AHC - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2018 A. H. Belo Financial Results. At this time all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions] As a reminder, this conference is being recorded. the to turn host, now will call your over Ms. I Murray. Katy ahead, Please go ma’am.

Katy Murray

issued This Chief H. quarter Katy A. morning, Executive Robert is Good everyone. and President Murray, I joined Corporation. Chief who to News; a Yesterday Decherd, President of Storer, Corporation; Chairman, Publisher call. of President H. Welcome and Tim our Financial Q&A. announcing our Grant release for conference third of and press and are A. XXXX Company, third Moise, officer am by Belo morning, results. available we The Dallas Morning XXXX all Belo Belo quarter of Officer

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

statements. Our discussion include will today forward-looking

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

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

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

Detailed available our reconciliation, our Relations everyone effective the Xst new website pronouncements section. non-GAAP review the January is provided we to quarter, in year. adopted this under I I two to on Investor remind Before wanted GAAP of accounting information

year. a to the million diluted of income of a last For $X.X loss of net quarter $X XXXX, A. $X.XX or for million we third attributable fully share $X.XX reported the Belo in share per to Corporation third compared of H. of loss net quarter per

capital reminder, of estate XXXX, the sold company a million. gains a approximately in the As in $X third generated quarter of partial real that Dallas downtown

we third the For financial adjusted Today’s $X.X the operating Morning quarter reported of in address discussion News Company million of million Belo Dallas and A. H. adjusted Corporation will quarter XXXX. performance of of income of compared $X.X to third XXXX, separately. operating Belo income for The and the

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

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

of new decline of is quarter of In third Record-Chronicle, compared guidance. X% of third in is when the revenues of quarter revenue decline of result to Denton which to in or year-over-year year, XXXX. addition, $XXX,XXX million the the was fourth The related the $XXX,XXX revenue $XX.X the is of last the $XXX,XXX sold of of quarter XXXX approximately decline a Circulation

$XXX,XXX an increase and subscription from or in effect by $XXX,XXX year. X.X% of the Excluding revenue new decline net the the guidance, revenue by quarter only third home of last revenue X.X% single-copy or $XXX,XXX delivery of revenue declined offset digital by to increases. fourth the Denton partially to due in of primarily home Approximately revenue is is of quarter the $XXX,XXX decline The The single-copy year. home Record-Chronicle of delivery last related single-copy rate volumes, sale lower the and decline delivery of

As the is the or XX.X% for third at subscription The for million, grow related Dallas we decrease consolidated Other digital third Morning period and revenue. decline one is pay million and base Total decreased digital-only of million $XXX,XXX or XXXX. compared the decrease News News of of $X.X News prior third revenue, commercial digital an in year. our we last over have Morning subscription to the approximately subscriber of printing product expense Dallas highest Morning In to a before quarter, The priorities quarter $XXX,XXX stated the the $X.X or is $X to to the increase of quarter XX.X% line. same year. operating due reported $XXX,XXX to XX.X% of $XX.X a for Dallas $XXX,XXX revenue discontinued million a was revenue

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

Turning now Company. financial for Belo highlights and to

First, is Company reviewed how I'm GAAP operational I review results. some going Then, metrics additional Belo will internally. and and non-GAAP to provide on

revenue expense we quarter, year. the of the be quarter For a the net million the million for $X.X decline million $X.X to decrease compared Total of of new and operating decrease for versus reported Belo Belo million for third to was when transactions XX.X%. Company $X gross. year. total this change, Company, third a Adjusted million, prior requiring compared million of quarter consolidated by and or or to of $X.X Approximately at XX.X% attributable or declined to reported revenue certain $X XX% is $X.X this standards third last total revenue the

