TPCO - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to Tribune Publishing Company Fourth Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Amy Bullis, Vice President of Finance.

ma’am. begin may You

Amy Bullis

welcome fourth 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

adjusted with that impact that Commission, and of Exchange references are adjusted website income, EBITDA, on have the including and including adjusted risks our Some total most financial our annual earnings reconciliations filed release, And today XX-K. in remarks our to earnings which to on margin comparable provided mention Securities press net could also these EBITDA per available is we non-GAAP definitions I should measures, report our the investor.tribpub.com. and net debt. included diluted adjusted measures uncertainties include and GAAP at businesses will Form our publicly in operating expenses, adjusted documents share,

and over CEO Financial and Joining Jimenez. me to today is Tim I the CEO Knight; and Officer, Terry Chief call now and Vice President Knight. President, Executive Tim will turn President,

Tim Knight

and to will financial opportunities ahead in media on on that the business progress to call opportunity. years stages made Thank with perspective to CEO. for environment. the our and recognized we just of rejoined like you, Terry touch a today then approach I I start far. fourth great because with you rapidly for my Tribune results Amy. excited as response assets year was and transformation ago capitalize with first that earnings our terrific here thus I'm changing I the over the to saw two the discuss the be my have lie for on in business, provide outlook I XXXX. quarter our a early the would

made have opportunities. on in progress those of capitalizing a We lot

have award-winning we to front before the consumers and in deploying a infrastructure example, necessary and place For begun journalism invested in digital world. our center

efforts as We BestReviews we changes. while a teams with as ForSaleByOwner.com affiliation change. and San of this during divested remain XX% agreement addition, In three the year Diego Virginian-Pilot well Times, that the Union-Tribune significant milestone we reposition years a year since to subscriber reached Publishing just our ago. of represents This pivotal these increase purchased to critical year underwent came and the end paid pleased for our grew our together earnest acquire restructured executing business a XXX,XXX at plan a Group our as Xx I this cars.com. effort in the This interest base our the Tribune past our am digital Angeles how focused Los XXXX. began on portfolio in company and one was with and

pension our XXXX, also liabilities debt reduced significantly sheet. with and During balance healthy us we a leaving

optimistic and lie enter the opportunities business strength ahead. our we the we about XXXX, As of are that

and in program cash generate our board to XX approved year demonstrates the business are The repurchase announce stock of two our We program. confidence the strength to the ability pleased that a new have million we flow.

products investments capital our shareholder continue strategy, to capital of people value. the will as shareholders work to return make work and part and in we to allocation disciplined deliver As to we necessary

flow delivering expanding achieve that and digital objectives. engagement pays our and cash a print our two, we plan. on structure One, range of our traditional optimizing have execute the from key four solutions; three, organizational team to business; digital our focused our to journalism; audience right advertising, marketing for and four, with selling Looking ahead, management and ensuring and our team deepening is commerce areas a

take these priorities. company, online vital the embrace our we with few overall growing of engaging on come our more as the have well strategic me digital to audience of across strategy, each expand Starting a Let to deeply entire moments both as subscribers. importance our

have our We journalist of have other arc prior completed mentioned we Washington at the few roles a successfully align order to full in our newsrooms over rollouts Hartford and and complete these on months. Post’s grow we Arc will the workflows our As in we December better digital calls, audience. partnered Group Publishing in implementation the Courant with to next

to addition, investment and subscribers. tools the best and more analytics decisions informed and These on few insights us organization what has insights in years last to given journalism where to the have our newsroom readers how directly tendencies. In our approach leads our to real-time This on deploy engaged audience data-driven cover, present resources. leverage data to

discuss to advertising, marketing want I groups. commerce Next and solutions our

In of departments recruiting the audience, markets advertising addition also by sales and sales leaders in with associates to experience. our transformation our year accelerated line of – each our efforts we aggressively past in with grow eight digital this our

to make valuable are units of examples of business in In advertising addition, to of more Two we to marketing our the continuing portfolio our each efforts. partners. invest these solutions local

with work outstanding partnership by in Studio exemplified is of team the Chicago Tribune. the our XXXX First

