- Total revenue of $82.3 million, down 1.9%
- Broadcast revenue up 5.4%
- Publishing revenue down 9.0%, down 6.4% excluding Florida community newspapers and shoppers sold in 2011
- Operating earnings of $5.7 million, down 4.5%
- Diluted EPS of $0.05 in both years
- Notes payable to banks of $37.7 million, a reduction of $3.6 million from year-end 2011
- Repurchased 577,015 class A shares for $2.9 million
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MILWAUKEE, Apr 26, 2012 (BUSINESS WIRE) --Journal Communications, Inc. (NYSE:JRN) today announced results for its first quarter ended March 25, 2012.
"Journal Communications reported a solid first quarter. Broadcast revenue was up 5.4% with the majority of our markets reporting revenue growth. We also had a number of other broadcast highlights in the quarter. First, we are pleased that our Milwaukee 620 AM WTMJ radio station extended its longstanding radio rights agreement with the Milwaukee Brewers. In addition, we reached a long-term agreement to originate the Green Bay Packers preseason television network.
"Publishing revenue was down for the quarter, although we posted positive operating earnings on strong cost controls. We faced tough comparisons to the first quarter 2011, during which incremental advertising and circulation revenue was driven by the Green Bay Packer Super Bowl appearance.
"In March we announced an agreement to purchase two FM radio stations in Tulsa, OK from Renda Broadcasting Corporation for $11.8 million, subject to FCC approval. We believe the addition of these stations to our existing Tulsa radio cluster will create a stronger group that will better serve our listeners, customers and the entire Tulsa community. This transaction is consistent with one of our strategic goals of creating additional scale in existing Journal Broadcast Group markets."
First Quarter 2012 Results
Note that unless otherwise indicated, all comparisons are to the first quarter ended March 27, 2011.
For the first quarter, revenue of $82.3 million decreased 1.9% compared to $83.9 million. Operating earnings of $5.7 million decreased 4.5% compared to $6.0 million. There were no earnings from discontinued operations in 2012 compared to $0.3 million. Net earnings were $2.9 million compared to $3.4 million.
In the first quarter, basic and diluted net earnings per share of class A and B common stock were $0.05. This compares to basic and diluted net earnings per share of $0.05 in 2011. There was no impact on basic and diluted earnings per share of class A and B common stock from discontinued operations in 2012 or 2011.
The operating margin was 7.0% for the first quarter compared to 7.2%. EBITDA (net earnings (loss) excluding the earnings/loss from discontinued operations, net; total other expense, net; provision (benefit) for income taxes; depreciation; amortization; and, if any, non-cash impairment charges) was $11.5 million compared to $11.8 million, a decrease of 2.5%.
Consolidated and Segment Results
The following table presents our revenue and operating earnings (loss) by segment for the first quarter of 2012 and 2011 (dollars in millions).
| 1Q | 1Q | % | ||||
| 2012 | 2011 | Change | ||||
| Revenue: | ||||||
| Broadcasting | $ 44.4 | $ 42.1 | 5.4 | |||
| Publishing | 38.0 | 41.8 | (9.0) | |||
| Corporate eliminations | (0.1) | -- | U | |||
| Total Revenue | $ 82.3 | $ 83.9 | (1.9) | |||
| Operating earnings (loss): | ||||||
| Broadcasting | $ 6.7 | $ 6.0 | 12.3 | |||
| Publishing | 0.7 | 1.8 | (59.2) | |||
| Corporate | (1.7) | (1.8) | 4.4 | |||
| Total operating earnings | $ 5.7 | $ 6.0 | (4.5) | |||
For the first quarter, total expenses of $76.5 million decreased 1.7% compared to $77.9 million.
