AHC - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Second Quarter 2018 Financial Results 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, today's teleconference is being recorded. I would now like to turn the call over to Katy Murray, Chief Financial Officer of A. H. Corp. Belo ahead. go Please

Katy Murray

Chairman, This Belo Murray, second Corporation. I Robert conference everyone. at Corporation; quarter are Chief and Moise, Q&A. all Financial News; A. Tim call. Decherd, by available joined President H. Welcome H. am and is Belo morning, Chief of Morning Publisher Storer, Dallas Katy for Officer Grant XXXX President Good to President Executive the and A. Officer and of Belo of Company, who our

morning, yesterday second opened market issued a our the Before announcing release we quarter press results. XXXX

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

include today statements. discussion Our will forward-looking

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

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

believe today's We non-GAAP the directly presented to Relations investors based our peers. determining comparisons under Investor will non-GAAP financial supplemental accordance include to in financial GAAP section. segment in performance measures. provide comparable assist on the with website to our financial discussion most Reconciliations our information provided measures measures Finally, reporting useful, on that are

everyone accounting the Before I we new remind effective quarter, two this to the year. January review wanted I adopted pronouncements X,

the financials, first net the to will is on impact adopting prospectively us to reporting in as first commentary The a restating quarter means out I'll we below. are modified are adopted its retrospective that a opposed this for bases be revenue my historical be revenues which now Topic calling the basis. we impact this primary we year. quarter certain gross a recognition, with The approach not starting of regarding XXX but

expense or pension net versus expense have in adopted retrospective or income benefit, reflect changes loss operating a or prior periodic below we we pronouncement pension approach above expense where and benefit second the The operations. benefit to the line record period restated including or all have been

For items, $X.XX attributable the provided to to compared of detailed morning, Relations to A. XXXX. again we section. provided GAAP website H. reconciliation non-GAAP in $XXX,XXX these or our information net our the of quarter $X.XX loss per both under in loss a we Investor Corporation $XXX,XXX loss net per reported share have a Belo a or reported of of under second share, Yesterday a

Starting XXXX, Dallas and For with News. Belo income financial and adjusted with separately. million, earnings reported News the quarter operating to second the this $X.X highlights operating Beginning financial quarter of of will covering Company second of for last Morning we million of adjusted be for Corporation the $X.X H. call, income reported year. compared The A. the performance I for Belo Dallas Morning of

$XX.X of standard Approximately the last be million decrease the quarter, second quarter certain of is of million, and million the or the the in XX.X% to when compared of this attributable requiring compared or of is Adjusting total XX.X%. growth. the new $X of digital Morning is at $X.X million transactions XXXX second new the to by advertising revenue versus the quarter $X million XX% down reported $X.X revenue or million declined Print in million revenue net reported $XX.X News of Dallas we reported decline For $X due for million this standard. revenue change, XXXX. revenue $XX.X total to to $XX.X million a decline year. to when the reported in second

compared new impact the to or when $X declined period. XX.X% print revenue the million year guidance, revenue of the Excluding prior

year-over-year quarter is the year. the XXXX million last the Record-Chronicle revenue Circulation of the sale $XXX,XXX the of second revenue is or in second of quarter result guidance. to decline $XX.X new In last in of the Approximately of of related year. $X.X quarter the $XXX,XXX of the addition to compared of a fourth Denton decline of the X.X% million decline is

offset single Excluding delivery quarter sale $XXX,XXX and new single of home declined The second of the the was the revenue second single X.X% of effect declined XXX,XXX by lower to related increases. to due decline Record-Chronicle. or XXXX by Denton of decline partially the home the quarter the by X.X% rate copy or guidance, $XXX,XXX revenue copy from primarily from delivery revenue and of delivery XXXX. home copy volumes Approximately was

