|Journal Communications Reports Second Quarter 2010 Results|
MILWAUKEE, Jul 21, 2010 (BUSINESS WIRE) --
Journal Communications, Inc. (NYSE:JRN) today announced results for its second quarter ended June 27, 2010.
"Improving revenue trends combined with permanent cost reduction initiatives taken over the last year led to another quarter during which we increased our operating earnings and our operating margin from the prior year. We also reduced our debt during the quarter by another $16.9 million," said Steve Smith, Chairman and Chief Executive Officer of Journal Communications. "While the economic recovery seems to be somewhat uneven across the country, we were encouraged by the operating results for the quarter at most of our local markets including Sun Belt markets like Nevada and Florida.
"In the second quarter, Broadcast revenue increased as automotive advertising was up 31% compared to the prior year and we recorded $1.9 million in political and issue advertising. The rate of decline in advertising revenue moderated in our Publishing business, down 8.5% in the second quarter versus down 13.0% in the first quarter compared to the prior year.
"As we look ahead, developing our digital business and enhancing our local market content in order to grow audiences and build new advertising revenues remain a priority for us."
Second Quarter 2010 Results
Note that unless otherwise indicated, all comparisons are to the second quarter ended June 28, 2009.
For the second quarter, revenue from continuing operations of $104.4 million increased 0.1% compared to $104.3 million. Operating earnings of $14.4 million are compared to an operating loss of $9.5 million which included a $19.0 million impairment charge for broadcast licenses. The loss from discontinued operations of $0.2 million is compared to a loss of $0.3 million. Net earnings were $8.1 million compared to a net loss of $4.8 million.
In the second quarter, basic and diluted net earnings per share of class A and B common stock were $0.14 for both. This compared to basic and diluted net loss per share of $0.11 for both in 2009. Basic and diluted earnings per share of class A and B common stock from continuing operations were $0.14 for both. This compared to basic and diluted loss per share from continuing operations of $0.10 for both in 2009. Basic and diluted loss per share of class A and B common stock from discontinued operations were $0.01 for both in 2009.
The operating margin was 13.8% for the second quarter compared to a negative 9.1% margin. Excluding the $19.0 million impairment charge last year, the operating margin was 9.1%. EBITDA (net earnings (loss) excluding the gain/loss from discontinued operations, net; total other expense, net; provision (benefit) for income taxes; depreciation; amortization; and, if any, non-cash impairment charges) was $21.1 million compared to $16.5 million, an increase of 27.7%.
Consolidated and Segment Results
The following table presents our revenue and operating earnings (loss) by segment for the second quarters of 2010 and 2009.
Overall, total operating expenses of $90.0 million decreased 20.9% compared to $113.7 million. Excluding the $19.0 million impairment charge and the $1.7 million gain related to the initial estimate of the insurance proceeds for the Wichita tower replacement, total operating expenses last year were $96.4 million. The decrease in total operating expenses of 6.7% is primarily attributed to the many permanent cost saving initiatives implemented during the second quarter of 2009 that have now been in place for over a year.
For the second quarter, publishing revenue decreased 4.1% to $47.4 million compared to $49.4 million, largely due to continued decreases in all advertising categories offset by an increase in commercial print revenue. Operating earnings from publishing were $6.6 million compared to $4.4 million, an increase of 51.7%. Total newsprint and paper expense in publishing was $4.6 million compared to $4.5 million, a 2.5% increase primarily due to an increase in the price per ton of newsprint.
Revenue at the daily newspaper for the second quarter decreased 2.3% to $39.0 million compared to $39.9 million. Retail advertising revenue at the daily newspaper decreased 5.6%. Classified advertising revenue at the daily newspaper decreased 9.5% largely due to decreases in the real estate, automotive and other advertising categories. Interactive advertising revenue at the daily newspaper increased 11.5% to $2.8 million compared to $2.5 million, primarily due to an increase in retail sponsorships and classified packages. Operating earnings from the daily newspaper were $5.4 million compared to $3.3 million, an increase of 63.3%. Daily newspaper operating expenses decreased 8.3%, primarily due to the reduction in employee related costs, other cost reduction initiatives and reduced expenses related to revenue declines partially offset by a $0.2 million increase in newsprint and paper expense.
Community newspapers and shoppers revenue for the second quarter decreased 11.9% to $8.4 million compared to $9.5 million. The decrease was primarily due to declines in automotive, retail and real estate advertising revenue. Operating earnings from community newspapers and shoppers was $1.2 million compared to $1.0 million, an increase of 14.1%. Operating expenses were down 15.1%, primarily due to cost savings from previous workforce reductions and reduced expenses related to revenue declines.