Broadcasting
For the first quarter, broadcasting revenue increased 5.4% to $44.4 million compared to $42.1 million. Total broadcast political and issue advertising revenue increased 45.8% to $1.3 million compared to $0.9 million. Core local advertising revenue, excluding political, was up 1.6%, driven by higher auto advertising. Core national advertising revenue, excluding political, increased 18.1%, due to an increase in communications advertising. Retransmission revenue was $2.3 million compared to $1.8 million. Broadcasting operating earnings of $6.7 million increased 12.3% compared to $6.0 million.
Revenue from television stations for the first quarter increased 7.5% to $29.5 million compared to $27.5 million. Television political and issue advertising revenue was $1.2 million compared to $0.8 million. Core local advertising revenue increased 2.6% primarily due to an increase in automotive advertising. Core national advertising revenue increased 18.1% primarily due to increases in communications and financial advertising. Operating earnings were $3.9 million compared to $3.8 million, an increase of 2.3%. Television operating expenses increased 8.3% primarily due to increases in employee related costs and network fees.
For the first quarter, revenue from radio stations increased 1.5% to $14.9 million from $14.7 million. Radio political and issue advertising revenue was $0.1 million in each of 2012 and 2011. Operating earnings from radio stations were $2.9 million compared to $2.2 million, an increase of 29.2%. Radio operating expenses decreased 3.4% primarily due to a charge recorded in 2011 for a sports contract that more than off-set employee related expense increases in 2012.
Publishing
For the first quarter, publishing revenue decreased 9.0% to $38.0 million compared to $41.8 million, largely due to continued decreases in the retail and classified advertising categories. Operating earnings from publishing were $0.7 million compared to $1.8 million, a decrease of 59.2%. Total newsprint and paper expense in publishing was $3.7 million compared to $4.1 million, an 8.3% decrease primarily due to lower newsprint consumption.
Revenue at the daily newspaper for the first quarter decreased 6.6% to $33.0 million compared to $35.4 million. Retail advertising revenue decreased 9.0%. Classified advertising revenue decreased 17.1% driven primarily by a decrease in automotive advertising. Interactive advertising revenue of $2.6 million decreased 1.6%, primarily due to a decline in classified advertising revenue that more than off-set increases in sponsorship and other online revenue. Circulation revenue of $12.3 million was down 2.0% compared to $12.5 million. Operating earnings from the daily newspaper were $0.9 million compared to $2.0 million, a decrease of 56.1%. Daily newspaper operating expenses decreased 3.7%, primarily due to a decrease in newsprint expense and lower operating costs associated with lower revenue.
Community newspapers and shoppers revenue for the first quarter decreased 22.2% to $5.0 million compared to $6.4 million. Excluding revenue of $1.2 million related to Florida operations sold in 2011, revenue decreased by 4.4%. The operating loss from community newspapers and shoppers was $0.1 million compared to a loss of $0.2 million. Operating expenses were down 22.1%, or 6.1% lower excluding Florida related expenses of $1.1 million, primarily due to employee expense savings from previous workforce reductions and lower operating costs associated with lower revenue.
Corporate
The operating loss for the first quarter was $1.7 million compared to $1.8 million.
Discontinued Operations
There were no earnings from discontinued operations in 2012 compared to $0.3 million. Earnings from discontinued operations in 2011 were primarily due to a gain on the sale of real estate holdings in Green Bay, Wisconsin related to our former label printing business.
Non-Operating Items
For the first quarter, other expense, which primarily consists of interest expense, was $0.7 million compared to $1.1 million. The decrease in interest expense reflects a decrease in average borrowing levels for the quarter.
The first quarter effective tax rate was 41.8% compared to 38.7%.
Notes Payable to Banks and Cash Flows
At the end of the first quarter, our notes payable to banks were $37.7 million. During the first quarter, we reduced our notes payable to banks by $3.6 million as compared to the 2011 year-end. Our consolidated funded debt ratio, as defined in our credit agreement, was 0.56-to-1. Cash from operating activities was $8.3 million compared to $3.5 million due to lower income tax and incentive compensation payments in 2012. First quarter capital expenditures were $2.8 million compared to $2.7 million.