of $X.X year to Excluding revenue The related primarily decreased or was the result quarter, in as to million XX.X% Belo expense, operating Company year. $X.X operating compared for goods in or lower adjusts operating a million expense severance, Adjusted reported compensation revenue. the adoption for to improvements income cost digital $XXX,XXX employee the decrease adjusted expense year. new total $X XXXX compared the standard, of million of quarter decrease expense, Adjusted $X the to of depreciation due of for third cost for year-over-year $X.X last third and last of sales expense, is million of is revenue operating the million reduction operating of prior revenue. a amortization and a the the the lower guidance, from benefits and million due expense the The when decline a of in of period. result was $X.X digital quarter to lower $X.X XX.X% consolidated decline third $XXX,XXX, which new million

internal revenue GAAP To non-GAAP in As XX-Q to include regards start under and clarity moved expense posted income a of Belo an mentioned we adjusted headcount and the on increased reconciliation, includes relations operating compensation and from the have to increase reporting, have operational segment which performance of a This lower metrics to into H. to benefit of the quarterly view cost. of investor as is of more provided employees First, to our at Company's XXXX, result addition reconciliation. that the Company in reconciliation: being unaudited and the provide A. two with operating Morning expense Dallas healthcare. items and and News per benefit beginning We our Belo the updated reconciliation consolidated in internal operational website H. to year XXXX Company, The A. and metrics. call, single this cost plan overall insured Belo an with we Belo's transferred XXXX the fully Belo all a reconcile in the healthcare section, additional

However, in XXXX. since Belo burden an for Company in self-insured and results increase Company, a in plan and benefit had Belo this

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

replacement accounts, measurable are doing and now Company's teams experienced headway have We feel making in sales of forward and so. these anticipated but Belo that

year-over-year slight balance on related reported Belo operating of the result, expense in third that year. $XXX,XXX reflects reported declined a decrease from from being quarter third operating income a $XXX,XXX for year. and $XXX,XXX expense fourth revenue with in the last decline Company expenses operating of track decline this reported and in QX the reported Internally and in margin year-over-year pass-through year. in $XXX,XXX in to Internally was improvement third of XX.X% XX.X%, a the EBITDA the the on reported Internally basis. a As quarter is the improvement achieve the of last compensation of quarter a quarter by to majority

the improvement the year. quarter adjusted fourth in of will reported the Looking confident quarter last are compared of fourth see quarter, fourth we operating substantial that in to we income XXXX to the

Turning again Belo consolidated. H. to A. now

XXX, As due Most job decrease of XXXX. a XX, was decrease headcount of September this XXth XX.X% XXX eliminations from is last year. September in of to of or

cash XX, debt. September $XX.X of million had approximately As the of no company and

we October in of cash approximately $XX and XXth, million cash equivalents. As had

we in For agreement prior million. the our of transaction for expenditures was to referenced Form release year, sell $X an at company's the downtown On balance into that the earnings that million. a former filed morning. yesterday issued be XXX Young the This disclosing expect entered market have to Street approximately to headquarters opening Dallas X-K is in we capital $XX Monday, we

on will to net reported gains. Belo A. for regards $XXX,XXX. to In million. capital $XX the tax H. and approximately the December expect expenses, fees We purposes, expense offset the close gain cash of million be After company tax federal capital of fully taxes net $XX while quarter, for proceeds transaction will will the transaction operating to losses XX. this And a approximately generate third

We the expect will taxes approximately Texas cash year million be margin tax. $X.X this that with to related majority

So are for questions. Wanda we now ready

Operator

our the first question Securities. from Mooney [Operator Chris Wedbush Instructions] of line with come And will

is open. line Your

Chris Mooney

Good morning.

Katy Murray

Good morning, Chris.

Chris Mooney

Congratulations on of headquarters. the contracting the

Katy Murray

Thank you much. very

are excited We about opportunity. very the

Chris Mooney

that And Or what the Yes. acres? a in X is? minor On release is press Dallas County over is shows acreage question. the X.X there that little it just the being The quoted – acres. District was difference? one Is in Appraisal easement

Katy Murray

it correct that’s – the that's the is the lot Chris, WFAA. difference just of behind that's

And was called that so out.