these a best Media Studio native XXXX for award. of International For advertising and Association’s efforts, finalist execution named XXXX was News the

a in partnered revenue investment performance. promote our search meaningful titles BestReviews, increased with work to site our local following brand the Second, the site in our BestReviews’ direct This to improvement markets. in and led

flow We design continuing from priority manage production audience of business each newspapers. made launched growing our optimize generated digital revenue. progress traditional is the our to We regard of print while and cash for our layout this studio print Tribune the XXXX. to our key Another in significant during

transitioned the of the our of quarters have have already We middle transitioned papers of by three XXXX. we'll titles and balance main the

pension drivers leadership, as Chicago applicable York and with our plans. under obligations part new multi-employer we New plan financial in addition, and reduce of flexibility increase Terry's operational In associated entered to union agreements into with the

a the series As reductions to costs our of declines We know, in of and seen offset traditional industry and well-publicized remains those revenue. immune one been to reductions priorities. key you not headcount controlling certainly have significant has

I it think to is also However, business in important that highlight to to invest continue future the growth. we fuel

new are journalist necessary the lifeblood These We and in talented are to have of and at the skills deliver revenue audience want hiring help hires markets. journalism We profitably value. to organization shareholder it. growing us associates us sales, and every of marketing, effectively our our and each sales in our of the our when, to in and business succeed consume to roles for level order how need product where, distribute long-term operational in digital people audiences

We on focused right are recruiting talent the for very position. every

[ph] Gazette Gazette, the incur. colleagues of took misconduct the five our public Capital Hiaasen, newsroom examines This Year world-class. Tribune colleagues, As journalist and that in shooting. of John the Chicago the Neuharth when and Hutzell on Chicago its Magazine our Parkland Gerald to in honor we Fischman, and was Quality series, Scripps foundation person the enable Award to staff editorial Rebecca the recognition Award these sexual remains the our examples Wendi C. the for which of lives honored won named include: XXXX frequency of serve memory the Editor strength school Investigative schools Gazette communities Rick educator from I Howard earned the Journalism Winters. Al to those secrecy of A Editor, to of was mentioned, Annapolis Capital them Coverage following Capital shooting failures in resilience Sun named and of year our do, a annual systematic of to in Benjamin awarded few the and every Bradlee And News colleagues much for his they editorial leadership for inspiration a crimes this McNamara, the the reporting is for in the our at Sentinel means in Time The ensure the journalism talent Betrayed their talented recognition. The take list. day. investing Innovation We Smith of The in culture his by everything that five was Rob their of work Breaking

quarter we collaboration the organizational each have undertake the January, we believe facilitate in important of engaging areas. that these ensure and local most have markets. now with already took to layers to maintaining we management create CEO to we improvement that we combined we in improving number focus reduced to encouraged shareholder generation these place right It strongest long-term in to this support and became turn greater strategy the Terry over focus media all our I but goal We accountability a value. around of execution are strong with our decision steps seen on still flow structure results. the Overall, in have of the by early, efforts cash of would on Lastly, Since fourth will our is our ultimate I platform of teams. while speed making. discuss our

Terry Jimenez

Thank you, Tim.

with housekeeping a start few me Let items.

properties sheets refer better previously has for without related certain organic as this divestiture. to view in balance a I of periods with same reporting components. you discontinued results and I we'll As both XXXX their sure will and purposes, make give discussed, operations will Also to we've ForSaleByOwner and that aid comparison in exclude speak to as the XXXX I the to and result and a to California four classified results on business results. activities

XXXX not in acquisitions of the results. The activity and are first from but Virginian-Pilot, the results in which is XXXX BestReviews

profitability. calls, comparison digital The cars.com agreement, has on second previous year-over-year impact distortions amended is in minimal as but revenue earnings the advertising for discussed impact which from drives

on recorded relates line. the third we to properties, new providing The of also California Services has Transition a bottom to minimal the the are owners impact revenue the services which for

