TPCO - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2019 Tribune Publishing Company Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker, Michael Ferreter, Head of Investor Relations. Please go ahead, sir.

Michael Ferreter

Tribune quarter to call. earnings welcome and Publishing's XXXX third conference Hello, Financial me Chief Executive Terry Chief Knight, are Vice Officer and With Tim and Executive today and President; President Officer. Jimenez,

expressions plan, like or such to we make forward-looking statements anticipates, as are differ our may, the during materially. I other and intend, Before of call, results remind believe, forward-looking this begin, will, course actual that outlook management you Statements similar continue, will estimate, would could statements. containing expects, words

Material our these results taken those forward-looking well uncertainties from statements company actions and as the differences the beyond actual in control. described the from risks may in result by company's as in

filed annual that will Commission, risks of uncertainties measures, with impact report and adjusted Securities publicly Some EBITDA could including to margin. XX-K. references and including today on Exchange remarks businesses adjusted Also, our and are Form our our financial these non-GAAP the include included documents in EBITDA

definitions the is available provided reconciliations which website investor.tribpub.com. at have to our release, GAAP most measures our press on and We in earnings comparable

it to With turn over I’ll Tim remarks. for that, opening

Tim Knight

made afternoon, leadership off to outlined efforts. the earlier highlighting subscription like few future, on touch the operational this our thank everyone, joining I'll Publishing by would year of for call. third to pleased I objectives a we on financial Good and start with continue best those position digital Tribune progress quarter. Tribune you for I'm The to continued I team and the the and today's focus our and digital throughout achieving of success achievements.

our mobile most sustained of brands stream XX% tools see over in app Tribune's Related, of we total with where the last this a important confidence key on journalism a digital-only engage These transformation and and when my the year. in enewspaper. is inspires with valuable company's marker a increasing specifically compared up of the revenue quarter have our the ongoing and web. begun mobile around subscribers, engagement, desktop the readers ended long-term We deeper consumer consumer same quarter level and growth we efforts digital platforms outlook. The our our to XXX,XXX

increase We app engagement. believe consumer experiences will improving our digital and our enewspaper mobile both

of and the to with we people continue of experience, new across challenges and third it crafting paid talent we As new our special each Publishing. consumer in hire attention top areas relates the navigation categories. In our industry, to quarter, in leaders privacy those our to Tribune we assigned of national and hired sales, the strategy

significant our teams in making also training all sales are our across state-of-the-art of programs. investments We markets with

improved we While it contribute revenue programs start to to is still early, advertising these seen have trends.

third the and am but special Sentinel world-class readers, September. call-out in I full-time their delivered at significant Dorian more and quarter properties our coverage Orlando of and traffic efforts the Hurricane the only also of to our the Florida public in serve August made last not on heart the sites. informed than Our remains quarter, proud reporting XX and to Sun drew to hires our journalism any in engage and a that the XX editorial our years. audiences, of most three company business, all and of mission, journalists goes our our Sentinel million Amid

technology spanning project complete. markets. new this was management market-leading content was our our cross-departmental a many The Operationally, months required that effort and the of of in across greatest QX implementation achievement deployment cooperation our system significant completing to all

improves platform of five has Tribune digital initial independent expect the results, and the our additional an Publishing transformation products. our helps year our with consumers for quality We we pleased to are our and company recognize next benefits over and the been marketing with very partners years. as online accelerate

successes believe became third that, I the us any facing we And to turn while headwinds, since better time we we the call like now successful. over a a we independent, to we I'd are face very in position strong and be challenges to than are position in enjoyed industry. continue quarter Operationally, to take in the the allow With on to the Terry. confidently industrywide

Terry Jimenez

income you, Thank another expanded solid quarter delivered EBITDA we Overall, Tim. EBITDA margin. significantly much adjusted and with higher adjusted growth, a

no that, cycled have as For the I this our With will financial same-business we quarter, there speak quarter. acquisitions for highlights. are necessary all to comparison

stable services performance relatively on transition Thus basis. of better than down in revenue revenue been on same-store have two properties basis. revenue. year-over-year third-quarter trends quarters our the core a with the with this declines California X.X% X.X% first a year. year of with and is providing throughout thereby year-over-year X.X% This the Revenue decline fewer the associated are is

add segments some color each I'll of a in on our moment.