XX.X% $XXX,XXX recorded Morning period a have digital XXXX. we the the stated second second priorities from million is $XX.X second million or ending paid of million, of grow revenue. to due and quarter, second subscriber Total for second Morning event declines we XX.X% decline digital increase digital grew net decreased News in quarter X,XXX for of with the subscriber to quarter highest base the XXXX, News the $X.X same an before, digital base approximately subscription by related to revenue consolidated revenue, digital prior As in $X.X quarter Dallas the the to subscribers of Other of XXXX. the $XXX,XXX operating XXX,XXX is of to one over expense subscription of our or decrease $X.X or In volumes. XX.X% paid or year. only revenue quarter, this compared related a subscribers. our XXXX the commercial the of was million In XXX,XXX of XX.X% quarter and XX,XXX for printing

of service expense, and guidance, decline to in Reflecting expense when new distribution decrease operating improvements advertising expenses and pension expense, severance of year. being expense $X.X $XXX,XXX improvement in XXXX XX% are was of of to $XX.X of year Adjusted in adjusted of adjusted compared the $XXX,XXX consolidated significant promotion $X.X of was million, operating for or an million expense compensation the in the second $X.X improvement The reduction and for of and $X of related period. impairment, benefit initiative adjusted operating or Excluding million decreased the to revenue in QX second operating early of cost million million reporting XXXX the last the expense Dallas XX.X% prior XXXX, News was decrease reported year. in $X.X new adoption asset to temporary the when million expense. now that was $X to last the newsprint amortization in due $X.X in fully operating income realized. quarter result year-over-year second million compared primarily quarter quarter or million $XX depreciation standard, in the revenue $XXX,XXX XX.X% a the compared and expense, in expense employee expense, million Morning The benefit, $X.X enacted a

our and I'm Turning now to non-GAAP Company, additional reviewed internally. and review provide for GAAP to is and how results First, going operational Company financial some metrics on then highlights Belo Belo and

$X.X quarter For expense to the transactions operating the versus XX.X% decline we revenue million, total decrease $X.X $X.X Total a year. $X.X of second $XXX,XXX total XX.X%. of million revenue certain a or $X.X for or Belo new net Adjusting prior XXXX consolidated declined compared of to this at Company and was standard be of by million XX.X%. twenty the quarter, decrease requiring change, million, for or second revenue the to this is reported reported Approximately growth. attributable of

improvements of cost of $X, lower Excluding year. million revenue in to period. decrease for the compensation standard; of $XXX,XXX, reported $XXX,XXX decline second operating expenses of operating was XX.X% to due new of was and depreciation million adoption second due XXXX the employee of income million and Belo and compared the $X.X quarter of The benefit, $X.X primarily the revenue. decline pension $XXX,XXX $X sales expense, to operating lower severance cost in the adjusted for and a was related amortization impairment, expense, Co year-every-year the was Reflecting benefit compared result a $X.X last from a consolidated digital year second quarter expenses new or asset the expense revenue XX% of expense digital last of quarter The $XXX,XXX to reduction XXXX guidance, Adjusted the and when of year. the decreased or for prior decrease goods. operating to million adjusted

have an Company, in regards an expense performance Investor clarity audited the Relations the XXXX at operational mentioned Belo revenue of the the operating GAAP internal our quarterly of start XX-Q a internal addition section provided two operating on under with consolidated the XXXX and view metrics and The income metric. includes the adjusted have for we internal reconciling of more we items reconciliation. to to segment operational call, and updated to reconciliation To in non-GAAP As provide within website include reconciliation our posted reporting reconciliation.

result compensation insured transferred benefit First, to a a beginning an a healthcare. Corporation's healthcare Company increased headcount overall the costs. of Belo increase benefit to News made and from being cost Morning decision additional lower single we employees H. Belo expenses have fully move XXXX, into in in of and the plan and XXXX, Company Belo In A. and Dallas all as