Second Quarter 2012 Outlook
For the second quarter, we anticipate high-single digit broadcast revenue increases, compared to prior year, driven by an improving economy and higher political advertising revenue in key states. We anticipate publishing revenue to decline in the mid-single digits, compared to the prior year, excluding revenue from the Florida community newspaper operations sold in 2011, reflecting continued challenges with publishing advertising revenue.
Conference Call and Webcast
The company will hold an earnings conference call today at 10:00 a.m. Central Time (11:00 a.m. ET, 8:00 a.m. PT). To access the call, dial (866) 783-2145 (domestic) or (857) 350-1604 (international) at least 10 minutes prior to the scheduled start of the call. The access code for the conference call is 90880744. A live webcast of the first quarter conference call will be accessible through the Journal Communications' website at http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.journalcommunications.com%2Finvestors&esheet=50253729&lan=en-US&anchor=www.journalcommunications.com%2Finvestors&index=1&md5=95b2f829515948a1438c8f6ddfb8319f, also beginning at 10:00 a.m. CT this morning. An archive of the webcast will be available on this site today through May 3, 2012. Replays of the conference call will also be available through May 3, 2012. 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 23566108. Pre-registration for the conference call is now available at http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.journalcommunications.com%2Finvestors&esheet=50253729&lan=en-US&anchor=www.journalcommunications.com%2Finvestors&index=2&md5=26df341f5b7d2f6c7bb7872a1d99093b.
Annual Meeting of Shareholders
The company will hold its 2012 Annual Meeting of Shareholders on Tuesday, May 8, 2012 at 9:00 a.m. Central Time at the Hilton Omaha, 1001 Cass Street, Omaha, Nebraska 68102.
Forward-looking Statements
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 Annual Report on Form 10-K, 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 radio and television broadcasting, publishing and interactive media. We own and operate or provide programming and sales services to 35 radio stations and 14 television stations in 12 states. We publish the Milwaukee Journal Sentinel, which serves as the only major daily newspaper for the Milwaukee metropolitan area, and community newspapers and shoppers in Wisconsin. Our interactive media assets build on our strong publishing and broadcast brands.
Tables Follow
| Journal Communications, Inc. | |||||||||
|
Condensed Consolidated Statements of Operations (unaudited) | |||||||||
| (dollars in thousands, except for shares and per-share amounts) | |||||||||
| First Quarter (A) | |||||||||
| 2012 | 2011 | % Change | |||||||
| Revenue: | |||||||||
| Broadcasting | $ 44,374 | $ 42,109 | 5.4 | ||||||
| Publishing | 38,021 | 41,800 | (9.0 | ) | |||||
| Corporate eliminations | (129 | ) | (48 | ) | U | ||||
| Total revenue | 82,266 | 83,861 | (1.9 | ) | |||||
| Operating costs and expenses: | |||||||||
| Broadcasting | 23,033 | 21,935 | 5.0 | ||||||
| Publishing | 26,152 | 27,645 | (5.4 | ) | |||||
| Corporate eliminations | (129 | ) | (48 | ) | U | ||||
| Total operating costs and expenses | 49,056 | 49,532 | (1.0 | ) | |||||
| Selling and administrative expenses | 27,470 | 28,321 | (3.0 | ) | |||||