quarter last expenses In terms operating of continue in third focus face we the in of to of the quarter on versus XX.X% year. XXXX headwinds, expenses, with same the total managing OpEx down revenue industrywide

Turning to net continuing income from operations.

which on with As exceed where million we million expense basis. a a revenue have focused year-over-year net just mentioned $X.X $X.X positive declines, is income, to in swing expense driven management, reductions net income

will a large we in charge have see, our operations. you As discontinued

a the the the in previous we brought former the on not owned successful the we to employee which to judgment Angeles court that we and the more fight negative previously pattern amount. Los intend award based period are disclosed, fact this jury's decision can believe of We case, favorable, modifying a The does decision. we persuade optimistic warrant were As one current business. from when reduce the related Times still to we reserve took to quarter, by third a in of We a lawsuit the judgment a was

charges EBITDA, quarter, business, in revenues. Restructuring year $X.X subscribers expenses by year are delivered $XX.X year. over year. $X.X which included adjusted margins and million come the EBITDA considerably our we have growth was $X.X that improvement Adjusted million expenses Year-to-date, million XXX-basis-point digital margin expand. EBITDA adjusted over expansion offset in third of continue BestReviews an of a this which terms quarter year transaction to and third of we million driven adjust we've in lower In lower down to partially seen the over out by and year, year advertising to

to turning balance sheet cash the flow. and Now

CapEx, year-to-date. $XX.X the up We XXXX. For cash, which $XX.X We should quarter had and of the full-year for $X.X $XX.X unrestricted. $XX.X million million the the end with million quarter we restricted of CapEx million million neighborhood and in million in in $XX in was exited

reminder, in we quarter. the July a share million of per paid $XX We $X an generated in approximate $X.XX early As outlay. for million cash cash out dividend

our a closer at segments. Now let's take a look – take look

segment, of print which XX%. declined X.X%, revenue the total advertising declined M For

advertising year. quarter XX% nearly in revenue XX% compared Print of in of last of was total approximately revenue QX our the total third to

on advertising less. Our print revenue continues be to reliance

in relying and across we advertising investments Although are on making performance. advertising, all are tools continue optimize we believe do sales we less platforms can and performance of our training, to

to Now X turning the segment.

the BestReviews basis. last continue e-commerce volume up up were as revenue Content we And Total a well X.X% to revenue strong significant was over subscription and year digital growth, due in same in revenue. the growth in to at XX% year-over-year see this XX% quarter were quarter and year. on versus third which

and and We all effort have basis subscription of discussed a the success there. year-over-year focus the digital in

synergies BestReviews, Cars.com. Site year. XX% of full down visits growth from Tribune In was see we advertising, utilizing digital lower over XX.X%, asset which the was to Partially year revenue Publishing. growth, realizing this strong result a terms of up are revenue of continue base with was organic which offsetting along substantially advertising

the driving of impact note, As we cycle the we Cars.com for six XXXX. should see digital to QX an a next that agreement ends five advertising quarters as down

at income the segment, from Operating expense X for but operations we a result, segment for shift the allocations saw which down was was over was as in costs as newsroom up year year. from M positive, a

$XXX revenue. $XXX guidance, fourth In quarter, anticipate to in we terms of the million for million

guidance million for adjusted guidance we we we XXXX to are of million previous For reconfirming provide that year. will full-year $XXX report at XXXX When time. earnings, $XXX our full our the EBITDA,

making focused company. investments costs we In to we key continue manage digitally the in closing, as we a where to are company effectively still transform

journey, We And up platform for we call continue now, operating success. the the all foundation metrics enhance strong questions. navigate deliver to we to our we open continuing this to across future our and and of key will transformation performance as are

Operator

first comes from Your the Lance Instructions] line [Operator question Cowen. of Vitanza with

Lance Vitanza

on consolidated on you all offer equal? guys questions job and – Tim, Thanks, you start, could the nice And might Could achieve particular, when the else bit quarter. that, to company in taking a talk more about thoughts little for can revenue growth? any maybe is – the you you positioning for

Tim Knight

the part we out. When Lance, cut what? achieve last

Lance Vitanza

consolidated growth, growth. line Top top-line

Tim Knight

improve had to we investments in packages. ability the mentioned, sell the growth of at advertising. digital organization, look our early as as Terry in and we're sales mentioned, on, to can continuing we've believe, while we our improve, seeing I that subscriptions, We're very trends made our multiproduct The and our

We continue us other to achieve products for that would look top-line to revenue. allow

growth, nice mind as alluded we yet Terry to a see we've when don't we As our is with progress it to, And of have timetable BestReviews business. top but seen – I would for as the us.

