GateHouse Media Announces Fourth Quarter & Full Year 2009 Results
Fourth Quarter and Full Year 2009 Highlights
- Reported revenues for the fourth quarter were $150.2 million, down 10.3% from the prior year quarter. Full year reported revenues were $585.0 million, a decrease of 13.8% from the prior year.
- Reported operating costs and SG&A expense decreased $17.1 million or 12.3% for the fourth quarter and $68.0 million or 12.0% for the full year.
- Reported net loss for the fourth quarter and full year was $4.3 million and $530.6 million, respectively. The full year net loss includes $481.4 million of non-cash impairment charges recorded in the second quarter to goodwill, mastheads and other long-lived assets.
- As Adjusted EBITDA was $29.3 million and $91.0 million for the fourth quarter and full year, respectively; down 4.4% and 30.7% from the comparable prior year periods.
- In the fourth quarter, Levered Free Cash Flow per share increased 50% to $0.24 versus $0.16 for the prior year quarter. Levered Free Cash Flow per share for the full year was $0.35, compared to $0.59 for the prior year.
FAIRPORT, N.Y., March 4 /PRNewswire-FirstCall/ -- GateHouse Media, Inc. (the "Company" or "GateHouse Media") (OTC Pink Sheets: GHSE) today reported financial results for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter 2009
Total reported revenues were $150.2 million for the fourth quarter, a decline of 10.3% over the prior year. As Adjusted Revenues for the quarter were $149.6 million, a decline of 10.5% on a same-store basis. The decline in same-store revenue was driven primarily by print local and classified advertising categories, which were down 10.2% and 16.6%, respectively. Circulation revenues declined 3.6% for the quarter on a same-store basis. Commercial printing and other revenues declined 23.1% in the quarter on a same-store basis.
Reported operating costs and SG&A expense were $121.5 million, a decline of $17.1 million or 12.3% from the prior year. Same-store operating costs and SG&A expense declined by 11.7% in the quarter, led primarily by declines in compensation and newsprint. The decrease in compensation expense reflects permanent cost reduction initiatives. In addition, declines in newsprint pricing and consumption contributed to a 39.0% reduction in newsprint expense. Although newsprint prices have begun to increase, the Company anticipates it will continue to benefit from year over year price declines during the first quarter of 2010.
Reported operating income for the quarter was $16.1 million, an increase of 50.8% over the prior year quarter, excluding impairment charges. As Adjusted EBITDA for the quarter was $29.3 million, a decline of $1.6 million or 5.3% on a same-store basis from the prior year. The minor decline in As Adjusted EBITDA was primarily due to the decline in revenue which was offset by expense reduction initiatives.
Levered Free Cash Flow for the quarter was $13.7 million compared with $9.4 million for the prior year, a 46.8% increase.
Non-cash compensation expense for Restricted Stock Grants in the fourth quarter was $0.7 million.
One-time costs incurred and other non-cash expenses in the quarter were $1.6 million, and related primarily to reorganization and expense control initiatives introduced to realize permanent expense savings.
Commenting on GateHouse Media's results, Michael E. Reed, GateHouse Media's Chief Executive Officer, said, "As the economy began to stabilize throughout the year, we experienced continued improvement in our year over year revenue trends. Our fourth quarter same-store revenue declines were 10.5% compared to 14.9% in the third quarter. This trend has continued into our first quarter.
"We continue to focus on permanent cost reduction initiatives. These programs were a significant contributor to a 10.7% expense decline in 2009, driven by an 11.0% decline in compensation expense. We are in the process of implementing additional cost saving initiatives in order to better align our overall cost structure with current revenue trends.
"The improvement in revenue trends and our cost saving initiatives, combined with controlled capital spending, have resulted in improved cash flow and liquidity. Our Levered Free Cash Flow per share increased from $0.19 in the third quarter to $0.24 in the fourth quarter, and represented a fifty percent increase from fourth quarter 2008. We have significantly improved our working capital position over the course of 2009, which positions us well going into 2010."
Full Year 2009
Total reported revenues were $585.0 million for the full year 2009, a decrease of 13.8% over the prior year. As Adjusted Revenues for the full year 2009 were $582.4 million, a decline of 14.2% on a same-store basis from the prior year. The decline in same-store revenue was driven primarily by the local advertising and print classified categories, which were down 12.1% and 29.5%, respectively, on a year over year basis. Circulation revenues decreased 2.8% on a same-store basis benefiting from price increases as volumes declined slightly. Commercial printing and other revenues were down 19.6% for the year on a same-store basis.
Full year 2009 reported operating costs and SG&A expense declined $68.0 million or 12.0% compared to the prior year. Same-store operating costs and SG&A expenses declined by 10.7%, driven by an 11.0% decline in compensation expense. Expense declines in 2009 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 23.4% reduction in newsprint expense.