For the second quarter, broadcasting revenue increased 7.5% to $47.0 million compared to $43.8 million. Local advertising revenue, excluding political advertising, increased 1.3% and national advertising revenue increased 16.1%. Total broadcast political and issue advertising revenue was $1.9 million compared to $0.6 million. Retransmission revenue was $1.6 million compared to $1.0 million. Broadcasting operating earnings were $9.7 million, including a $0.2 million gain related to insurance proceeds for the completion of the Wichita tower replacement compared to an operating loss of $11.8 million, which included a $19.0 million impairment charge for broadcast licenses and a $1.7 million gain related to the initial estimate of the insurance proceeds for the Wichita tower replacement.
Revenue from television stations for the second quarter increased 10.0% to $29.3 million compared to $26.7 million. Television political and issue advertising revenue was $1.7 million compared to $0.4 million. Operating earnings were $5.4 million compared to operating earnings of $2.0 million, excluding a $14.8 million impairment charge. Television operating expenses decreased 3.0%, excluding the impairment charge in 2009 due to the reduction in employee related costs and in syndicated programming expense as we move to more local television programming.
For the second quarter, revenue from radio stations increased 3.5% to $17.7 million from $17.1 million. Radio political and issue advertising revenue was $0.2 million in each of 2010 and 2009. Operating earnings from radio stations were $4.2 million compared to $3.5 million, excluding a $4.1 million impairment charge and a $1.7 million gain related to insurance proceeds from our Wichita tower replacement in 2009. Excluding the impact of the gain related to insurance proceeds from the tower replacement in both years, radio operating expenses were essentially flat.
For the second quarter, revenue from printing services decreased 10.0% to $10.1 million compared to $11.2 million due to continued weakness in the printing industry and the anticipated reduction in revenue from certain printing customers. Operating earnings were $0.5 million compared to an operating loss of $0.2 million. The business continues to align its cost structure with its reduced revenue base.
Revenue eliminations were $0.1 million in each of the second quarters of 2010 and 2009. The operating loss was $2.4 million compared to $1.8 million due to an increase in director stock compensation expense and an increase in incentive compensation expense related to the improvement in overall operating earnings of the company.
For the second quarter, the loss from the discontinued operations of PrimeNet Marketing Services was $0.2 million compared to $0.3 million.
For the second quarter, other expense, which primarily consists of interest expense, was $0.5 million compared to $0.7 million. Interest expense decreased due to a decline in both the average borrowings under our credit facility during the quarter and the interest rate on our borrowings.
The second quarter effective tax rate was 40.1% compared to an effective tax benefit rate of 55.6%. Last year's rate was impacted by the operating loss created by the impairment charge and a favorable adjustment to our income tax reserve due to the lapsing of certain open tax years.
Debt and Cash Flows
At quarter end, our debt of $117.8 million represented 1.60 times the trailing four quarters of EBITDA. During the quarter and year-to-date, debt was reduced by $16.9 million and $33.6 million, respectively. While we have classified our debt as a current liability, we are in the process of extending our existing credit facility on a long-term basis and expect to finalize the agreement in the near future. Year-to-date cash from operating activities was $37.9 million compared to $47.0 million which included income tax refunds of $8.7 million. Year-to-date capital expenditures were $5.8 million compared to $3.8 million. Current year expenditures include $1.5 million related to the Wichita tower replacement for which we have received insurance proceeds.
Third Quarter 2010 Outlook
For the third quarter of 2010, we anticipate that publishing and printing services segment revenues will continue to be down compared to the prior year period reflecting challenges with publishing advertising revenue and printing volumes. Broadcasting segment revenues are expected to be up compared to the prior year period due to increased political, local and national advertising.
Conference Call and Webcast
The company will hold an earnings conference call today at 9:00 a.m. Central Time (10:00 a.m. ET, 7:00 a.m. PT). To access the call, dial (888) 679-8040 (domestic) or (617) 213-4851 (international) at least 10 minutes prior to the scheduled start of the call. The access code for the conference call is 55339577. A live webcast of the second quarter conference call will be accessible through the Journal Communications' website at http://www.journalcommunications.com/investors, also beginning at 9:00 a.m. CT this morning. An archive of the webcast will be available on this site today through August 4, 2010. Replays of the conference call will be available July 21 through August 4, 2010. To hear the replay, dial (888) 286-8010 (domestic) or (617) 801-6888 (international) at least one hour after the completion of the call. The access code for the replay is 66386414. Pre-registration for the conference call is now available at http://www.journalcommunications.com/investors.
This press release contains certain forward-looking statements related to our businesses that are based on our current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Our written policy on forward-looking statements can be found in our most recent Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission.
About Journal Communications
Journal Communications, Inc., headquartered in Milwaukee, Wisconsin, was founded in 1882. We are a diversified media company with operations in publishing, radio and television broadcasting, interactive media and printing services. We publish the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and several community newspapers and shoppers in Wisconsin and Florida. We own and operate 33 radio stations and 13 television stations in 12 states and operate an additional television station under a local marketing agreement. Our interactive media assets build on our strong publishing and broadcasting brands. We also provide a wide range of commercial printing services - including printing of publications, professional journals and documentation material.
SOURCE: Journal Communications, Inc.
Journal Communications, Inc.
|"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Journal Communications, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.|