The second quarter was a momentous one for Tronc (NASDAQ: TRNC), the owner of the Chicago Tribune, New York Daily News, Orlando Sentinel and other media properties. Among the second quarter highlights was a 3.9 percent increase in total revenue and 89 percent growth in digital-only subscribers, bringing total digital-only subscribers to 212,000 at the end of the second quarter.

Also in Q2, Tronc acquired The Virginian-Pilot Media Companies for $34 million in cash and closed the sale of the Los Angeles Times, the San Diego Union-Tribune and related California media businesses to billionaire Dr. Patrick Soon-Shiong for $500 million in cash. Soon-Shiong also assumed about $90 million in pension liabilities.

“The company accomplished a great deal during the second quarter 2018, all of which provides a solid foundation to drive future growth. After closing the California transaction, we now have one of the strongest balance sheets in the industry,” said Tronc Chairman and CEO Justin Dearborn in an August 9 news release. “Moreover, during the quarter we added The Virginian-Pilot Media Companies to our portfolio and we saw ongoing advancement in our digital subscription business as well as overall strong representation of consumer-related revenue versus advertising revenue.”

Dearborn also addressed the June 28 shooting at The Capital Gazette in Annapolis, Maryland.

“We have been overwhelmed by the support of the Annapolis and greater Maryland community as well as from colleagues in newsrooms across the country following the senseless tragedy at The Capital Gazette. We are humbled and honored by the manner in which our entire organization has mobilized to fully support our Maryland co-workers and the journalism community has come together to respect and honor their lives,” said Dearborn. “This show of solidarity reinvigorates the dialogue on the importance of strong journalism. We are proud of the way our staff at The Capital Gazette continues to produce every day since the tragedy occurred, and to the thousands of people who contributed to the Capital Gazette Families Fund and the Scholarship Fund.”

Financial highlights for the second quarter include the following:

• Total revenue of $253.0 million, a 3.9 percent increase over Q2 2017.
• Revenue includes $42.8 million from recent acquisitions: the New York Daily News (September 2017), BestReviews.com, (February 2018), and The Virginian-Pilot Media Companies, (May 2018).
• Total advertising revenue was $111.8 million.
• Digital advertising revenue was $24.0 million
• Total operating expenses were $254.3 million, a 6.4 percent increase.
• Net loss from continuing operations was $15.1 million, or $0.44 per share, compared to a net loss of $1.9 million, or $0.06 per share, for Q2 2017.
• Adjusted EBITDA was $22.2 million, compared to $27.6 million for the same period last year. Tronc attributes the decline to anticipated losses at the New York Daily News and higher newsprint costs.

Based on second quarter results, Tronc has increased its full-year guidance for total revenue and adjusted EBITDA as follows:

• Total revenue between $1.02 billion and $1.06 billon
• Adjusted EBITDA between $106 million and $112 million

Investors did not have a significant reaction to the quarterly financials. On August 8, the day financials were reported, Tronc stock was valued at $16.96 per share. Stock spiked slightly the next day at $17.77 per share, but it has leveled off. As of 10:57 a.m. yesterday, Tronc stock was valued at $16.87.

Insider Take:

Despite a relatively stable financial report, Tronc still seems volatile. Its merger and acquisition activity in the last year has been brisk, helping with the company’s bottom line, but the company has been laying off staff en masse this year as well – the L.A. Times (April), Chicago Tribune (April) and the New York Daily News (July). 

In terms of digital subscriptions, the company is moving in the right direction, but considering the number of publications the company holds, the numbers seem rather low. It is not clear what direction Dearborn is taking Tronc, but based on increased guidance for revenue and EBITDA, we hope it is a positive one.