Reported operating loss for the full year 2009 was $454.5 million. Excluding the impairment charge associated with goodwill, mastheads and other long-lived assets recorded in the second quarter, operating income in 2009 was $26.9 million, compared to $32.9 million in 2008. As Adjusted EBITDA for the year was $91.0 million, a decrease of $37.5 million or 29.2% on a same-store basis, primarily due to the loss of revenue partially offset by expense reduction initiatives.
Levered Free Cash Flow for the full year 2009 was $20.1 million compared to $33.8 million in 2008.
Non-cash compensation expense for Restricted Stock Grants was $3.4 million for the year.
One-time costs incurred and other non-cash expenses in 2009 were $6.0 million, and related primarily to reorganization and expense control initiatives to realize permanent expense savings.
About GateHouse Media, Inc.
GateHouse Media, Inc., headquartered in Fairport, New York, is one of the largest publishers of locally based print and online media in the United States as measured by its 87 daily publications. GateHouse Media currently serves local audiences of more than 10 million per week across 21 states through hundreds of community publications and local websites. GateHouse Media is traded in the over-the-counter market under the symbol "GHSE."
For more information regarding GateHouse Media and to be added to our email distribution list, please visit www.gatehousemedia.com.
Non-GAAP Financial Measures
A non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. GateHouse Media defines and uses Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues, and Levered Free Cash Flow, non-GAAP financial measures, as set forth below. The Company strongly urges stockholders and other interested persons not to rely on any single financial measure to evaluate its business. In addition, because Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are not measures of financial performance under GAAP and are susceptible to varying calculations, these non-GAAP measures, as presented in this press release, may differ from and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow
The Company defines Adjusted EBITDA as income (loss) from continuing operations before interest, income tax expense (benefit), depreciation and amortization and other non-recurring or non-cash items. The Company defines As Adjusted EBITDA as Adjusted EBITDA before other non-cash items such as non-cash compensation and non-recurring integration and reorganization costs. The Company defines As Adjusted Revenues as total revenues plus revenues of discontinued operations less revenues from non-wholly owned subsidiaries. The Company defines Levered Free Cash Flow as As Adjusted EBITDA less capital expenditures, cash taxes and interest expense.
Management's Use of Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow
Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are not measurements of financial performance under GAAP and should not be considered in isolation or as alternatives to income from operations, net income (loss), cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. GateHouse Media's management believes these non-GAAP measures, as defined above, are useful to investors for the following reasons:
- Evaluating performance and identifying trends in day-to-day performance because the items excluded have little or no significance on its day-to-day operations;
- Providing assessments of controllable expenses that afford management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance; and
- Indicators for management to determine if adjustments to current spending decisions are needed.
Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow provide GateHouse Media with measures of financial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with its capital structure. These metrics measure GateHouse Media's financial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the organization. Adjusted EBITDA, As Adjusted EBITDA, As Adjusted Revenues and Levered Free Cash Flow are some of the metrics used by senior management and the Board of Directors to review the financial performance of the business on a monthly basis. In addition, GateHouse Media's management utilizes these metrics to evaluate the Company's performance, along with other criteria, to determine the funds available for paying the quarterly dividend.
Forward-Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to various risks and uncertainties, including without limitation, statements relating to progress made by the Company in its integration efforts, growth in revenues and cash flow, on-line revenues, expense reduction efforts and potential acquisition and sale opportunities. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek," "anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "would," "project," "predict," "continue" or other similar words or expressions. Forward looking statements are based on certain assumptions or estimates, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although the Company believes that the expectations reflected in such forward looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on the Company's operations and future prospects or which could cause events or circumstances to differ from the forward-looking statements include, but are not limited to, the condition of the economy and the credit markets generally, the Company's ability to maintain adequate liquidity and financing sources and an appropriate level of debt, the Company's ability to close on a timely basis upon announced or contemplated transactions, unexpected liabilities arising from any transaction or that the Company will not receive the