Lance Vitanza

couple that impressive been bridge called ago the obviously, on sharp me EBITDA dividend get have guess versus the to performance to headline thought, the thought little cash $XX have A of $XX million could $X just the there back million quarter to even add-backs. given reduction flow. of only the said, a free had than add about, year million payment, million Okay. I EBITDA The bit million call. through exclusive EBITDA, $X million I in the $XX that quarter, $XX of flow better. $XX of north of in talking during cash a you would only restructuring meantime I out a And more the you of free I'm looked, from in the EBITDA this million add-backs. you would million to That walk the of

Terry Jimenez

Yes.

we had, in, huge itself, generation the of the working lot upswing that capital a about in point that relatively cash minor, we the Then sure. then We I And pay. shift see had million. to working CapEx some quarter, think, didn't well, taxes we had of drive capital would quarter a from cash view, $X quarter. So a in

Lance Vitanza

I front, the few Or issues Is matures? terms are over think, that be as part of just the year-over-year to but over it can growth slowing business, Okay. other the on suggest some reaccelerate? a over some that great, the subscription this big quarters, the it's just that there That's could, see or quarters that in does, mentioned. you expected XX% digital-only growing theory, past I you as slowing in trends. do year, make growth few If obviously, just year think could, you business past of moves

Tim Knight

the take can You his first question. of part

Terry Jimenez

focused the where what think I down in grows, of consumer subs, are the drive see and the of sub so. a got So into, newsrooms, digital content enhancements that view, CMS lot we'll base drive more on see we the opportunity also that's product continue on that us ones for to some that that can the got how now that have a that's we a slow number we only there's terms a even base, but make driving we'll live, a And number, we've experience they have as to is of focused growth to we just percentage in we then point can right digital team the really is, number. think forward. that We've that not so grow from larger percentage team as

So there. that digital well we as is think opportunity growth there subs in volume as revenue

Lance Vitanza

maybe then me. And just for Okay. last

what your past, becomes going years of you're forward? expect in As you business increasingly seeing what you discuss could the the importance of inserts digital-only, and terms business today relative

Terry Jimenez

won't this so Yes, we guide number. specifically

of that I we think that print when at as are inserts revenue, overall in paper. includes paper the print the revenue about about, that XX% ad the overall ad ads look print revenue the well inside that talked we both you go as talked when total – revenue the

XX%. it's really of a that So subset

making by they're doing optimize investments. that what a we on sure placements, those I can getting of making value-add there's kind to of our think lot those through ROI clients and right the to we're

we're bring not delivering on just team the focused so digital we into to And can on what the we world insert the side, as can but them clients, what well. also

Lance Vitanza

I Thanks, Okay. guys. time. the appreciate

Operator

with from Huber Doug Your of Arthur the comes next question Research. line

Doug Arthur

I stable on pretty guess, I and in the down relative It's XX.X% print right XX.X%. I if Yes, down QX QX QX. of middle, looks to advertising, sort XX% QX mean, the have and

the the peers, So that by kind better a steady-state like way. fair? rate of your looks And that of than run some moment. for that's Is

Terry Jimenez

peers of our year for we've this Yes, this we've declines last I been as the you kind been highlighted, few seen has been the I where have within a tight think because we've it it's – think far band outperforming quarters year. so been,

at quarters. through than first we're it's So better where pleased It's down, three the relative. we're with Albeit nothing others. it's

Doug Arthur

circulation, print think, assume would X.X% the prices, I mean, obviously, on is And I I higher – in lower volume. quarter. down, the you Are strategy

Terry Jimenez

Yes.

