GateHouse Media, Inc. (the "Company" or "GateHouse Media") (OTC Pink Sheets: GHSE) today reported financial results for the quarter ended September 30, 2009.
The Company reported total revenues of $144.9 million, a decline of 15.0% versus prior year. As Adjusted Revenues were $143.5 million for the quarter, down 14.9% on a same-store basis versus the prior year quarter. The decline in same-store revenue was driven primarily by the print classified and local advertising categories, which were down 28.5% and 13.7%, respectively. Both categories continue to be impacted by the recession. Circulation revenue declined 3.6% in the quarter on a same-store basis.
In the quarter, reported operating and SG&A costs declined by $23.2 million or 16.3%. Same-store expenses declined by 15.2%, driven by compensation expense which declined 14.3%. Expense declines in the quarter reflect permanent cost reduction initiatives implemented primarily in the first half of the year. In addition, declines in newsprint pricing and consumption resulted in a 37.8% reduction in newsprint expense. Although newsprint prices have begun to increase, the Company anticipates it will continue to benefit from moderate newsprint prices and consumption declines during the remainder of the year.
Reported operating income for the third quarter was $14.0 million, a 44.2% increase from $9.7 million in the prior year. As Adjusted EBITDA for the quarter was $27.3 million, which was down 13.6% on a same-store basis from the prior year. As Adjusted EBITDA performance is improving as the Company realizes the full benefit of permanent cost reduction initiatives.
Levered Free Cash Flow for the third quarter was $11.1 million or $0.19 per share. This represents an 11.8% increase from $0.17 in the prior year, driven by lower interest expense and capital expenditures. Interest expense for the quarter was $15.7 million, down $5.9 million or 27.1% as compared to the prior year. The decline in interest expense was due primarily to lower LIBOR rates.
Non-cash compensation expense for Restricted Stock Grants in the third quarter was $0.7 million.
One-time costs and other non-cash expenses in the quarter were $0.9 million, and related primarily to reorganization and expense control initiatives introduced to realize permanent expense savings.
Commenting on GateHouse Media's results, Mike Reed, Chief Executive Officer, said, "While current economic conditions continue to present a challenging revenue environment, the permanent cost reduction initiatives we implemented this year resulted in higher EBITDA margins and increased levered free cash flow in the quarter.
"Revenue trends are showing signs of potential stabilization in terms of nominal dollars. Our total same-store revenue declined 14.9% in the third quarter, a slight improvement over 15.2% and 16.3% in the first and second quarters, respectively. September was our strongest month based on year-over-year revenue performance and we are encouraged that this trend may continue as we enter what has historically been our seasonally best quarter.
"Due to the cost initiatives put in place in the first half of the year, our As Adjusted EBITDA margin has improved each quarter, reaching 19.0% in the third quarter, compared to 16.6% and 6.7% in the first and second quarters, respectively. Solid As Adjusted EBITDA results, combined with lower interest expense and capital spending resulted in levered free cash flow of $0.19 per share in the third quarter compared to $0.16 per share in the second quarter and $0.17 last year.
"In addition to ongoing cost reduction initiatives, we continue to focus on strengthening our balance sheet, in particular, working capital and liquidity. During the third quarter, we were able to improve our short term liquidity position by retiring $16.0 million of short term debt at a discount."
GateHouse Media owns The Carthage Press, Neosho Daily News, Pittsburg Morning Sun and more than 300 newspapers across the United States.
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