By: Mark Fitzgerald
The McClatchy Co. Thursday reported first-quarter net income including discontinued operations of $2.2 million, or $0.03 per share, compared to a loss of $37.52 million, or $0.45 a share, in the year-ago period.
McClatchy reported a net loss from continuing operations of $2 million, or 2 cents per share. Without certain unusual items, The Miami Herald parent said, income from continuing operations was $4.8 million, or 6 cents per share.
In the first quarter of 2009, McClatchy had a net loss from continuing operations of $37.7 million, or 45 cents per share.
McClatchy’s Q1 2010 revenue fell 8.2% to $335.6 million, while advertising revenue was down 11.2% to $252.9 million.
Chairman and CEO Gary Pruitt said McClatchy saw improving ad trends in the first quarter.
“Advertising revenues in the first quarter declined year-over-year by 11.2%, compared to a 20.5% decline in the fourth quarter of 2009 and a 28.1% decline in the third quarter of 2009,” he said. “In addition, we are continuing to see growth in the digital side of our business; digital advertising revenues were up 2.2% in the first quarter and continue to lead the company in advertising performance.”
Retail advertising fell 11.5% compared to a year ago, while national was down 7%.
Classified advertising overall fell 13.8%, with real estate especially soft, plunging 26.8%. Automotive classified revenue was down 14.1% and help-wanted was off 18.4%.
Like its peers, McClatchy’s bottom line continued to benefit from deep cost cutting. Q1 cash operating expenses were down 21.3% compared to the 2009 quarter.
Operating cash flow jumped 89.5% in the quarter to $81.9 million.
During the first quarter, McClatchy issued $875 million of 11.50% senior secured notes due in 2017 and used the proceeds to repay bank debt and repurchase a majority of outstanding 7.125% notes due in 2011 and 15.75% notes due in 2014. McClatchy used the proceeds to repay more than $746 million in bank debt and retired $171.9 million in principal on its bonds.
Mcclatchy said its outstanding bank debt at the end of the first quarter consisted of $37.6 million due on June 27, 2011 and $93.4 million due on July 1, 2013.
At the end of the quarter, McClatchy said its total debt was $1.905 billion. Pruitt noted that was down more than $43 million from the end of 2009 — despite incurring $46.6 million in costs associated with the refinancing and premiums paid on the bond tenders.
“Importantly, our leverage profile continued to improve,” he added. “We had expected our leverage ratio to improve to 5.0 times operating cash flow at the end of the first quarter of 2010. Instead, we finished the first quarter with a leverage ratio of 4.65 times, more than a quarter-turn better than our earlier expectations. So we believe financial covenants are not a concern for the company nor are debt maturities, as a majority of these have been pushed out to 2017.”