from second anything anything

Christopher Mooney

you able of up fourth or amongst those guess, just been new subscribers you election. the perhaps Okay. to, had on any this recover the after that? right due a random Presidential quarter the anything a all of quarter to number you Have question, base unhappiness picking And from my lost fourth and in

James Moroney

of for we specifically We that back. as identified have subscribers say, coming canceled but of followed our them, identified XX% And those they I some recommendation specifically of those at that Clinton told because than and us less Hillary that we would been as gotten of it's have back President.

Christopher Mooney

and look next to Okay. or the meeting few [indiscernible]? month some you at forward weeks in When with I point

James Moroney

look getting to We Chris. thanks Great, together. forward

Operator

Instructions] go & [Operator you. from Lucas ahead. from Gabelli is next Thank Please Our Company. question Barry

Barry Lucas

good you morning. Thank and

James Moroney

Good morning, Barry.

Katy Murray

Barry. Hi,

Barry Lucas

or in Katy the left there building? Is you anything headquarters portfolio maybe the Jim memory. other real our than just estate refresh

Katy Murray

our that we own well. On I about some the our commercial at number there out printing have of Dallas, of facility. acres land, facility as we the North other we own a not own but the print mean we we that do is building printing printing again But XX arrangement that print that only is paper, and

Barry Lucas

back and purchase a return provide there DMV for investment? the of look you price you way on a what done at to Is if go and it's

Katy Murray

to I we with think have every do two things that Barry.

bought But one, if kind you, we definitely that when the the a cross-sell I be put to has own of I accelerate it it's on for on real what be peg investment knew opportunity we think, basis. was in double-digits the to of I continue to continues on its kind see think would the accretive I going and in force I increasing growth to say DMV but had that leverage as the an return would has we the going into TDMN But an sales been had accretive. don't DMV have but it the sales don't the been in revenue say topline analysis – to I been we've DMV. me, exact to from from the of in have percentage increase for able and space. would I What if I opportunity expense without front

Barry Lucas

of capital? of cost And your significantly ahead

Katy Murray

Absolutely.

Barry Lucas

Okay.

trends, the you little slowdown reach of being to base current mean I when trend else, a way [indiscernible]. anything points gains seasonal digital at more look they the the as election maybe point, assuming sequential bit talked on out so you had you think and sustainable, You business but about print the might do any we those without additional? an When then are

James Moroney

some as out that two described revenue that year. things receive quarter, print long-term aggressive kind which maybe what just Yes, different I'll an unexpectedly we along run call quarter of had same during Barry, We're on and from we it causes projected we talk last guidance acquisitions it. to the offset. with have around that had, and where which future were do. it to was that. therefore amount to print, year newspapers. what we to It's and might We've you companies have the we it thinking tricky Katy to One, the that because quarters, or haven't other like in one goes doing don't seen makes experience fourth the up during little try newspaper buying of tell makes DMV a out the But actually we you we'll we the easier the decline line if way at more the that rate happen. bit I'll decline that difficult depletes more in couple of might give a doing been a time

and with we up some if So look around. that something can confident and give you feel enough information come go it that let see to a us take at isn't we –

Barry Lucas

forward at is have That's business, but job me you would one very the much you’ve done look think fair. be left run? for going on you expense the Last to reductions do how as room you incredible,

James Moroney

and all time time. ourselves question we all get the it perennial a ask asked the is this Barry we

to we the that of I with be think franchise. in able our declines take strength and to revenue down I say continued our aligned the maintain have expenses best can still thing the that is

great getting particularly product, putting that we digital We're for that we I seeing very digital providers is our other strong subscriptions. and I a what they're pay think people to things that we're published aren't both growth in there necessary news think from because now therefore out it. paid willing a and say can digitally

in that We and inches that also large still a XX most and We of pages and still number have published print we're of news metro proud subscribers, three four paper very the I very XX terms day at a out. us at or in helped franchise. and of we both strong I we're width quality maintain columns. We're by standards retain among what not a it's the of number metros of think the it of probably a and franchise And because priced put highest because country. good think

profitable to publishing the going we're So of that demonstrate that overall along kind our keeps the is publishing And expense business that the with business. print particularly align profitable. today an a to continue contributor to to need in revenues it management expense we still

publishing now we falls still the you and will real is profitability before to well that a one subscribers, I Someday publishing It's expense expense little last also going that's revenue, than under before was digital closer are that of noted. business because and taken trying adding grow by the we don't involved both segment that only year margin it. to expense have the when digital our year contributor, because be and certainly out has which business we we but of both very in as management the with to it that not that know as doing think subscriber wall. of that high associated – we more a and But year hit is. as we've can a lot confident profitable to

our subscriber of hoping as the base. sort So in of we see continue to I'm publishing some business improvement build profile of to the profitability digital

Barry Lucas

misspoke. I Great.

Let me more throw one out.

of think the for you demand, Again, price in you bit quarter. cover lap room I about think maybe the circulation fourth elasticity run increase the plans little talk to when or about a you pricing?

