GateHouse Media, Inc. (the “Company” or “GateHouse Media”) (OTC Pink Sheets: GHSE) today reported financial results for the third quarter ended September 30, 2010.
Third Quarter 2010
Total revenues were $137.9 million for the quarter, a decline of 4.8% as compared to the prior year. As Adjusted Revenues for the quarter were $136.7 million, a decline of 4.7% on a same-store basis. Total advertising revenue for the quarter declined 3.7% on a same-store basis. The decline in total advertising revenue on a same-store basis was driven by declines in local retail and classified revenue, which were down 4.2% and 5.2%, respectively, partially offset by strong growth in online revenues, which grew 17.6%. Commercial print revenues declined 21.2% in the quarter on a same store basis from the prior year.
Operating costs and SG&A expenses were $113.8 million in the quarter, a decline of $5.3 million or 4.4% from the prior year, despite a $1.2 million increase in newsprint expense related to increased pricing levels. The expense declines were driven primarily by lower compensation expense and hauling and delivery costs. The Company has been able to successfully reduce compensation expense as part of its overall cost savings initiatives begun in 2009. Compensation expense was down 4.3% in the quarter versus the prior year on a same store basis. Hauling and delivery was down 10.7% versus prior year on a same store basis driven primarily by increased distribution efficiencies throughout the Company.
Operating income for the quarter was $12.0 million, a decrease of $2.0 million as compared to the prior year. As Adjusted EBITDA for the quarter was $25.0 million, a decrease of $2.3 million or 8.5% on a same-store basis from the prior year.
Levered Free Cash Flow for the quarter decreased 21.3% to $8.8 million as compared to $11.1 million for the prior year.
Non-cash compensation expense for Restricted Stock Grants in the third quarter was $0.4 million.
One-time costs incurred and other non-cash expenses in the quarter were $1.2 million, and related primarily to reorganization efforts and initiatives introduced to realize permanent expense reductions.
Commenting on GateHouse Media’s same store results, Michael E. Reed, GateHouse Media’s Chief Executive Officer, said, “Overall revenue trends improved slightly in the third quarter versus the second quarter with revenues down year over year by 4.7%. I was particularly encouraged by our newspaper advertising revenue, where declines improved to down only 2.7% year over year, and our online revenue growth, which remained very strong, showing a year over year increase of 17.6%. The investments we have made in our online programs continue to help make positive contributions to our total revenues.
“While we continue to navigate through a very choppy revenue environment, the total decline was significantly impacted by our commercial print business which has been very challenged by the economic pressures felt by all. Commercial print is a small category for us, however, the 21.2% decline experienced in the quarter from this category made up almost a quarter of our total revenue decline. We do expect improvement in this trend looking forward into 2011 as we begin to cycle some of the larger job losses we saw this year.
“We continue to operate more efficiently as well, evidenced by our costs being down in the quarter despite rising newsprint costs, which have resulted in a 13.7% increase in newsprint expense. Through September of this year our aggressive expense initiatives have resulted in As Adjusted EBITDA growth of 8.3%.
“In the very near term our revenue visibility remains limited as a result of the choppiness of our month to month revenue trends. While we remain dedicated to operating more efficiently by identifying permanent cost reduction opportunities, we are placing even more emphasis on audience and revenue development through new product and business innovation as well as a more highly energized sales culture.
“Our operating results and cash management activities continue to have a positive impact on our overall liquidity We ended the quarter with $31.6 million of cash on the balance sheet, with all short term debt paid off. We remain highly focused on de-levering through both growth in our business and debt reduction.”
Wednesday, November 03, 2010
GateHouse Media revenues down 4.8 percent
GateHouse Media revenues were down 4.8 percent during the last quarter, according to its quarterly report issued Tuesday. The company issued the following news release: