TPCO - Earnings call transcript Q2 2018

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Operator

Good afternoon, and welcome to the tronc, Inc.

Second Quarter 2018 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Aaron Miles, Vice President, Investor Relations. sir. ahead, go Please

Aaron Miles

welcome second and conference XXXX call. to you, quarter our earnings Thank

I remind intent, this like will we may, materially. would Before result begin, such by words to continue, described forward-looking actual our actual could in statements as the Statements company containing our anticipate, outlook make during estimate, you will, in course forward-looking and as and Material of these statements. expect, call believe, from results differ or plan, forward-looking management taken other company's uncertainties similar differences in statements well as beyond may from the control. expressions those actions are risks results that the

today entertain we portion with that a not company Q&A possible hence, call. impact policy that Commission, of and remarks operating website of financial Exchange most are regarding longstanding during a company been on including is the have in And we share, release, measures comparable available tronc will including total commenting adjusted the being Also, The risks about in not market of has our is references adjusted Some published investor.tronc.com. the annual our this per press And on about net earnings to earnings filed debt. XX-K. reconciliations sale aware GAAP on adjusted rumors. our mention EBITDA, those of that have our net diluted non-GAAP company. Securities at will the provided could the which reports questions discussions include in definitions adjusted rumors also these I should and report and included margin uncertainties EBITDA businesses Form adjusted measures, our publicly expenses, in to documents income,

will Dearborn. Vice Chief President Joining me Tim CEO, I Justin over Chairman Executive Knight. Officer, Chief Jimenez; and Justin today Officer, Financial tronc's turn to and our now the and Terry Chairman and Dearborn; Executive call President, is

Justin Dearborn

of everyone of joining event want In to was in thanks all off on journalists violently for took Fischman, Aaron, by important Capital-Gazette day the June, late us Smith and do were based Other that John immediate colleagues day. Gerald I newsroom the our start of Thank you, escape Hiaasen, Robert and five us senselessly The in an Rebecca coworkers, the McNamara, Annapolis, impact. Maryland Wendi the to commenting our work reminds lives were killer Winters. our today. attacked. physical who able that office every

prayers in to hold We fallen and their their support we and thoughts to the continue move attempt survivors in as colleagues forward. our families

proceeds which to grateful and are especially number a time. distribution portfolio, We the almost and you estate and Carolina. greatly the and Capital, The to the together for Times, Beach, during our I mission support. included in journalism various sale other Pilot's facilities the strengthened its of Pilot Union-Tribune continue work of offices our staff, The late X.X May, commend were and to outstanding Annapolis In acquired the our sheet Virginian-Pilot The Companies. lowered whose again Media loan. a complements to purchase headquarters of of the our I'm serve. term of its the square Virginia as way we we communities North in Downtown citizens across San proud comprised XX, Nant inspire, feet. we a received. Diego million California we Norfolk, nation to The with million Baltimore, operation engage News drive our community Virginia. The the Los of committed and Angeles liability. Thank and persevere $XXX the the satellite an forward balance interest and and community price significantly Norfolk Consisting closed majority properties to real the in pension On extremely in our after-tax million $XX of inform used we difficult Newport of retire June in outpouring printing support all in

grow of the sales to a that in reorganization believe market We we quarter, end implemented the and the and strategy exists. rolled playbook, Terry. print few like headwinds completed managing we I have marketing past our leverages infrastructure turn sales services the that robust digital Towards the local advertising out people over has would which been the all and the call to place over our while revenue now digital to years.

Terry Jimenez

start couple A with. Justin. of items you, housekeeping Thank to

of to better the results to speak ForSaleByOwner the on the year-over-year a certain and XXXX quarter first result continuing these have I comparison call, of and revenue. you [indiscernible] classified discussed as for Also, News, make agreement include, to aspects on XXXX with will regards the purposes, This operations York a will both properties and same-store XXXX operations view not I our XXXX for noted, in for and the to as comparison be business. the New without in the give as And that Virginian-Pilot, Unless the I periods. the results. distortions but Daily Cars.com provides assets sure the discontinued transactions, BestReviews results. results results the what to related sheets we otherwise reported and will refer would California First, balance of and

to As reduction Cars.com results business to enterprise. a agreement revenue Cars.com XXXX, agreed in we for the in a business of and expense move this amended that as the reminder,

revenues in declines. same-store continuing related tronc XXXX. of quarter the On a on X.X% revenues declined, same quarter EBITDA. total basis. the revenue referred $XXX flat, declined from impact slightly revenues for basis, Total print adjusted The Our same-store elements were million, for up primarily second advertising XXXX these up the exclusion to of has be for XX%, is a will to

