The McClatchy Company shares surged nearly 13%, to $1.89, and the company’s debt advanced after second-quarter results blew past Street expectations. The 5.75% unsecured notes due 2017 traded three points higher, at 82.25, while the secured 11.5% notes due 2017 gained the same amount, with prints at 106.5, according to trade data.
The company’s net income in the second quarter was $26.9 million, or $0.31 per share, versus net income of $4.9 million, or $0.06 per share in the 2011 comparable period, the company statement shows. S&P Capital IQ calculates normalized EPS at $0.19 per share, which is nearly double its consensus mean estimate of $0.10 per share.
Gains in EPS are noted even as net second-quarter revenue slipped 4.8%, to $299.3 million, as compared to the year-ago second quarter, according to the firm. Advertising revenues declined 5.7%, but digital advertising expanded by 4.9%, the company stated. Management noted that advertising trends were deeper in the first quarter, down 6.8%, so sequentially the figure is improving.
The fallen angel issued the 11.5% secured notes in early 2010 as part of a debt repayment effort. Ratings were B-/B1 at offer. S&P briefly upgraded its rating to B+ on improving earnings, but then lowered to the current B/B1 profile a year ago on declining advertising trends.
McClatchy is the third-largest newspaper publisher in the U.S. in circulation, with 30 daily newspapers and 50 non-dailies, including the Miami Herald, the Sacramento Bee, the Fort Worth Star-Telegram, the Kansas City Star, the Charlotte Observer, and Raleigh’s News & Observer. The company trades on the NYSE as MNI with an approximate $162 million market capitalization, according to S&P Capital IQ. – Matt Fuller