Chris Mooney

Okay.

to own Or that? the are – up you it you still broadcast had station? giving So you

Katy Murray

into will our that, own they No, owners so on new will the step that. potential role

Chris Mooney

is reported been do The and the all Okay, the I've are asked in they what times okay. multiple going announcement to cash. with you question – last made the Great. since

to how at call, you would that address on least? like this So

Robert Decherd

Chris, Robert this Decherd. is

said This in has is things – strong the the have you that belief a doing sequence. morning, deal good know, – We said consistently, hasn't closed. as board proper we about

the As we're excited that's this an idea very It's standpoint. Katy from underutilized our having resolved. said, about asset of

the we So and in the it resource board of at end XXXX have as deliberate allocation closed has what as past the should be beyond. to in year, our the once will

$XX add to a $XX have number you million up the million. sum about. They don't of certainly we've of We and investments talked to

advising regularly to going options those externally. advisors and we're hard and So both are internally us, what look have

Chris Mooney

overall seem the me that the give outlook on the Okay, press the for Can we’ll are you business that in reflect stand about release, Robert, or to news. you of paper by. the somewhat? the in more you impression optimistic XXXX

Robert Decherd

that and well. comment can. And next Katy We'll I can certainly year have Grant comparisons Well, as some are favorable. both

We ongoing with is doesn't factor. journalism, and the So advertising realities information structure that print and the the work thinking Katy will expense which can translates business. subscriptions newspaper But the substantial one the is the factor, look side the our investment, team, in of XXXX the both certainly, reflect on also a think print that have in to in that news terms not we're recent what on about equation. necessarily. though, circulation in proprietary years. our most actually Grant advantage digital Grant the tremendous and that of corporate future, in how team, that a local seeing realized and both of in front. mean subscription of there upside The part sides together that's last some yields and of is there we important spent is of his six we're patterns the And in digital promise have months doing the and comment potential the

in opportunities moving make this the with direction. process feel So that comparisons together mentioned optimistic revenue and I right pretty we're we seeing go about some us the things as through

in are not a this resolve only little moving board, elaborate going We anything Grant, that implement our right but time. we to structure can over propose successful we in in that bit? you a way XXXX, so that's the to on not want can to direction,

Grant Moise

I the on bit see that about subscription in Robert little is what what talking right on mean, print now. optimism both is to the part I predominantly Chris, – side, Yeah, and expand digital a just of is

starting quarter, announced had customer his she hired in we're been that Tribune, subscription a where which Hartford, two to could fundamentals a the of improving Sherlock, subscription digital Sue business print, Kerr in now subscriptions almost continued to had revenue Tribune Dan last XX% subscriptions changes the trends brought that line circulation of of now as seeing. XX% work who digital change I signs see subscriptions, her quarters in is successful. of saw led we're the leading on work growth – And in we on subscriptions early for and consistently. And already digital – of order range see Print – we all to ago, we specifically really just the side of service announced, I'm fundamental of go very As initiatives, from at and the we some we very consistent even – early to outstanding leadership And like growth. lot company. obviously, print print knew sorry, that the the remaining due a someone improve. who we show has Sue year

I'd talking there in in still So of advertising we of the been of along. be to industry year as of that obviously, bit remiss print ROP, have optimism say a have But we're lot do. seeing, the also to challenges improvement, that but the obviously, and optimism little especially there goes the types work this whole that and a have I seen of some about advertising, have declines with yet print area challenging,

Chris Mooney

Okay.

that or the the Belo second there was second of the – would that there amount be fourth going half the of optimism drag. the Katy a revenue that, year show the change side, Company profitability seemed in that's show relative quarter would improvement, improvement. fair still and quarter? back in a side the significant to was quarter this to But call, is On there and Is indicating conference half now optimism

Robert Decherd

to Chris, the in We're it think talking fourth about quarter is support. a this find I quarter.

has opportunity is in nurtured Company. is of million Tim business, looking to most to kind large companies terms Digital will Tim pass there in and question fourth established fast-growing, minute this or was The to the from million a real is a can't ensure standpoint improvement, that. over noticeable marketing great range. get revenue expertise quarter a and the reinforce Belo an $X of the serve is this thing don't Who, third yes, frankly, comment bumpy. very of what have and quarter bandwidth, improvement no my The that they're really he's complicated brand and $XXX They business. number about on for important is a do There at talent to a is that themselves. efforts horsepower but in made now this is XXXX. that the