XX XXXX Finally, weeks. had for quarter will results action quarter week fourth weeks fiscal XXXX the in year. our of the the had The operations fourth and fourth be the XXXX XX including item of adjusting

print by our operating had weeks week declined Total million, year The fiscal applicable. revenue the quarter continuing is same the On of in So weeks of year XXXX from I advertising revenue taking the primarily declines. versus will full fourth down actual out the basis exclusion due outlooks total $XXX.X comparisons. were where for XXXX. XXXX. X.X% same these a business in to for adjust operating basis XXXX revenues XX And the X.X%, XX quarter

the XXXX. operating a the assets, or $X.X million XXXX. loss of fourth due fourth quarter in versus quarter outpacing $X.XX XXXX income manage meeting of in Same the fourth expenses operating expenses were were were the or share quarter EBITDA of to fourth of of Driving quarter million EBITDA quarter our level as quarter XXXX. share of down and Virginian-Pilot from in quarter the stockholders results partially million $X.X continuing the $XXX.X year-over-year continue declines expenses. we aggressively on in net operations $XX.X attributable per basis million million, core Tribune to XX.X% Our $XXX.X year-over-year In a compared business, a the adjusted and year-over-year to million first million expense net for we on in of operating $X.XX the quarter first but reductions to or revenue quarter BestReviews income the to of per increase down $XX.X was of XXXX, of consolidated from this adjusted growth. totaled the in Adjusted loss XXXX. to thoughtfully the – had $XXX,XXX our XXXX, fourth $X the for In million compared quarter the $XX.X compared business same

or virus, ware XXXX, determined was company continuity it an and in systems. and systems and that in XXXX resulting actual week to any year-over-year data company's newsprint I'll which which up increase of further. from attacked up a occurred last year, by the from ransom increases The incident which are access result the the components threat company explain company week investigated required a December plans expense over XX% of within In a pricing, million, cyber that in our data $X partial not unauthorized of did locked stored certain sensitive the acquisition business of impact Our the backups. implementation and of data of restoration

have and are our newspapers a commercial of our From pleased plans. and sheet proud our to get point a customers and stable our serve balance and view, we to rallied of to and had organization how position. We strong to advertising around continue people very continue

related final to $XXX.X million taxes we April of of million due $XX.X unrestricted We the $XX.X million up cash, $X.X the million made have restricted as cash. and of pay of California. will of transaction XXXX, In in

continue capital classified the in debt. to with are have debt as leases approximately that We of million no exception $X

of which was pension the sits December the markets And performance weak since have is at XXXX's end by markets, lower Our in $XX.X adversely balance. those than but the rebounded. our liability performance impacted asset million, equity

of terms invested CapEx one quarter locations, capital other In office for two lower in million technology Gross the resulting and have an was our year. infrastructure in million the as fourth on in Baltimore, full expenditures, we the $X.X both and basis. in well as in ongoing $XX.X Chicago expenses

capital previously mentioned, our and XXXX versus ongoing the in for We lower locations presentation. reporting spend moving office is and a tenant cash As net which the amortized capital received, offset forward. reduces outlays allowance anticipate purposes, for rent improvement much against effectively a expense

third fourth same continue we Print segments. X.X% revenues XXXX of down advertising On business prior down see compared advertising. we X.X% BestReviews, million a on our each down as experience third basis. a XX.X% same the down Now for downside where of we in an were of were $XXX was the was revenue the XXXX. were trend in offset growth were to I'll total by was fourth in this in fourth basis, XX.X% which Virginian-Pilot also XX% significant which year and in revenues the X.X% revenue print quarter The total a million, subscription did touch improvement we quarter X XXXX, digital-only year. sequentially in compared of improvement where on the to prior from in quarter. But quarter the was quarter reporting M performance in Total the pressure the basis, of business partially $XX.X down cars.com had year-over-year a week The to decline revenue on in up the quarter. which actual sequential came

continue in subscribers. traction our see to growing solid We digital paid

guidance. our to turning Now

outlook. into thought well as as are first would full quarter, we deep the be helpful we year Given QX provide it to

to QX $XX million into show fall approximately This we will $XXX For to XXXX, a by total in EBITDA year-over-year EBITDA adjusted in million million growth we revenue the $XX between we range. $XX $XXX and for fall anticipate quarter. and adjusted million anticipate will the million