$XXX in adjusted our a September very operating of second at basis, net decreased in $X.XX an we $XXX teams. solid a to million, purposes consolidated had quarter. position. balance estimate tax the due of digital income income in XXXX. basis, would quarter the of of benefited On in believe second XXXX the second of $XXX $XX.X the offset $XXX versus partially We $X.X in relates as have restricted, million the million $X expenses was QX million quarter $XXX of to million a net XXXX. in in compared per or million, debt year-over-year a XXXX $XXX same to sheet extinguishment. of of The million had compared We made select operating XXXX, quarter second million Our our end second the million $XXX $XX XXXX XXXX after-tax noncash [indiscernible] to is quarter prior that compared of We quarter is $X.XX to which operating period expenses paid for of from termination quarter cash, On XXXX. operating million income been million second will the $XXX from were $XXX same-store same-store decline million Canadian well newsprint of $X X% the from gain the as or million of million $XXX XXXX. investments the up expenses be tariffs year. EBITDA the million million Adjusted were In dispositions, QX for [ph] million available $XX.X at or cash second share $XX.X California quarter of Adjusted in increase to in share in leaving for per suppliers of to the which related and we've expense the pricing the approximately by XXXX.

payments of This million the at liability $XXX end cash reduced of interest more second debt. eliminated per our have We million saves also $XX the also the than now at quarter. by pension million fees. liabilities and We've $X month sits $XX in us million and

performance grew XX.X% in the Also of print up advertising increase increases as more stable the I print compared revenue prior note, Virginian-Pilot of of million was Total the greater of subscribers the quarter. will reporting advertising came a declines was at TroncM a new revenues the revenue we downside circulation advertising. of period to partially million, News, historically York along for News New Print compared up The quarter with circulation the second had X.X% the the print the we been volume $XX in in revenue. year. Virginian-Pilot the quarter. in same is year second which Daily experienced print total the revenue circulation that XX.X% quarter year advertising a has price quarter, our of BestReviews, were see same-store revenues to the important to print revenue. of experience of from which continue X.X% the pressure prior by declines for revenue X.X% to down much compared to Now subscribers offset basis. to growth circulation revenue. revenue segments. touch prior is than same-store basis, on On quarter continue $XXX than addition end New total Cars.com of York were troncM again down offsetting as and Digital-only on each in Daily to and TroncX XXX,XXX highlight, XXXX, our XXX,XXX the

onetime as in million of two reduced allowance, invested Under tenant in U.S. a portion improvement capital related. in year-to-date well locations, other CapEx not significant of infrastructure Chicago our and CapEx expenditures. is the of $XX.X substantially was as new terms In GAAP, office technology We've the Baltimore. for one and

have run our a While lower we QX with technology CapEx much some prospectively. additional infrastructure, office rate, moves will we associated in anticipate and

Now guidance. to turning year our full

billion billion. continuing for million Adjusted range increasing is print year expected For for due fiscal from reflects $X.XX operations prices, EBITDA the an to Canadian the items year $XXX EBITDA, guidance for to tariffs prices full to imposed adjusted high our $XXX $X.XX be to following guidance are operations, are fiscal to XXXX again This on for substantially revenues perspective: at continuing the XXXX. consolidated suppliers. news million we historically

and this that industry, unfair U.S. are of U.S. our penalizes cautiously employees optimistic rule U.S. being We that in consumers overturned. the process businesses,

realign savings headcount and base We of the guidance. our line in are into ongoing factored business, the to reduced our have our with revenue expenses QX those

the a adjusted the in to our California Again, an digital our substantial outstanding in nonunion team our anticipate part with rewarded investments of continuing include operations for continued our any increase our or does growth. long-term reflects or team revenue salary hourly and drive also from talent. EBITDA XXXX. the investment as guidance operations portion We rate not of We

the we additional close up profitability enjoy the Although transaction. did till of

organic be the we in believe acquisitions, excited future, a in about over solid future and with to X years. position next continue We to X investments growth, layered financial with the remain we'll

digital million revenue of expansion, investment which core margin quarter; discussed, we outlook, focused growth, and previously significant still growth to which mode; longer-term we X a [indiscernible] consolidated three are we are on subscribers. transition As on experienced this in a

XXX,XXX same of of end Xx quarter higher XXXX, just in QX two Our than XXXX number the more is ago. than years

call We that, these the our are about With company now and questions. the achieve to will we goals open are for organizing we excited future.