James Moroney

the of as home to you company, the know helps services which we delivery side, continue those segment. the on employ Well Yes.

to that. continue Our levels to them and around do into home elasticity subscribers different the opportunity surprise of we

single that long we a if copy Sunday as time, probably headroom none anything delivery we of take on last you at increased to single along sequential made will all, copy you side so product, some before. as had the time, know – maybe side, at consistent others, that and do than up price that higher daily Sunday basis, a up single year in have pick some every may that but yet. we that that time a course, On look mentioned see we increase a year this of copy mentioned with headroom used more at still So we for subscribers as some we we on a single but copy we a haven't the final a price probably year decision little

Barry Lucas

Great. that Thanks for Jim.

James Moroney

You bet.

Katy Murray

Thanks Barry.

Operator

you. Thank

Our from from next is question ahead. Cohen Please David go Advisors. Minerva

David Cohen

morning, Good guys.

James Moroney

morning, Good David.

Katy Murray

David. Good morning,

David Cohen

than touched one pension thing number and decision to talk related us level then hear thoughts can see to anything of it haven't and that and sort do sales So the vision sort to your wait you on I really about? that be of all, thought at I'm through process the decision that the the underlies if to you do one did that? to So interest just of you would it at higher rather like wondering

Katy Murray

of over continue the by with retirees Sure, every transferring opportunity many company, risk out, a to program pension consistently the started my something de-risk to year. try David. entity pension add. an portion actually only We cash over we’ve successful this could give ways people several years we and last thoughts of look our liability been the but to year, to at with not the and discussing segment this I you that we year Jim then to the identify insurance will rolling and

at our segment the third retirees country a looking transaction only great the out it in took again of financial them, ability that on to is not sense which this. top a And had provider the to any the push able to on allowed we but actually the of high. all-time with right return like out a and plan earnings utilize of it we for now us with sheet, for insurance balance look to continue – quarter asset assets in made it know retirees, we utilize XX% an the the some pension you the were the in and contributions. actual those mandatory to we portion move some market cash When on there As

reduced that other quarter, down with the that through fees have we actually by would in $X.X under $X.X that save million. $XXX,XXX. we would taking benefits of third the have year on advantage and thing been We it million this think is I pension this our took pay it

So I able an maximize value of from were mean save and know not I it look perspective it debt, at I and do. to a how return pension well I that the think take that the liability is may while many at obligation, really when do of and and we you and really look look cash care others people at to I way it’s

ongoing cash So an to PBGC we it’s that fees, asset. from are the that this I really would balance successful and have. continue will making added will the of returns which were we on of an which the advantage quarter down be obligation the that great year took savings, We that transfer and through we sheet think earned third again, took overall plan

something now perspective, funded is hold it the of constant, things which for again again not on Our is we we're care from another taking the pension a and is including years think pilot really that XX%, S&P auto now I if in good opinion, that's and at all median and transaction and contribution everyone think looking retirees. status of kind plan after so six this for goes involved from at outcome it I where an my over everyone

James Moroney

in having the obligation have portion $XX of pension we some the of run parking a livelihood noted million, the the assets to de-risk employees of high such add It those of care rest retired is that from you of the we right which was time plan. the committee. help a got just moral felt as our just of took debt these it harvest pensions credited that the tied probably as investment to obligation It is their for We who pension priority our amount as and games much with that of I'll Katy taking lots. is David, selling Board. same and a money a was about return great for them

cash the us years on were have to range cause some we of the then and Also in said, which the for the rates to kind we table. went the we in we've rates kind we look to rates also basically have gains large a of plan. the year $XX we pension Katy go So taken of harvest and that we've said those for that plan might go ended off with correction, of up balance before half up around seen and million market for sheet interest the an low waiting back interest able pension opportunity assets the missed had up, been to those maintain for years first now these and We that interest as down. might

So will out think we – indicate on we do which to sheet was and us much make to flexibility performance important operations. the then for timing have the our balance something call and we think drive is the Company during now to go us and have acquisitions greater we cash how it that to for do using some

David Cohen

sales this the the your And going more yield right assume tax than over just comments you parking guys didn't now right? implications, that lots mention in I

Katy Murray

It does.

mentioned of million $XX offset I that. contribution pension that fully million $XX parking were deductible. fully lots The is gains tax about the So to

utilize something We continue on be to are that and know the you well. then is a capital loss perspective in would operating as as generating we in from losses to future an that and able position NOL

from to next if flexibility perspective. from that have and And able think question these I we losses around I would capital building, help offset a property in would So a we that. the tax be to be a answer continue sell is the loss think decision perspective this to make the especially yes, some

David Cohen

very you much. Thank Great.

James Moroney

Thanks David. End of Q&A

Operator

And Please there questions. you. at Thank you. no are this time, further Thank continue.

James Moroney

Okay. talking If no we and the in there New everybody forward call for want are the to look being we to questions, again Year. on you further thank to

Katy Murray

Thank you. Louis. Thank you,

Operator

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DallasNews (DALN) 31 Oct 172017 Q3 Earnings call transcript