realizing EBITDA in an annualized out to be drivers For the the through items last for million savings the brought guidance fourth And full expense adjusted EBITDA quarter, $XXX third shore year be adjusted year. pension separation which will we Chicago realize XXXX, The to program midway we be will $XX from and million savings. to referenced, This unit voluntary as pension funding reflects number of of In which contributions we New York, anticipate full reduction increasing significant the from to year. in second $XXX transportation realize following in we million the perspective: quarters savings. launched both actions Chicago, will up and a of our our Chicago. Tim in executed our

level, and at to savings. reorganized the corporate our thus efficient to realize be significant team we have more executive We expect

expenses that ease newsprint are And faced the peak we cycle office year-over-year new XXXX. see will as continue optimistic we pricing in finally, XX-year also estate to in rationalization. we expect We real we given savings nearly

the We years be years. continue we grow investments solid remain organically three excited will to to the acquisitions, layered over with we position potential and in next financial future, believe five with a to future about

longer-term core on we outlook, a three on discussed, previously goals. As are focused

subscribers. for times expansion, million just digital-only years First, as of two we than at quarter growth, the is XXX,XXX Tim on which X basis. which ago. three the significant expansion full mentioned, growth in subscribers, were XXXX same Margin to consolidated we we had which where the year-over-year And in experienced a revenue And in more XXXX, had we year QX digital end of XXXX. had

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

Operator

Instructions] question Lance you. And Vitanza [Operator Thank from first Cowen. our from comes

now line open. is Your

Lance Vitanza

the of higher-level versus with – the how XXXXversus then as to just the EBITDA can the guidance. the just what from And digital, thinking quarter cetera? taking of a about and start if for big what it of discussion you a the sort you had of pretty I in cost just think wondering kind third if end but back sort quarter at likewise XXXX, we call thought you I EBITDA you been in this in are the of was revenue get print sort from off got. how bridge you good bit questions. that side, terms thanks Hi, was et looked of that on the the of buckets could side

Terry Jimenez

sure. Yes,

within point hopeful guidance the and end of come we a we we on middle. in view range revenue the but to lower more came in of So were from did be

had momentum And we then bit thought. that slight really softness we December middle sequentially so seen the in the of some end frame But to there in quarter occurred December So then realized in a really an occur the come reductions view, was for We into from at earmarking to expense there. little time of we’re saw QX, then or January. of improvements. started a came of softer expense some where we’ve were while we point optimistic more the reductions of get earlier kind realized we and number most of more some we into

hurt initially little from adjustments, look we And for dollars that comp sometimes will we and that take. Typically, was workers’ it we was thought will actuarial sometimes for we another you, based you adjustment estimated some million it had prudent as at those at reserve a going will and things a several that which out. just you. come of is from of now exposure smooths And that And looked So unfortunately then to and accounting had as those time, view, area reserves view go, analysis reserve help we us, there. think savings over increase the to anticipated. bit point year, I went point more for closed we of timing happens on us. shifted we the handful against than had all a had again, out much things an a But and

Lance Vitanza

of take revenue, revenue EBITDA year into million translated from I roughly would EBITDA, the that would the if And $XX a guidance aside, putting that acquisitions, the million we $XX have the in year-ago – $XX of the versus revenue the much ago. much How it mean, how week, extra million was extra quarter? out of

Terry Jimenez

with I get number. the – Bear us Lance. second. We’ll exact a about $X you around it recall, was million,

Lance Vitanza

Okay.

is beg performance call I then what $XX in improvement. the cadence have to a it we you of of bit restriction into – restructuring So is in right over And charges look given out good just the least at terms see versus year-over-year, expect just sort million low trends of in baked outlook the the how but that’s XXXX guess, EBITDA low is, add-backs? the don’t gauge I numbers it sequential that do course the pretty faces if metric up sort of on does versus XXs the quite question both adjusted and full the quarter, year-over-year the here? – you of at much question, a XXs, know me year to sort the went of guidance front

