Business News

GateHouse Media Announces Fourth Quarter and 2010 Annual Results

Wednesday 02. March 2011 - Fourth Quarter and 2010 Annual Highlights

Online advertising revenue had the strongest quarter of the year, increasing 27.8% for the quarter and 18.4% for the full year. During the quarter, monthly page views increased by 11.8%.
As Adjusted EBITDA was $31.5 million and $98.2 million for the fourth quarter and full year, respectively; an increase of 7.6% and 7.9% from the comparable prior year periods.
Revenues for the fourth quarter were $143.4 million, down 4.5% from the prior year quarter. Full year revenues were $558.6 million, a decrease of 4.5% from the prior year.
Advertising revenues for the fourth quarter were $103.3 million, down 3.2% from the prior year quarter on a same store basis. Full year advertising revenues were $395.3 million, a decrease of 3.4% from the prior year on a same store basis. Advertising revenues for the newspaper business only (excludes directories) were down 2.2% and 2.4% for the fourth quarter and prior year on a same store basis, respectively.
Operating costs and SG&A expense decreased $7.6 million or 6.3% for the fourth quarter and $35.7 million or 7.1% for the full year.
Levered Free Cash Flow per share increased 8.3% to $0.26 in the fourth quarter versus $0.24 for the prior year quarter. Levered Free Cash Flow per share for the full year increased 71.4% to $0.60, compared to $0.35 for the prior year.
GateHouse Media, Inc. (the “Company” or “GateHouse Media”) (Pink Sheets: GHSE) today reported financial results for the fourth quarter and full year ended December 31, 2010.
Fourth Quarter 2010
Total revenues were $143.4 million for the quarter, a decline of 4.5% as compared to the prior year. On a same store basis total revenues for the quarter were $143.0 million, a decline of 4.3%. Total advertising revenue declined 3.2% in the quarter on a same store basis. Newspaper advertising revenue, which excludes SureWest Directories and makes up over 97% of total Company advertising revenue, declined 2.2% in the quarter on a same store basis. Online revenue, which now accounts for 7% of total advertising revenue, had its strongest quarter of the year, increasing 27.8%. Local retail revenue also had its strongest quarter of the year, declining on a same store basis 3.1% and down only 1.7% in our newspapers. Continued strength in employment and auto classifieds were not enough to offset the choppiness experienced in real estate and legal classifieds as the category as a whole was down 9.7% in the quarter. Circulation revenue declined 4.1% in the quarter and commercial print revenues, which now account for less than 4% of total revenues, declined 19.3% in the quarter, both on a same store basis. The Company has cycled through the most significant of its commercial print losses and anticipates significantly less impact on year over year comparisons in 2011.
Commenting on GateHouse Media’s results, Michael E. Reed, GateHouse Media’s Chief Executive Officer, said, “We saw a slight improvement in our overall revenue trends for the second straight quarter due in part to the strength of our online revenue, which grew 27.8%. We experienced double digit increases in our online traffic, with average daily unique visitors up 26.7% and monthly page views up 11.8% over the prior year. Additionally, since the initial roll-out of our mobile websites during the second quarter, we are encouraged to see a more than 100% increase in our monthly mobile page views, which reached nearly two million in December.
“We continue to experience choppy monthly year over year revenue comparisons as the economic recovery progresses. Our December and January performance was negatively impacted by the abnormally severe weather conditions in the Northeast and Midwest as local advertisers reduced their advertising spend. However, this situation is temporary and we are encouraged with the positive trends in the automotive and employment classified categories as well as the continued strong growth in our online business and the longer term trends in our total revenue.
“We expect our online revenue will continue to grow at high double-digit rates during 2011 from increased traffic and new online and mobile product offerings. We are pleased with the success of our behavioral targeted advertising efforts and will be increasing the number of GateHouse locations offering these capabilities. We are planning to expand our mobile websites and applications and roll out additional daily deal platforms at a number of locations. With the merger of Monster and HotJobs and the anticipated improvement in the jobs outlook, there will be increased emphasis on online employment classifieds and we are very encouraged by the trends in that category. We are also experimenting with paywall technology at certain of our larger locations including a partnership with Journalism Online.”
Operating costs and SG&A expenses were $113.8 million in the quarter, a decline of $7.6 million or 6.3% from the prior year, despite a year over year $1.1 million increase in newsprint expense related to higher pricing. The expense declines were driven primarily by lower compensation expense and hauling and delivery costs. Compensation expense was down 6.2% in the quarter versus the prior year on a same store basis as the Company has been able to successfully reduce compensation expense as part of its overall permanent cost savings initiatives begun in 2009. Hauling and delivery costs were down 7.9% versus the prior year on a same store basis driven primarily by increased distribution efficiencies throughout the Company.
Operating income for the quarter was $17.6 million, an increase of $1.5 million as compared to the prior year. As Adjusted EBITDA for the quarter was $31.5 million, an increase of $2.2 million or 7.5% on a same store basis from the prior year.
Levered Free Cash Flow for the quarter increased 9.5% to $15.1 million as compared to $13.7 million for the prior year.
Non-cash compensation expense for Restricted Stock Grants in the fourth quarter was $0.4 million. One-time costs incurred and other non-cash expenses in the quarter were $1.7 million, and related primarily to reorganization efforts and initiatives introduced to realize permanent expense reductions.
Commenting on the Company’s expense structure, Mr. Reed said, “We remain focused on permanent expense reductions through regionalization and centralization of certain functions, as demonstrated by the 6.3% decline in our operating and SG&A expenses during the quarter. This continued dedication to expense controls was a significant driver behind our 7.5% As Adjusted EBITDA growth on a same store basis. We enter 2011 in a strong liquidity position and focused on revenue growth from both existing as well as new products while continuing to effectively control costs.”
Annual 2010
Total revenues were $558.6 million for the full year 2010, a decrease of 4.5% over the prior year. On a same store basis total revenues for the full year 2010 were $555.6 million, a decline of 4.4% from the prior year. The decline in total advertising revenue on a same-store basis was driven by local retail and classified revenue, which were down 4.1% and 4.7%, respectively, partially offset by strong growth in online revenues, which increased 18.4%. Commercial print revenues declined 20.8% on a same store basis from the prior year. Local retail revenue for the newspaper business declined 2.8% on a same store basis from the prior year.
Full year 2010 operating costs and SG&A expense declined $35.7 million or 7.1% compared to the prior year. Same store operating costs and SG&A expenses declined 6.7%. 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 5.4% from the prior year on a same store basis. Hauling and delivery was down 8.1% versus prior year on a same store basis driven primarily by increased distribution efficiencies throughout the Company. For the full year, newsprint expense was down 8.2%, due to favorable pricing experienced in the first half of the year and lower consumption levels.
Operating income for the full year 2010 was $43.2 million, compared to an operating loss of $454.5 million in 2009. Included in the 2009 operating loss is $481.4 million of impairment charges. As Adjusted EBITDA for the year was $98.2 million, an increase of $7.2 million or 8.0% on a same-store basis, primarily due to the expense reduction initiatives partially offset by the loss of revenue.
Levered Free Cash Flow for the full year 2010 was $34.5 million compared to $20.1 million in 2009.
Non-cash compensation expense for Restricted Stock Grants in 2010 was $1.7 million. One-time costs incurred and other non-cash expenses in 2010 were $5.1 million, and related primarily to reorganization efforts and initiatives introduced to realize permanent expense reductions.