McClatchy Reports First Quarter 2019 Results

– Increased digital-only subscribers to 179,100, up 59.6% from Q1 2018
– Achieved the twelfth consecutive quarter of growth in digital only-subscriptions
– Reported the second consecutive quarter of improving trend in Adjusted EBITDA, excluding the impact for real estate sales
– Redeemed $4.6 million of 9% 2026 Notes at par on April 5, 2019
– Asset sales in the second quarter expected to reduce first lien debt by approximately $32 million

McClatchy (NYSE American-MNI) today reported a net loss in the first quarter of 2019 of $42.0 million, or $5.34 per share. In the first quarter of 2018, McClatchy reported net loss of $38.9 million, or $5.04 per share.

The trend in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) excluding the impact of real estate gains recorded in the first quarter of 2018, improved sequentially to down 5.7% from the down 8.2% rate in the fourth quarter of 2018 and was the company’s best performance in this key metric in three years. Adjusted EBITDA was $16.4 million in the first quarter of 2019.

“The first quarter adjusted EBITDA marks the second consecutive quarter of improving trends in operating results,” said Craig Forman, McClatchy’s President and CEO. “This reflects our discipline in controlling costs while we make strategic investments in our digital transformation.”

The first quarter of 2019 marks the company’s twelfth consecutive quarter of growth in digital subscriptions, and the most significant year-over-year growth in that time. When coupled with the company’s combination print/digital subscriptions, where customers have activated their digital products, total paid digital customer relationships were at 474,400 at the end of the first quarter of 2019, up 34% from 353,900 a year earlier.

“Our focus on paid digital subscriber growth is a key performance measure in our continuing digital transformation and a contributor to improving our audience revenue trend this quarter,” said Forman. “We have tightened our paywalls, improved our ability to convert viewers to paid subscribers and sharpened our targeting for our digital products. As a result, we achieved nearly 60% growth in digital-only subscriptions, reaching 179,100 at the end of the first quarter of 2019.”

Forman added, “We continue to be strategic and resolved in taking costs out of the business while making key investments to boost revenue generation. During the quarter we invested in our digital advertising team, adding new leaders to our functional organization structure with a dedicated focus on our customers to drive digital revenue and create new efficiencies.

“We are excited by the improvements we are seeing in our business and we remain firm in our commitment to independent local journalism in the public interest. In this regard we had a very strong quarter capped by award-winning reporting and commentary in our markets from Kansas City to Miami to the Carolinas and California.”

Total revenues in the first quarter of 2019 were $180.3 million, down 9.3% compared to the first quarter of 2018, unchanged from the decline reported for the full-year 2018, and is an improvement from the 10.1% decline reported in the first quarter of 2018.

Total advertising revenues were $85.2 million, down 14.7% in the first quarter of 2019 compared to the first quarter of 2018. The rate of decline in total advertising revenue improved by 200 basis points compared to the first quarter of 2018 reported decline of 16.7%.

Total digital and digital-only advertising revenues surpassed print newspaper advertising revenues in the first quarter of 2019. Digital-only advertising revenues in the first quarter of 2019 were down 5.2% and total digital advertising revenues were down 5.8% over the same period in 2018. The decline in digital-only advertising reflected lower audience traffic compared to the first quarter of 2018, the result of a softer news cycle generating fewer page views compared to last year, a strategic tightening of website paywalls that accelerated paid digital subscriptions and, to a lesser extent, a change in algorithms by a large platform company in the last half of 2018 that impacted McClatchy and the rest of the industry.

Direct marketing advertising revenues declined 26.1% in the first quarter of 2019 compared to the first quarter of 2018.

Adjusted net loss, which excludes the items above, was $21.5 million compared to adjusted net loss of $18.0 million in the first quarter of 2018.

Operating expenses were down 7.0%, while adjusted operating expenses were down 8.1%. Excluding the impact of real estate gains offsetting expenses in the first quarter of 2018, operating expenses were down 8.4% and adjusted operating expenses were down 9.7%.

Adjusted EBITDA was $16.4 million in the first quarter of 2019, down 5.7% when excluding real estate gains from the first quarter of 2018 and were down 19.9% with gains on real estate sales included in the 2018 results.
more detail at: http://investors.mcclatchy.com/news-releases/news-release-details/mcclatchy-reports-first-quarter-2019-results

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