| Total operating costs and expenses | |||||||||
| and selling and administrative | |||||||||
| expenses | 76,526 | 77,853 | (1.7 | ) | |||||
| Operating earnings | 5,740 | 6,008 | (4.5 | ) | |||||
| Other income and (expense): | |||||||||
| Interest income | 5 | 18 | |||||||
| Interest expense | (733 | ) | (1,080 | ) | |||||
| Total other income and (expense) | (728 | ) | (1,062 | ) | (31.5 | ) | |||
| Earnings from continuing operations before income taxes | 5,012 | 4,946 | 1.3 | ||||||
| Provision for income taxes | 2,093 | 1,912 | 9.5 | ||||||
| Earnings from continuing operations | 2,919 | 3,034 | (3.8 | ) | |||||
| Earnings from discontinued operations, net of tax | - | 341 | N/A | ||||||
| Net earnings | $ 2,919 | $ 3,375 | (13.5 | ) | |||||
| Weighted average number of shares-Class A and B common stock: | |||||||||
| Basic and diluted | 50,381,619 | 51,126,320 | |||||||
| Weighted average number of shares-Class C common stock | 3,264,000 | 3,264,000 | |||||||
| Earnings per share: | |||||||||
| Basic - Class A and B common stock: | |||||||||
| Continuing operations | $ 0.05 | $ 0.05 | |||||||
| Discontinued operations | -- | -- | |||||||
| Net earnings | $ 0.05 | $ 0.05 | |||||||
| Diluted - Class A and B common stock: | |||||||||
| Continuing operations | $ 0.05 | $ 0.05 | |||||||
| Discontinued operations | -- | -- | |||||||
| Net earnings | $ 0.05 | $ 0.05 | |||||||
| Basic and diluted - Class C common stock: | |||||||||
| Continuing operations | $ 0.19 | $ 0.19 | |||||||
| Discontinued operations | -- | -- | |||||||
| Net earnings | $ 0.19 | $ 0.19 | |||||||
|
(A) |
2012 first quarter: December 26, 2011 to March 25, 2012 | |
| 2011 first quarter: December 27, 2010 to March 27, 2011 | ||
|
U |
Greater than 100% unfavorable variance | |
| Journal Communications, Inc. | |||||||||
| Segment Information (unaudited) | |||||||||
| (dollars in thousands) | |||||||||
| First Quarter (A) | |||||||||
| 2012 | 2011 | % Change | |||||||
|
Revenue |
|||||||||
| Broadcasting | $ 44,374 | $ 42,109 | 5.4 | ||||||
| Publishing | 38,021 | 41,800 | (9.0 | ) | |||||
| Corporate eliminations | (129 | ) | (48 | ) | U | ||||
| $ 82,266 | $ 83,861 | (1.9 | ) | ||||||
|
Operating earnings (loss) |
|||||||||
| Broadcasting | $ 6,709 | $ 5,975 | 12.3 | ||||||
| Publishing | 744 | 1,825 | (59.2 | ) | |||||
| Corporate | (1,713 | ) | (1,792 | ) | 4.4 | ||||
| $ 5,740 | $ 6,008 | (4.5 | ) | ||||||
|
Depreciation and amortization |
|||||||||
| Broadcasting | $ 3,084 | $ 2,966 | 4.0 | ||||||
| Publishing | 2,472 | 2,632 | (6.1 | ) | |||||
| Corporate | 165 | 146 | 13.0 | ||||||
| $ 5,721 | $ 5,744 | (0.4 | ) | ||||||
|
(A) |
2012 first quarter: December 26, 2011 to March 25, 2012 | |
| 2011 first quarter: December 27, 2010 to March 27, 2011 | ||
|
U |
Greater than 100% unfavorable variance | |
| Journal Communications, Inc. | |||||||||||||||||||||||
| Publishing and Broadcasting Segment Information (unaudited) | |||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| First Quarter of 2012 (A) | First Quarter of 2011 (B) | ||||||||||||||||||||||
|
Broadcasting: |
% Change | % Change | % Change | ||||||||||||||||||||
| Television | Radio | Total | Television | Radio | Total | Television | Radio | Total | |||||||||||||||
| Revenue | $ 29,503 | $ 14,871 | $ 44,374 | $ 27,457 | $ 14,652 | $ 42,109 | 7.5 | 1.5 | 5.4 | ||||||||||||||