Operator

Instructions]. first from Kupinski [Operator comes And the our from line Capital Markets. of question Michael NOBLE

Michael Kupinski

to Heart your goes newsroom out family.

all, of significantly the the service for model rest that cost, first of the outside in run Is good to the speaking just quarter. In year? rate it lower like terms was of a seems the

Terry Jimenez

on expense focusing in particular been items, all We've outside and line services. Yes.

And see as items on of some cross item some ongoing well that benefit on we so basis as the should well. line other an as

Michael Kupinski

you York give in that a at had updates you us of lot it. New in news York of staff-type you where targets New News are some you Daily that point? cutbacks for you. regarding you've this And when the terms in on News, profitability there. process I Can purchased And obviously, been know Daily Got

Terry Jimenez

yes. Sure,

had last cetera, a by had perspective we a our headwinds, this is our focus month. make profitability cost that made right very of industry business to time. focus that but we decisions, just And third It's the drive navigate is the to long-term. newsprint we return that difficult the business decisions probability to And to some some business from really year. prices, end think And in et been challenged quarter to from profitability. reductions given So the long been to essentially

Michael Kupinski

accelerate terms some I that And would there? just to revenues. could mean, we you're Got investing of little growth ignite maybe that But for you. growth what wondering rate that I seemed I And that light then, how of rate it what in in revenue kind in troncX see infrastructure. know is the a terms is troncX? was it of

Terry Jimenez

Yes.

have you Cars.com So the out. on distortion the to factor

kind execution, of, if did that touch Justin think as about direct out, talked some you see Tim the I well programmatic. can in terms of, a rolling on good I experience back across out, sell of, as that CPMs mean we sales kind the playbook on.

Timothy Knight

Tim. Mike, Sure. it's

executing leveraged of sales practices services' We've at had started up a playbook, those the we’ve We looking one our historically hired resources. quarter the And best on last of better. not markets, in week. So we marketing country. around second packaged each spent this the our digital digital directors past some

in essentially playbook are using specialist pitching the sales teams calls there, very the we suite we making have focused more to and of each and markets, So sure make and the products services. we are and our CRM of marketing just on our full have leveraging

Michael Kupinski

point? acquisitions bit Got a the a of great maybe strong about this a yes, of environment, And be have M&A looking types you flow, -- what at? of little sheet. you. capital you lot talk What lot and And might obviously, you cash A can at cash. balance allocation about

Justin Dearborn

Terry the be pretty to on the We from digital assets. to as good all the pointing we little balance with skewed the Again, with the digital towards kind of But overall accretive think cash the stream. noted, transaction. plan. BestReviews the a Heavily diversity going from on, sized And the allocation quite do I'll capital bit due to But end from calls, consistent are market. legacy of bit a towards that skewed to a a And we transaction provides revenue the our active did Justin. heavily it's have assets call, quarter a we although opportunistic M&A very Mike, in payable Businesses add that remain sheet. government of, divestiture. in and taxes we and perspective, remain assets. Sure. revenue

the So available a and kind inorganically. from the, we we growth hopefully use will that capital accelerate we powder perspective dry have have of, to leverage

Operator

from question comes Cowen. And line from of our Lance next the Vitanza

Lance Vitanza

housekeeping I thought I'll a couple start with items. of

being the pension. first The

$XX wondering sort net million gross you the, is you And can obligation of, point? I'm if I mentioned the at this think benefit liability that the provide now.