Terry Jimenez

restructuring onetime won’t there spent it ongoing, $XX of like was million, we on roughly then generate program, of the say, transportation that unit really fall. big benefiting where but in lot to financially of is what chunk And hurting to at number occurred of the there of which XXXX. million onetime restructuring a definitely view that savings, of be charge. going items, but a things was north specifically point from I’d a is less will experienced guide our $XX a don’t was That voluntary we of charge so an Yes, end significant change. that a severance other we the XXXX December, number recurring also

going in be what And to so charges of forward, I level in lower move had XXXX. think from think a we much as we’re we operating researching I

Lance Vitanza

If more just in. get I one could

credit should information, you wells. frequently provide you, to pay What but experience respect I’m to looking been? like What your how a tailwind about on for this Just curious progressing much what a or more a thinking in? the inning I bigger-picture we web question headwind with trial new have I’m being get Do they’re that? prompted your are subscribe a basis, the not before get an be sense necessarily How I’m we on titles for when card we user see only to ID, certainly your stories. to on additional has tailwind? feel

Tim Knight

Tim. look us quality for for the Hey in consumers to content. continue Lance, and for pay to We it at extraordinarily get to it’s as important particular industry our

that paying will important I The making content to decrease we product for. especially on having – in to think and the we around around we portfolio, have have acknowledging be consumers investments worth are been them continue mobile, the make the quality And challenges pay is real easily. people. capture

– subscribers who I early my still. have million to to that this that, our a and that consumers’ growth for. really on the is got that think analytics data news and we’ve we’re our we’ve helped mentioned I more seen nice markets taken the pursuing understand the investments volume, growth they're data continue in both anticipate pay content of on rooms – needs year and each use audience willing valuing comments, to digital-only us in continued used in us, to make as and and the on seeing our the sure with it it’s X.XX pay is we We’ve

going opportunity important, So shift important, of is, that very media forward. big operations a all towards a lot across kind on answer major early and short more

Lance Vitanza

much. very Thanks

Operator

next you. Capital Markets. Noble from Michael from comes And Kupinski Thank question our

now is open. line Your

Michael Kupinski

Thanks good you. the for questions and taking Thank afternoon.

was first you bit you're the just sequential first was I could talk and improvement a flow in and little seeing Your better where trends expected. for than that in wondering full about revenue revenue is what And revenue I the year guidance quarter if moderating quarter. the cash you're you that seeing I trends would've wondering, guidance mentioned

Terry Jimenez

Yes.

So but for against. I we're big the a the cycling some of there's us without advertising of and challenges of think others that on of question, bankruptcies of some certainly time, number cycled side, we've one-time events seeing the

a that given of have been easing a that there. also bit bit running, national a side there's pain have boost little of on So print us also programs There's little the some of terms things. advertising And in of digital then we're we to sure cycling in moving we're issues the efforts, that continue right again earlier and the against some that XXXX. of direction in make that the we had

Tim Knight

And general also just we and what me changed add Mike, XX the on each is call that, months our past VP have year we out essentially let digital of ad in manager. hired in markets

people So advertising digital market. each for specialize sales who in

of to to team opportunities execute a is we able building see be out the right there. So lot the on that it

Michael Kupinski

Got restructuring, I that regarding is assume transportation right? you. in that And your was and New Chicago, mostly York

Tim Knight

Correct.

Just markets. those two

Michael Kupinski

to profitable? now profitable that now it is York, the was then New And publication be is – you. those are a got quarter? fourth in or What path in on I like it

Terry Jimenez

Yes.

the we've So look the significant were that business stand in obviously we experienced there profitability itself as alone we some the progress. northeast. as well made synergies and at, When

our the publication, Morning instance, So Call. Allentown for

as up. standalone when the factor exited so in performance, as And well that you year all it the

Michael Kupinski

consolidate to of much terms stable or those? in you putting And there Got pretty are now you. further then in opportunities are opportunities facilities, production – you're

Terry Jimenez

with think our well. two those We've where And more serve. being even facilities certainly And there's do then our the have we of think number peers that that we aggregator. more opportunities markets got the there's those more that opportunities other some Chicago, consolidation markets. we within conversations still we the mid-markets, have as within we're New So of largest, a we York

we're them of at drive there. to help each So revenue looking growth some

Michael Kupinski

increase fourth you And price seeing newsprint it strongly in any from up prices, you terms the of in the in rollbacks quarter. quarter? the Are was fourth mentioned a big