Company Belo for self-insured XXXX. in However Belo plan had increase an in Company and benefit a that burden since resulted and in

late and and is in revenue the expense million in internally revenue we decline of to would Second, $XXX,XXX XXX for the accordance XXXX. XXXX gross what reconciliation would the quarterly attributable year-over-year and with attrition early have QX $XXX,XXX XXXX been approximately of pass in The have reported revenue and adopted six XXXX. had included had that down $X.X been accounts in have predominantly through revenue Topic quarterly QX included and of of

had in balance declined or the to Most income QX year-over-year basis. Internally grew decrease those a in this QX QX year. due of decrease expenses by X% basis a quarter A. In increased this of that X,XXX, related operating improvement is on of June being first compensation which XX%. attrition. decrease reported operating While reported regards revenue of with was in declined majority to Internally a expense last XXX the of X% revenue to over by sequentially from headcount Corporation H. year. expenses year-over-year margin of a or XX XXXX. the and year-over-year of job to as to Belo eliminations June from million XX, through pass $XXX,XXX headcount $X.X XX.X% due on

million $XX.X sheet, approximately Company of to June the cash as the balance had debt. Turning no and XX, of

X, and we August of cash had cash $XX million approximately equivalent. As in

expenditures $X million. For expense in quarter, taxes second year, we the approximately of the be to regards tax the we reported expect balance of capital In to $XX,XXX.

that the of cash questions. this that taxes tax. $X.X majority related will ready year now Brad, we be taxes to margin for expect are the with approximately We

Operator

Chris we of Instructions] go with the Wedbush [Operator line Mooney Securities. question And from Please do have a ahead.

Chris Mooney

morning. Good

Katy Murray

Hi morning. Chris, good

Chris Mooney

talk I AHC time question get question, I long? is not on of update and sale morning. Good an that every somebody the The related headquarters so an to to it's taking operational but why it is

Robert Decherd

Chris. good morning, Hi Chris, Robert Decherd.

real it's course think complexity. of this I normal the and commercial estate size of transaction a following

the those are to it end campus straight And jail question a of only as I operating. the work very easements which on by to you We for estate that And me for quarter. will we has earlier, are to potential of our we like, forward. years button interest looking think is role, can't in this to mentioned as than then enable as around is but expressions third and There As for helping are offers, really of expect the station are this. Same know by from may see be would will becomes then that on we some certain we typical takes buyers worked campus kind come would field, process we Todd out issues with will what transition undertook Jim longer fully is complexity the the involved closing perhaps pause JLL folks hit but it not the and television real weeks be continue about in much. eight how the you us co-located be as the deals, now. coordinate us engaged those that expressions other but expert sale interest they to in CEO technics of the to are cash predict team look

to strong in estate Dallas that that optimistically year, this still in spill may experienced XXXX the through of we've looking of and holds up of that years all we're it end into course timeframe. real recent presumes So market the

Chris Mooney

had guess good so, been thoughts, any guidance baseline? a I And the or higher is still million $XX that

Robert Decherd

That's line. a it is. good base Sure,

Chris Mooney

going other country? Okay. public I faster a On see on last the an at there inside the the fairly that's region seem operational declining least quarters couple we're newspaper robust basis, to of Is revenues of the of something different, than companies. at rate be mean in a AHC

Robert Decherd

first me and Chris, on that Tim I'll ask amplify. pick Grant up to let then and

that have companies First of tie a in all impression of the experienced the back XXXX we traditional have slowdown had to media New some the little it it's anecdotally, Times to bit you a But are relative earnings other under announced you bit in a York peer Texas releases comparatively. they today, Carnet compared seen has little to of patterns today revenue weakness strong mixed and yesterday picture, a mixed. very companies.