| Operating earnings | $ 3,851 | $ 2,858 | $ 6,709 | $ 3,763 | $ 2,212 | $ 5,975 | 2.3 | 29.2 | 12.3 | ||||||||||||||
|
Publishing: |
Community | Community | |||||||||||||||||||||
| Daily | Newspapers | Daily | Newspapers | % Change | % Change | % Change | |||||||||||||||||
| Newspaper | & Shoppers | Total | Newspaper | & Shoppers | Total | Daily | CN&S | Total | |||||||||||||||
| Advertising revenue: | |||||||||||||||||||||||
| Retail | $ 11,679 | $ 3,165 | $ 14,844 | $ 12,837 | $ 4,406 | $ 17,243 | (9.0 | ) | (28.2 | ) | (13.9 | ) | |||||||||||
| Classified | 3,580 | 599 | 4,179 | 4,318 | 801 | 5,119 | (17.1 | ) | (25.2 | ) | (18.4 | ) | |||||||||||
| National | 799 | -- | 799 | 1,119 | -- | 1,119 | (28.6 | ) | N/A | (28.6 | ) | ||||||||||||
| Direct Marketing | 18 | -- | 18 | 45 | -- | 45 | (60.0 | ) | N/A | (60.0 | ) | ||||||||||||
| Total advertising revenue | 16,076 | 3,764 | 19,840 | 18,319 | 5,207 | 23,526 | (12.2 | ) | (27.7 | ) | (15.7 | ) | |||||||||||
| Circulation revenue | 12,280 | 432 | 12,712 | 12,529 | 439 | 12,968 | (2.0 | ) | (1.6 | ) | (2.0 | ) | |||||||||||
| Other revenue | 4,656 | 813 | 5,469 | 4,513 | 793 | 5,306 | 3.2 | 2.5 | 3.1 | ||||||||||||||
| Total revenue | $ 33,012 | $ 5,009 | $ 38,021 | $ 35,361 | $ 6,439 | $ 41,800 | (6.6 | ) | (22.2 | ) | (9.0 | ) | |||||||||||
| Operating earnings | $ 869 | $ (125 | ) | $ 744 | $ 1,979 | $ (154 | ) | $ 1,825 | (56.1 | ) | 18.8 | (59.2 | ) | ||||||||||
| (A) 2012 first quarter: December 26, 2011 to March 25, 2012 | |
| (B) 2011 first quarter: December 27, 2010 to March 27, 2011 | |
| NOTE: | |
| Broadcasting and publishing segment information is provided to facilitate comparison of our broadcasting and publishing segments results with those of other broadcasting and publishing companies and is not representative of the overall business of Journal Communications or its operating results. | |
| Journal Communications, Inc. | |||||
| Reconciliation of consolidated net earnings to consolidated EBITDA (unaudited) | |||||
| (dollars in thousands) | |||||
| First Quarter (A) | |||||
| 2012 | 2011 | ||||
| Net earnings | $ 2,919 | $ 3,375 | |||
| Earnings from discontinued operations, net | - | (341 | ) | ||
| Provision for income taxes | 2,093 | 1,912 | |||
| Total other expense, net | 728 | 1,062 | |||
| Depreciation | 5,340 | 5,352 | |||
| Amortization | 381 | 392 | |||
| EBITDA | $ 11,461 | $ 11,752 | |||
|
(A) |
2012 first quarter: December 26, 2011 to March 25, 2012 | |
| 2011 first quarter: December 27, 2010 to March 27, 2011 | ||
| We define EBITDA as net earnings (loss) excluding earnings/loss from discontinued operations, net, provision (benefit) for income taxes, total other expense (which is entirely comprised of interest income and expense), depreciation, amortization and, if any, non-cash impairment charges. Our management uses EBITDA, among other things, to evaluate our operating performance, and to value prospective acquisitions. EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States. EBITDA should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. EBITDA, as we calculate it, may not be comparable to EBITDA reported by other companies. |
| Journal Communications, Inc. | ||||||
| Calculation of Diluted Earnings Per Share - Class A and B (unaudited) | ||||||
| (dollars and shares in thousands) | ||||||