Terry Jimenez

huge where so it peak call decrease. late of it definitely the because wouldn't pricing were up see really a seeing, a easing But mid away, occurred we're down. to year-over-year month of tariffs terms we're be of to really quarter right we We a to the the and on drop saw that month, third easing it or would pain. There's in kind easing continue I jump in substantial after basis. reversed. not of little rollback some still bit the a of But

we quarter, fourth the around wise I were think up in year-over-year we XX% quarter up and were price third XX%.

back But to hoping and the that'll when to year-over-year we'll lower point get we're not and down basis. at So, see hopefully how newsprint happen. flat prices a foreseeable sure some and I'm hopefully future on

Michael Kupinski

bit you question. Got for this Can appetite final thoughts talk your acquisitions market your And the you. little the maybe acquisitions? a about environment, Maybe regarding at point? some

Terry Jimenez

every anything don't and we particular, said but Mike, opportunistic. Well, we've to things we in as comment on quarter continued look at that be might

a make can sure take strong position opportunities have markets we we strengthen look and at deliver shareholder on key value. we balance we where and a sheet we have and So, our

Michael Kupinski

Got you. Thanks.

Terry Jimenez

Thank you.

Operator

Thank next Doug comes question you. our Arthur from Research. from And Huber

now is line open. Your

Doug Arthur

last adjustments et newsprint, segment the and what get schedule in impairment to quarter. cetera without I'm comp, expenses with $XX about considerably operating just there's trying you're your Thank the I DNA – where to adjusted of showing million to Terry, reconcile you results. Yes. higher reconcile you. for guess than adjustments, the it's the fourth to Obviously second that's

of or offline. to the comp do you what is. something et sort the understand underlying those should just trying is out break number So can these I'm restructuring, cetera, we that transportation,

Terry Jimenez

Yes.

offline What to bit well. – we a is little clarify certainly is as what getting view think, get can adjustments. the I we're you also trying I deeper a business same

with and any Virginian-Pilot the out And associated so BestReviews. expenses we're taking

you're comparing a that basis, on adjusted So get you year-over-year when same to column the businesses. the

lot a looks charges in higher it restructuring are. So the actual than

Doug Arthur

Okay.

trying you're store that, same So okay. to

Terry Jimenez

Yes.

Doug Arthur

or in ad That's XX% And heard something you significant print all then XX% there? Is of in is in if Understood. there I in terms Okay. correctly, QX. QX, pretty trends, down print else that a improvement.

Terry Jimenez

Yes.

that's So print. all

Doug Arthur

that that or to I easing some across programs it some you and was back already mean, to just was that the Mike about goes said drove comps. particular And what national more board? it property

Terry Jimenez

across the it No, was board.

Doug Arthur

subs, the that do in And is I million mean, that come then guess within paying might through sub view XXX finally or have on something your you of digital your universe X Okay. I more acquisitions? potential

Terry Jimenez

helping I look well So million year at really timeframe, got, I got five data team is, that think a from think a a We've this when this. we've the as helping my view personally really drive that's good X support and team. we –

five I more the million think X of year timeframe. the is achievable,

is likely. through accelerated I think can probably acquisitions. three year more get that's that And where window the

Doug Arthur

right, great. you Thank Okay. very All much.

Terry Jimenez

Thank you.

Operator

I'm And further to closing Tim I for call turn showing at to like and President back now not any Knight, CEO the questions you. this time. remarks. would Thank

Tim Knight

Thanks joining call. our gain very these of XXXX momentum year the success. we our you Tribune organization, part transformations forward continued we sustained through We and to groundwork execution laid the on new everyone anticipate as us much. on successful Company. building Publishing a today's look for transformative for XXXX a was of last Throughout Thank strategy. for year

Operator

you today's program. Ladies This conference. for and today's participation concludes gentlemen, thank in your

You may all disconnect.

Tribune Publishing (TPCO) 13 Mar 192018 Q4 Earnings call transcript