way sites consumer the side I consumers entire it's a the different least to of the it's we emphasis lot transitions more is companies not think that following to just on a what's are reality experiencing be a pattern. that products on based is are digital certainly products and consumer and at putting market digital happening the and newspaper Internet industry world, others newer go subscribers,

underscores on Tim's side. So very And to growth know. is of as our Tim's great this you recorded in digital very the work it leading doing the the of are making course second on I'm that on Grant just urgency we margin see the transition, newspaper encouraged the side, quarter. marketing that charge focused

add a that's we precursor Belo and want Company. news you more I go anything? think with of to good some Grant, as forward

Grant Moise

loss account Yeah, that thing is hit quarter largest only major $X sure, just that moved would Robert change this that have the of And the quarter, at our million we mentioned quarter has to think is Chris. from I we've say in alone. the revenue one grocery I did that mention a with have the first also not of us the TMC vendor. their News alone Morning been another second Dallas about in

accounts I on So some a peers, based us when this I it's what just on other I happen on kind just think with of us lose drag magnitude, pronounced effect than has smaller think you like a I our others. company financials. one know the being of little But know think of you bit you account little bigger a bit more that think than there's had a gets

Robert Decherd

the company. a in part of Which on that way shift the strategy by was national

comment Dallas Morning on the world? Tim, just wasn't it So to your News. you want

Tim Storer

mean see the QX loss with we've I discussed, continued in booking Yeah, strong sales previously in we performance and That know experienced some late that attrition QX. and we've replaced as sold to year. you revenue net early early said deal

stronger take accounts we on those so a half of to time do the of to revenue second Now we get didn't continue to to quarter board, in the full see compared XXXX. from them. But performance expect year

Chris Mooney

those many that? quantify That that will will still still with the something boarding clients describe clients on are can we and new sort boarded how quarter or third on you new all widely or be

Tim Storer

There we've the are say them few week, obviously recently launched in that through as QX. of I would just literally back of last QX and been half boarding

as Robert those to I'll into revenues. just as and the go tell marketing very again, the growing continue to of And to regards being to we're out budgets the to market as strong go up marketing digital in money the but on of not accounts accounts performance you moving optimistic digital in those garnered alluded that's Sometimes back sector. boarding necessarily year due you'd the quickly Chris, don't obviously the on the half regards these But of only boarding like. spend

lack opportunity go as after. no of strong. Dallas alluded to, there's we certainly you it's And is So market us to the for

one of Dallas country. market We focused bid space on are and mid-market in the cities ranks very the largest as the

optimistic future. very we're about the So

Grant Moise

think of in Tim's of the counts. a do not we're but what it of to conservative of but the first have revenue Chris, fourth and is it's number to necessarily try a numbers year way of Not as well number quarter of replaced just think part quarter. third I the accounts. accounts a this end and

Katy Murray

I at of accounts of in six the think number - play, number other The yeah. the been typical that has

Grant Moise

mean, That's what I yeah.

Katy Murray

a amount that thing on a comparable more in the was out bit it pleased been account this of revenue in the to pass that and are a one is a revenue would've left it had had to I that we've why important through larger that different, how customers other am and trying of the of more visibility is look is we're the Chris basis. schedule account net of that part the additional large revenue think little left I been given give also basis, the that reasons we at a is is finally the

XXXX and clarity giving call to Belo can help more I out, get how so back lot everybody you think internally. be see Company to that's that on to that's to of looking and why going visibility we're that a we're

Grant Moise

last to, one equal a all that experienced and number sales And And comparative obviously but obviously double-digit the sales QX to considered quarter-to-quarter basis. are not we from in QX XXXX of sales the number add just I thing of growth track would we've of experience XXXX? of we

Chris Mooney

these Great. difference? profile is the of they And the margin ones asked, businesses you that opportunities are new versus

Grant Moise

know accounts will of in we're margin or the new you half compared I we that I the the think year early this bringing accounts last better of tell You back the had year. on that in to is

that that's where think starting So you're I to improvement we Robert to earlier. that that see alluded margin

