Business News

GateHouse Media Announces Third Quarter 2008 Results

Monday 10. November 2008 - - Total reported revenues reached $171.6 million, an increase of 6.4% over the prior year.

Third Quarter 2008 Highlights

– Total reported revenues reached $171.6 million, an increase of 6.4% over the prior year.

– As Adjusted Revenues of $174.6 million, a decrease of 5.1% on a same store basis, continuing to significantly outperform the industry.

– Online revenue grew 34.0% over the prior year on a same store basis.

– Net loss of $18.5 million.

– As Adjusted EBITDA was $32.7 million, down 18.5% versus the prior year.

– Levered Free Cash Flow was $0.17 per share.

– Balance of revolving credit facility of $28.8 million, was paid off during the quarter.

GateHouse Media, Inc. (the “Company” or “GateHouse Media”) today reported financial results for the quarter ended September 30, 2008.

The Company reported total revenues of $171.6 million in the quarter, an increase of 6.4% over the third quarter of 2007. On a same-store basis, As Adjusted Revenues for the Company were $174.6 million in the quarter, decreasing 5.1% over the prior year. Operating income for the third quarter was $9.8 million as compared to $12.1 million in the third quarter of 2007. As Adjusted EBITDA for the quarter was $32.7 million, a decrease of 20.8% on a same store basis.

GateHouse Media’s management utilizes As Adjusted Revenues and As Adjusted EBITDA to evaluate the Company’s performance, cash flows and liquidity because these metrics exclude non-cash items such as depreciation and amortization, non-cash compensation expense and one-time costs associated with integrating acquisitions and realizing synergy cost savings. GateHouse Media also uses As Adjusted EBITDA, excluding corporate costs, to assess the performance of its core local businesses.

Third Quarter 2008

Total reported revenues reached $171.6 million, an increase of 6.4% over the prior year. As Adjusted Revenues for the quarter were $174.6 million, a decline of 5.1% on a same store basis. Local advertising revenues continued to hold up well given the current economic environment declining only 1.1% on a same store basis. Classified revenues continue to be the primary driver of revenue declines with a 21.0% decline on a same store basis accounting for 97.0% of the Company’s total revenue decline. The classified advertising weakness was seen across all three major categories: help wanted, real estate and auto. Online revenues continued to grow, increasing 34.0% on a same store basis, consistent with the first half of 2008. Circulation revenues in the quarter increased by 4.0%. Commercial printing and other revenues declined 21.6% on a same store basis due to lower commercial printing projects, which is typical in a slow economy.

As Adjusted EBITDA declined 20.8% to $32.7 million on a same store basis with margins declining from 22.4% to 18.7% over the period. A combination of the lower classified revenue and flat expenses year over year contributed to the decline in margins. The Company was successful in reducing approximately $8.0 million in controllable costs in the third quarter. Unfortunately those reductions were offset by increases in newsprint costs, delivery costs, health care costs and bad debt expense, resulting in very slight expense declines for the quarter versus prior year.

Non-cash compensation expense for Restricted Stock Grants (RSGs) in the third quarter was $0.8 million. One-time costs incurred or accrued in the quarter were $4.3 million. These were charges related primarily to integration of the Company’s acquisitions in order to realize permanent expense reductions, and to reduce future capital expenditure needs, as well as staff reductions taken in order to reduce the cost basis in light of the current revenue environment.

Levered Free Cash Flow for the quarter was $9.8 million compared with $15.8 million for the same quarter in 2007.

During the quarter, the Company paid off its revolving credit facility. With the revolving credit facility at zero, the Company is not subject to any leverage test under its long term credit facility. The Company does not intend to borrow on the revolving credit facility in the near term and intends to fund working capital needs with cash from operations.