| First Quarter (A) | ||||||
| 2012 | 2011 | |||||
| Numerator for diluted earnings per share: | ||||||
| Dividends on class A and B common stock | $ - | * | $ - | * | ||
| Dividends on class C common stock | 464 | 464 | ||||
| Dividends on non-vested restricted stock | - | - | ||||
| Total undistributed earnings from continuing operations | ||||||
| Class A and B | 2,283 | * | 2,383 | * | ||
| Class C | 148 | 152 | ||||
| Non-vested restricted stock | 24 | 35 | ||||
| Earnings from discontinued operations | ||||||
| Class A and B | - | 316 | ||||
| Class C | - | 20 | ||||
| Non-vested restricted stock | - | 5 | ||||
| Net earnings | $ 2,919 | $ 3,375 | ||||
| Denominator for diluted earnings per class A and B share: | ||||||
| Weighted average shares outstanding - Class A and B | 50,382 | 51,126 | ||||
| Impact of non-vested restricted shares | - | - | ||||
| Conversion of class C shares | - | - | ||||
| Adjusted weighted average shares outstanding for class A and B | 50,382 | * | 51,126 | * | ||
| Diluted earnings per share of class A and B: | ||||||
| Continuing operations | $ 0.05 | * | $ 0.05 | * | ||
| Discontinued operations | - | - | ||||
| Net earnings | $ 0.05 | $ 0.05 | ||||
| * Included in calculation of diluted earnings per share from continuing operations - class A and B |
|
(A) |
2012 first quarter: December 26, 2011 to March 25, 2012 | |
| 2011 first quarter: December 27, 2010 to March 27, 2011 | ||
| Journal Communications, Inc. | ||||
| Condensed Consolidated Balance Sheets | ||||
| (dollars in thousands) | ||||
| March 25, | ||||
| 2012 | December 25, | |||
| (unaudited) | 2011 | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ 2,243 | $ 2,418 | ||
| Investments of variable interest entity | 500 | 500 | ||
| Receivables, net | 48,689 | 56,695 | ||
| Inventories, net | 3,084 | 1,766 | ||
| Prepaid expenses and other current assets | 4,849 | 3,877 | ||
| Syndicated programs | 2,584 | 2,822 | ||
| Deferred income taxes | 3,313 | 3,593 | ||
| Total current assets | 65,262 | 71,671 | ||
| Property and equipment, net | 165,661 | 168,200 | ||
| Syndicated programs | 4,311 | 4,457 | ||
| Goodwill | 8,670 | 8,670 | ||
| Broadcast licenses | 81,547 | 81,547 | ||
| Other intangible assets, net | 21,019 | 21,400 | ||
| Deferred income taxes | 55,493 | 57,236 | ||
| Other assets | 4,423 | 4,544 | ||
| Total assets | $ 406,386 | $ 417,725 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ 20,174 | $ 20,516 | ||
| Accrued compensation | 7,721 | 11,888 | ||
| Accrued employee benefits | 6,409 | 6,217 | ||
| Deferred revenue | 15,082 | 14,662 | ||
| Syndicated programs | 3,031 | 3,436 | ||
| Accrued income taxes | 344 | 2,740 | ||
| Other current liabilities | 5,348 | 6,093 | ||
| Current portion of long-term liabilities | 312 | 382 | ||
| Total current liabilities | 58,421 | 65,934 | ||
| Accrued employee benefits | 89,735 | 90,176 | ||
| Syndicated programs | 5,153 | 5,527 | ||
| Long-term notes payable to banks | 37,725 | 41,305 | ||
| Other long-term liabilities | 9,066 | 8,595 | ||
| Shareholders' equity | 205,122 | 205,024 | ||
| Noncontrolling interest | 1,164 | 1,164 | ||
| Total liabilities and equity | $ 406,386 | $ 417,725 | ||
SOURCE: Journal Communications, Inc.
Journal Communications, Inc.
Andre Fernandez, 414-224-2884
President & Chief Financial Officer