Terry Jimenez

essentially do So our gross Lance. as net asset single-employer pension I the you described. handy, or the is have liability liability, that not

Lance Vitanza

Okay, it tax And had that And zero I I wasn't suggest That's no surprised larger it taxable guess the payment. basis I problem. in doesn't I'm than the Tribune. ago bought that And you -- on then given bit a think suggest literally the Union assets? expected. long

So thought there'd I some least, nothing basis there? at would if have that else, be

Terry Jimenez

was bit taxes with almost a a have Times of is with San did which then as basis federal, Angeles we Diego. so Yes, There XX%. both And which The are X%. basis California little due Los well. is

closer So the effective about tax rate. on the transaction is the fact XX% the rate to is tax

Operator

next Arthur question [Operator from the our of Research. Instructions]. line And Huber comes from Doug

Douglas Arthur

the And I Times. on just The second echo sale go events to of my the to deepest -- condolences basics quarter. on in LA the back the

cash. So it was $XXX of million

there? $XXX at of pension tax million. $XXX again think, a was You're liability, looking me said Remind I million how to you much offloaded liability

Terry Jimenez

closed time transaction. million. So announced balance we had, that million. the roughly the at $XX sales By The we year, the the beginning was it when of liability was of $XX the

it's million transferred is so $XX over. what roughly And

Douglas Arthur

quarter, unpacking reported terms was troncX mean, basis at Okay. the in dynamics it on just the -- revenue was it a I And in up. then, of

Cars. You talked about the of impact

get to, I'm the impact a positive The News. then impact Daily -- trying So just of sort -- of, and the

of what sort the press release? Sort something up or there? underlying in what's you trend said -- advertising think I X% the was underlying of

Terry Jimenez

Yes.

quarter an the on million was ins for adjusted three switch In $XX of million new roughly adjusted and Daily the $X four outs. EBITDA. was York EBITDA are Virginian-Pilot. a for total coming Cars.com and about basis, revenue, slight quarter. are things then roughly benefit the actually the those in revenue. the million, New essentially So And a $XX.X hit total together, BestReviews revenue assets on there's The All three News,

Douglas Arthur

Cars likely year? the the is to the for And two hang impact around last quarters of

Terry Jimenez

Yes.

that that And in quarter through next through first year. of go So next will we'll year. the cycle

Douglas Arthur

Okay.

It's sort did the or sort that's you're terms thinking Virginian-Pilot. what your sense And pop strategically, the that sort [indiscernible] I of, good of, not. there? to make what that I of But, in up acquisition plans? helpful. grand doing how Now then mean sort very obviously, of -- fits was, of of opportunities mean

Timothy Knight

Virginian-Pilot Doug, across right state, in Newport it's Tim. News the our and River the from paper largest The is James daily press is the publication.

simply but just -- waterway. that one market and audiences, readers by online. it's different there in is This essentially was large very the So [indiscernible] print overlap large divided serve a the

that the serve And to how the so to that figure effectively newsroom a in out underway organization supports we're single single as we entire a market. sales very well the do possible. we'll And plans our integration entire audiences have supports as market, look

Douglas Arthur

Okay.

I strategic, this So geographically is very guess is..

Timothy Knight

Justin Yes. which of Geographically $XX evaluate includes estate that a it mentioned, monetize in as our that. options And how and million, we acquired real have for to strategic. lot we

Douglas Arthur

website And back sort systems I going between Times. just that LA any arrangement the Okay. and any understanding certain were this finally the continuing there aspects guess of on at LA issues a break of Time? Times, to on or clean the operational then corporate LA a ongoing it of service is the there point? that Is at Or the any were there cross-pollinated -- lot

Terry Jimenez

Yes.

sure into entered we've transition agreement, is the closing to the of service operation with typical buyer stable transaction. So that make the post their arrangement an

up So to support themselves. we continuing speed their able to and that help to infrastructure their they are and systems until get over take are

Douglas Arthur

that's great. Okay,

Terry Jimenez

the agreement. term there a that to And is of limit

Operator

Dearborn, closing not would now back And questions to at further to showing call over I the time. CEO, any Justin remarks. I'm like any turn this for

Justin Dearborn

thank interest. your for everyone you. Thank And

to forward our we'll while on in you updating strategically execution future. and near consistent the remaining look focused And our our the organization continue have progress strategy. position We of to on

Operator

all the have today's a does thank you in gentlemen, disconnect. may nice and conclude you conference. Everyone, participating day. This program, and Ladies for

Tribune Publishing (TPCO) 9 Aug 182018 Q2 Earnings call transcript