So opportunity categories, where those outlets. just home in of kind the think lower there's terms as to We've the there's the the been end feasible it's delivery well We of that focusing two subscribers consumers, – schedule. increase – rate single-copy of the you've at on still on pricing got the increase especially prices that there. are as

on the at third think least price in we bit take the actions many increase. didn't I where little new single-copy seen quarter, we've – a

declines the price the no and so volume really quarter. seen And really in we've action just

think I see basis, you blended down on it a So X.X%.

little number that. than Our better a home delivery bit is

Doug Arthur

just is substantially. year for of volume you a M sort number print over pretty second, versus highlight versus newsprint down price? stay with your And to Can year –

Terry Jimenez

bear me Yes, a with second.

of, third of quarter As to last we year. XX-year you I'd had recall, close in peak say, newsprint pricing the kind

terms we're I closer think where and – XX%. for this kind the of of mid-teens, ended price, down down down in in is the to we about volume the quarter,

Doug Arthur

impact advertising. And then while been six on I the you Because for will something I Cars CareerBuilder a I clarify Okay. of about QX you now say quarters? X and on the deal thing continue you place. thought had that's of to it's Cars. five ago to said the another XXXX. And of kind also think Did that all just – mean over the

Terry Jimenez

Yes.

markets from were a that them of do revenue, XXXX. basis way revenue, So through kind to the right so. the rights them recognition after QX had that the we is revenue we structured in previously was had gave advertising agreement that on we the received sell to them of Cars was essentially The receiving that a from we declining

And that so ad decline all versus Cars XXXX. on just continue kind or bit way we'll piece of more revenue And of alone in QX revenue XXXX. in QX QX little then of get through QX, to you the the a to see see significant a because of until for we XXXX digital cycle

Doug Arthur

Okay.

what's So kind of if else you I that, everything adjust mean, for doing?

Terry Jimenez

Cars low of down – was going Most driven digits, and advertising that tension we're this single the to with longer is digital-only digital advertising. drive overall, we're trying yes, so on – overall to subscribers, So digital we've still got really no be total hope focused in the just the excluding and in views for a audience where for growing impact. page period

recurring boost we're access, short-term now a to impact consumers from limiting advertising on digital focused on long-term much so gives can an subscriber. And has how digital-only us a very but revenue the stream which

our properties that little seeing – across we're So play out further now. bit a

Doug Arthur

Okay. Terrific. Thank you.

Operator

[Operator Markets. instructions] question with Heim of line from Capital next Noble the Your Mike comes

Mike Heim

Mike store for & it another specifically be to wants like XXXX? that how just know wanted on Penneys closing, Bed And ask in Beyond. significant business. recent call. He is and about here about sitting and who been I've that guidance affect overall companies and the fourth-quarter He Kupinski if is your to reflected might Bath to talking the Thanks, had to

Terry Jimenez

Yes.

revenue, advertising side. asked. a our had – historically, So at look has been like print Lance especially proportion of big just It's insert the retail always we'd on

the overall happen, kind at rate I of rate basis, while think, XXs and couple relatively think But any been the has wholesale had – for of us, There's world been closings there's with, haven't continue we've been that one-offs. closings, of Forever others. closings of obviously, the business bankruptcies the hasn't of we seen a I so large stable. the a to an There changes.

as there So in next they fourth sell will push into they see can try as maximize strong what think for we a the forward retailers inventory terms all in as move moving out of to much be year. quarter, I to and

And specific don't this so foresee in year we QX actions. any impact a we of – think large from don't

Mike Heim

started publications, Okay, impact as And toward thinking points business how the Is could savings? secondly, reduced wants other And be moved of a are canceled Mike out source Sunday as has an he thank Sunday. have of ask, publishers Tribune something you about? that business, considering to you. guys that that has potential

Terry Jimenez

us, each look day. I by think, we're that markets the for we at publish overall really profitability each really good day, think in our I a and across of position

we are we period that the other other nameplates need make say, And near-term there that on products. I'd of have in days some there's markets. our are that we have of of that so our noncore products decisions there's – for no, core large to each Certainly, reduction outside really

So actions But say, as a into products, any we near-term. periodically. those in XXXX move in and for we look the don't I'd position really at foresee good we're core those the of

Mike Heim

your for you Thank Okay. time.

Terry Jimenez

Thank you.

Operator

this no I to At are call questions. would Knight. time, now Tim like to the over back there turn further

Tim Knight

call. Thank on joining you, for today's everyone, us

third was we throughout Publishing, we look day. to one using built XXXX forward year have for quarter the a finish strong. Have momentum The a strong and Tribune the to great

Operator

and for now participating, and conference call. gentlemen, you concludes you may Thank this Ladies disconnect. today’s your

Tribune Publishing (TPCO) 8 Nov 192019 Q3 Earnings call transcript