Despite the distraction of takeover attempts by Gannett and bold rebranding last year, tronc Inc. (NASDAQ: TRNC) finished 2016 with a few positive notes, including net income for the fourth quarter of $19 million, a significant increase over the net loss of $0.1 million for the same period last year. This included a $46 million pre-tax charge related to the company’s employee voluntary separation program. Net income per share for the fourth quarter was $0.53. Net income per share for the full year was $0.19.

Other fourth quarter highlights include:

• Total revenue in Q4 was $425 million, a decrease of 6.9 percent year-over-year.
• Advertising revenue was down 13.7% year-over-year, but circulation increased 6 percent with growth primarily from the Chicago Tribune, LA Times and Baltimore Suburban papers.
• Total operating expenses were $384 million, a decrease of 14.2 percent year-over-year.
• Adjusted net income for Q4 was down $11 million year-over-year.
• Adjusted EBITDA was $67 million, a decrease of $2 million year-over-year.

Other full year highlights include:

• Total revenue for the full year was $1.61 billion, a 4 percent decrease year-over-year.
• Total operating expenses for the full year decreased by $95 million, due to a $53 million decrease in compensation for employees who accepted voluntary separation packages.
• Adjusted net income for 2016 grew by $1 million year-over-year.
• Net income of $6.5 for 2016, compared to a $2.8 million loss for 2015
• Adjusted EBITDA was $181 million, an increase of $23 million from 2015.

“2016 was a transitional year for our company and despite unexpected distractions, we delivered strong financial results for the full year of 2016, including total revenues of $1.61 billion, and Adjusted EBITDA of $181 million, which was well ahead of our November guidance and consistent with our January year-end guidance update,” said tronc CEO Justin Dearborn in a statement. 

“We continued to make progress in growing our digital audience, with our average monthly unique visitors in the fourth quarter of 2016 up 16% year-over-year and our total paid all access subscribers reaching just under a million at the end of 2016. With a focused strategy and strong balance sheet in place, we believe we are well-positioned to further develop our business transformation in 2017,” Dearborn added.

Operational highlights include:

• Starting in Q2, the company realigned into two segments: troncM which is the company’s media groups excluding digital revenue and expenses, digital subscription revenue when bundled with a print subscription, and troncX which includes all digital revenues and expense from local websites and mobile apps, digital-only subscriptions, and Tribune Content Agency, ForSaleByOwner.com and Motiv8.
• Total revenue for troncM for Q4 was $367 million, an 8 percent decrease year-over-year.
• Advertising revenue for troncM decreased 16 percent, partially offset by a 4.9 percent increase in circulation revenues.
• Total revenue for troncX for Q4 was $60 million, a 1 percent increase year-over-year.
• Advertising revenue for troncX decreased 3.3 percent while content revenue, including digital-only subscriptions and content syndication, grew 21.2 percent.
• Total fourth quarter 2016 average monthly unique visitors were 57 million, a 16 percent increase year-over-year.
• Digital-only subscribers grew to 160,000, an 82 percent increase year-over-year.

On February 22, when the financials were released, tronc announced the appointment of Timothy P. Knight to the position of president of troncX. Knight is the co-founder of the digital business that created Cars.com and Apartments.com.

“We are fortunate that Tim has joined the Company to continue the development of our digital business as we increase our audience and further leverage data and technology to expand our opportunities for growth and vitality,” said Dearborn. “Tim is a proven operator, who has both an entrepreneurial spirit and deep expertise in transforming media companies.”

For 2017, the company projects total revenue to be between $1.57 billion and $1.60 billion and adjusted EBITDA between $185 million to $195 million.

Investors reacted negatively to the news. On February 23, the day after tronc posted its financials, stock closed at $14.89 per share, a slight increase over the previous day’s price of $14.60. Since then, stock has dropped to $13.68 per share (as of March 3, 2017, 4:47 PM EST). This is still a significant improvement over tronc’s stock price this time last year – $9.14 per share as of March 7, 2016.

Insider Take:

Last year was a volatile year for tronc, Inc. as it fought off takeover attempts by Gannett, and underwent an odd rebranding exercise, becoming tronc (lowercase T) and moving to NASDAQ. The talks with Gannett were on-again-off-again with tronc fighting off a hostile takeover. That was interesting all by itself, but the rebranding left many of us shaking our heads. Why take respected, recognizable brand like Tribune Publishing and turn it into a name that you have to think about? tronc stands for “tribune online content,” but that isn’t intuitive, particularly if you didn’t know the company used to be called Tribune Publishing. We won’t rehash the merits of the rebranding here, but you can about it in our July 1, 2016 post.

In spite of all that turmoil, tronc managed to turn a profit in 2016, even after paying out huge separation costs. Those cost-cutting measures will help the company to stay in the black, but not if the revenue declines continue. The company will need to capitalize on its circulation and readership increases in 2017.