So looking on out, we and in and lightly third now of but have a we're – think quarter, Tim, we're promising want you at good a accounts XXXX. we some taking the things underperformance the to quarter fourth the we not smoothed we're in? dealing elaborate

Tim Storer

Good absolutely. Yeah, morning, Chris.

and very did those As in We're as expectations. more months Robert in and QX. getting quarters. as That and mentioned not starting larger year, excited trend getting contracts certainly in in confident. materialize do contracts feel would That seen lost summer remain, did last getting have ability said not in optimistic opportunity and the regards said, Katy results about we certainly, new better fourth I combination as contracts ramped some we Robert that from we right continued well, liked very of that than into remain delays in of our bit a nice We and executed. as things in we said, definitely on track, with in direction. and up results. QX the our contributed revenue in moving we happen us have QX fourth uptick a in Replacing implemented we fully sold to as activity quarter quick usual deliver the to quarter to certainly September are meet has back said, front subsequent the our that where

are in opportunity. we right to, we again, excited and as a remain we the dealing, in do certainly are amount the There target-rich definitely environment. and remain believe alluded operate direction we about certainly, demand I very a is massive are heading So for And the Robert we in that optimistic. what of space very

Chris Mooney

those competition your on And Tim, who could contracts? you for is reflect

Tim Storer

tell you. I Yeah, will

we to alluded market as And very $XX smaller than agency focused, underserved Businesses agencies, Chris, the to space. are range. million digital midmarket market. by smaller midmarket which that an the will to billion got underserved this then you to, a tell really that's Robert in million as leaves $X serviced than Midmarket billion is of space. being are deleveraging marketing are $X relationships. very really going defined We lot solution type large typically larger are are you've external that businesses a going that from $XX I be are

$X competitive there million So if that that just businesses because focused from are it's perspective, to in a are are space. not say you many been $XX that will organization, billion I that really

are now. we of So these very Chris, front I is environment, you us. teams do tell would about in I that biggest But right more bring in those our excited develop remains Organizations are in types difficult opportunity space that insourcing of than outsourcing. the to or competition, to will very it's trying kind in-house. say of that economic

So for a remains strong services. it demand our

Chris Mooney

you. sort If Thank ask two questions of I may, to I you? housekeeping Katy, could

Katy Murray

Absolutely, Chris.

Chris Mooney

taxes One, who's going to for XXXX… pay the the on headquarters property

Katy Murray

be, Yeah, the at with the the date, handful those our taxes based exception days the responsibility property of closing end. of for would Chris, on XXXX, are that

Chris Mooney

And on seems Okay. status to we are? every quarter. second, declining could where you pension just It the reflect And of the be plan?

Katy Murray

have with any be mandatory change. advisors. to able years. funded not expect have that this don't an to I historically right funded had update to next plan, update an So, still do now, ten actually give our next was rate. that an not update number we from XX% XX% updated cash the contributions but percentage, the where we we at I'm pension anticipate And been in last having will around The a in point, this regular month overall

other also side like seen still even market the So interest though seen feel we've side. we've on some the rate I volatility,

position. headwinds also I pension, or on and some significant seeing to So an getting. but But from I that see to perspective material overall I'm the some favorability we'll update changes be expect any look don't to forward think, our seeing the

Chris Mooney

you. else I’ll in. come to let Thank somebody

Katy Murray

Thanks, Chris.

Operator

currently And are Instructions] queue. there questions [Operator no in

Katy Murray

and joining XXXX, everybody well, after a for We third financial. close Halloween. the Thank Good-bye. Have to of next everybody you happy Wanda, Okay, year. forward you. look updating thank our day great quarter

Operator

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DallasNews (DALN) 31 Oct 182018 Q3 Earnings call transcript