Katy Murray

that expenses so. you replacing debt just these like the think that margin last demand can these operating some And and generate these at a one was, about the lack bad accounts they other the the higher I the experience with get and And great year around also debt, but lot alike. Chris large then account of are operating talked you bad timing end things increases we of we but and of had of of into expense

Chris Mooney

versus local regional had at accounts were be they served that couple and are sort least the in more ones the nation? tend And of a you lost to

Grant Moise

few to backyard. have on, in one are more will of it's Yes, companies said that that I that we will that do cities that of in continue broaden I midmarket a of as have the well. scope that focused the Again much of tell we the richest we national we're on, up number certainly highest our focus accounts say It's brought one the number.

we look doing footprint expand to actively market so. the So our to DFW continue do outside and

Chris Mooney

success. your look Right. forward And to I

Robert Decherd

you. Thank

Katy Murray

Chris. Thanks,

Operator

the [Operator Instructions] from go a Investments. And with ahead. question we Please do KMF Fite of line Jonathon

Jonathon Fite

was what I could exchange I wondering that thought I the the digital just morning. through in segment? second loss some occurred with on if in major clarify good growth the side last through half revenue even Hey, accounts the

Katy Murray

year-over-year mentioned in When to growth the Yes. quarter, we the were showed better XXXX. than if it's as it of on basis, over same put in QX growth the we look that when put where the expansion from you you can XXXX position us sequential second you're where we be in on Tim type will comparing boarding at should and a saw if it half second over

Jonathon Fite

talk early dynamics account just the were some with you about of a the kind dynamics and XXXX what of growth starting now to large or some kind that there XXXX saw growth on? are of of acceleration drivers build other going through because just again? the Can It the is strategic how that

Robert Decherd

a was after made we one I one, little or that shift to for most changes underwent by just account in flux acquired of vendors means perspective of a were just upon move control. any marketing in one partners was accounts the and that's that issue. more is it sales that traditional it business that those more actually consolidation year ironically strategy money type had there was other part really that very felt are factors bit controlled. any in last previous some on that based of have we a to anything noticed from allude issues some companies kind to our factor of end of through a Well certainly the of into factors their is a an anytime into happens just But businesses a business accounts that business out all back we that and digital out so we so our think the trend combination that and of across There they were of accounts they started some that large regards that could the and specific within combination through large no those within

Jonathon Fite

the earn do outs ownership those with Speakeasy last years? of To over impact any the or kind associated factors incremental DMV and couple acquisition

Katy Murray

if the other Co. Belo. have Morning subsidiaries entries been to both which recall first and at in Jonathan are on units quarter That entities Belo of in Speakeasy of DMV a Dallas and Speakeasy XX% have XXXX, I you just not acquired that XX% was of were we of of the at focus. remaining once be own DMV the actually A.H. that News both actually and marketing business consolidated those entities fully part the more service which only is but think digital holding

are Belo Belo anything and that no out, urn an or earnings compensation So separately there subsidiary from and on plans. everyone Corporation line, is fully along operate normal Co, impact of on now A.H.

Jonathon Fite

given just intend And two strategy kind are some just commentary color any share you things, current behind of that? the could pro around Okay. forma pension consolidation be class there the updates environment another straight and regarding quick provide

Katy Murray

consolidation those So on question more clarity on and are specific? your any referring you I something the shareholder - mean around

Jonathon Fite

to I around common a the filings quarter thought of some I classes So of single resolution digital consolidation last saw class? and two and share types

Katy Murray

incorporate have Belo No. shareholder from regarding we Delaware. end to What have A.H. that might Texas That unique seen that any we actually after Corporation the our Belo is you was filings June actually did out been not were Corporation. at A.H. approval we may did of there

have saving the some out around but certain class. of fading related share may nothing you filings to pension our just seen So plans

Robert Decherd

saw. elected the annually might hear been up word classify we could have you board, picked you may declassify so what all it's I that directors Roberts have Jonathan, we the now

Jonathon Fite

that pension? clarity in on on of any that, commentary appreciate pro-forma Okay. I you the follow-up with up kind

Katy Murray

a perspective, pension some So I'll from get clarity that. on I think

years overall quarter, At I any that been as several know market over last contributions XX and years anticipate plans. you the obviously As not is based time, and very between on successful now the do conditions de-risking pension pension this we we've required any and pension to that rate very we about we but this market. still are our if interest where contribution we required were update change their feel have and at and plans we fund stuff. not would and point, positive good our do mentioned next the with last But pension overall very

Robert Decherd

Jonathan interest up ours. question as on just as that you rise pick plans to helps your rates about interest rate know, environment actually like

as So more not our said funds the the by risk itself, interest significantly and gradually but de-risking investments calculated continued protected plan to which between market is we the move rates have the we plan, dynamic and so to very annually and held those assets. the in Katy

Jonathon Fite

a Thanks appreciate it. lot, update Great.

Katy Murray

Thank you.

Operator

Wedbush [Operator go Securities. question of Instructions] And Mooney follow-up we a do from from the of Please line Chris ahead. have a question line the

Chris Mooney

boarding, on you're with and know the CEO Robert. this the I been you've long a company now time again.

You must some thought market pile relative you already cash the cap. to have have a quite of given

cash? shares somewhat share to bring the You is with the $XX in so of quarter. a expect repurchase another have what you potential And million do from to on second you're XX,XXX do sale the which active about something or acquired

Robert Decherd

cash, this excuse a been capital and I intent how going very we're at discussing as regular board they attentive about it we are topic of environment. several the but be is board, and also $XX shareholder Chris, the this position we this pothole sure year for its me million going list. our done make in $XX we are the to to all how we about you will meetings, not and to and decisions. with today, going going But happy We're the at because our articulate next bringing objectives million how company in we're make to allocation a has down choice top there's on and has in cash traded team that, be this good capital allocated the excuse the down we're of of is decides Tim to cash, the very we're but purposes know about and I we've, is very to what simple stock to of million think great uncertain able industry of platform. the today to uses preferred here using have are plenty to we at value example news are not me board if $XX very update priority look very when job and fact potential what have a here shareholders have We're capital are and sit not a

Chris Mooney

ever comes business? Okay. And one assets newspapers to it also businesses and have your monetize now, in give decided monetizing some with distribution that that printing other asset thoughts their seems me fairly to any significant that's any are to case which they and real estate and by

Robert Decherd

Chris largest the customers have a and declines you our near to That impacts in term. size as put that Again in the newspapers but know, not generally relationships intermediate circulation model I print with in of printing bringing are only or to commercial circular differs and Daily down Morning experiencing would I contract think don't we the while the the News Sunday number all products. are of X customers. to the the number so newspaper the as we them two those in just each our are sensitive of or of Dallas commercial because copies X pages business printed factors,

in and put future level, on I company clear of Morning fashion News quality the along. estate occurs. we're that Yes, being difficult or duty newspaper so that product is have be very north highest plant. we'll the We what we're terms focused which guess the overall at the that on go be first really in our the is and we're to sports for noted as the making a we printed picture sure what's of Morning shareholders have these North a long the located company's plant as that to possible at us. that in as in the don't printing Dallas pace to we're printing business piece valuable is News the project of idea is you its most that's profitability timely clear contributes to customers a going that But ultimately other Dallas will real to So

really printing reduced it would choices that when and for newspapers have your that sufficiently comes scenario available are we own today. So acquirement just how their to down

Chris Mooney

you. Thank

Operator

further And Instructions] at does there appear phone this time it no the are lines, please from [Operator continue. questions

Katy Murray

you. our and us talking on for after to you the third call Great. forward look Thank Brad, you thank everyone you. quarter with Thank joining we earnings.

Operator

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DallasNews (DALN) 9 Aug 182018 Q2 Earnings call transcript