expected benefits from the transaction, the Company's limited operating history on a combined basis, the Company's ability to generate sufficient cash flow to cover required interest, long-term obligations and dividends, the effect of the Company's indebtedness and long-term obligations on its liquidity, the Company's ability to effectively manage its growth, unforeseen costs associated with the acquisition of new properties, the Company's ability to find suitably priced acquisitions, the Company's ability to integrate acquired assets and businesses, any increases in the price or reduction in the availability of newsprint, seasonal and other fluctuations affecting the Company's revenues and operating results, any declines in circulation, the Company's ability to obtain additional capital on terms acceptable to it, the Company's vulnerability to economic downturns, regulatory changes or acts of nature in certain geographic areas, increases in competition for skilled personnel, a portion of the Company's workforce being unionized, departure of key officers, increases in market interest rates, the cost and difficulty of complying with increasing and evolving regulation, and other risks detailed from time to time in the Company's SEC reports, including but not limited to its most recent Annual Report on Form 10-K filed with the SEC under Commission File Number 001-33091. When considering forward- looking statements, readers should keep in mind the risk factors and other cautionary statements in such SEC filings. Readers are also cautioned not to place undue reliance on any of these forward-looking statements, which reflect management's views as of the date of this press release. The factors discussed above and the other factors noted in the Company's SEC filings could cause actual results to differ significantly from those contained in any forward-looking statement. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements and expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 2009 31, 2008 31, 2009 31, 2008
-------- -------- -------- --------
Revenues:
Advertising $106,839 $120,608 $409,725 $492,557
Circulation 35,276 36,453 142,023 145,653
Commercial
printing and other 8,102 10,493 33,290 40,841
------ ------ ------ ------
Total revenues 150,217 167,554 585,038 679,051
Operating costs
and expenses:
Operating costs 81,191 96,112 335,602 382,333
Selling, general,
and administrative 40,306 42,451 165,160 186,409
Depreciation and
amortization 11,978 16,675 55,752 69,913
Integration and
reorganization costs 598 1,481 2,029 7,113
Impairment of long-
lived assets - 21,083 206,089 123,717
(Gain) loss on
sale of assets 1 127 (418) 337
Goodwill and
mastheads impairment - 154,989 275,310 488,543
------ ------ ------ ------
Operating income
(loss) 16,143 (165,364) (454,486) (579,314)
Interest expense 15,418 19,410 64,631 88,630
Amortization of
deferred financing
costs 340 340 1,360 1,845
Gain on early
extinguishment of debt - - (7,538) -
Unrealized loss
on derivative
instrument 3,207 4,593 12,672 10,119
Other (income) expense 931 (52) 1,394 (59)
------ ------ ------ ------
Loss from
continuing
operations before
income taxes (3,753) (189,655) (527,005) (679,849)
Income tax expense
(benefit) 34 (7,617) 342 (21,139)
------ ------ ------ ------
Loss from
continuing
operations (3,787) (182,038) (527,347) (658,710)
Loss from discontinued
operations, net
of income taxes (487)(a) (722) (3,265)(a) (14,596)
------ ------ ------ ------
Net loss $(4,274) $(182,760) $(530,612) $(673,306)
Net loss
attributable to
noncontrolling
interest $174 $- $510 $-
------ ------ ------ ------
Net loss
attributable to
GateHouse
Media $(4,100) $(182,760) $(530,102) $(673,306)
========== ========== ========== ==========
Loss per share:
Basic and diluted:
Loss from continuing
operations
attributable to
GateHouse Media $(0.06) $(3.19) $(9.18) $(11.54)
Loss from discontinued
operations,
attributable to
GateHouse Media,
net of income taxes $(0.01) (0.01) $(0.06) $(0.26)
------ ------ ------ ------
Net loss
attributable to
GateHouse Media $(0.07) $(3.20) $(9.24) $(11.80)
========== ========== ========== ==========
Dividends declared
per share $- $- $- $0.20
Basic weighted
average shares
outstanding 57,506,651 57,129,132 57,412,401 57,058,454
---------- ========== ---------- ==========
Diluted weighted
average shares
outstanding 57,506,651 57,129,132 57,412,401 57,058,454
========== ========== ========== ==========
(a) Included in income from discontinued operations, net of taxes are
total revenues of $55 for the three months ended December 31, 2009
primarily related to Albany, MO and Western Printers, MN and
$1,026 for the twelve months ended December 31, 2009 primarily from
Derby, KS, Charles City, IA, New Hampton, IA, Kansas City, KS
on-line publication, Albany, MO, and Western Printers, MN.
GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
December 31, December 31,
2009 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $10,999 $11,744
Accounts receivable, net of
allowance for doubtful
accounts of $4,569 and $6,024
at December 31, 2009 and
December 31, 2008, respectively 67,669 75,274
Inventory 7,049 10,790
Prepaid expenses 5,128 4,576
Other current assets 6,873 3,808
----- -----
Total current assets 97,718 106,192
Property, plant, and equipment,
net of accumulated
depreciation of $81,493
and $57,400 at December 31,
2009 and December 31,
2008, respectively 171,572 194,401
Goodwill 14,343 261,332
Intangible assets, net of
accumulated amortization of
$130,472 and $100,132
at December 31, 2009 and
December 31, 2008, respectively 295,731 565,033
Deferred financing costs, net 5,695 7,055
Other assets 5,442 2,489
Long-term assets held for sale 1,428 13,119
----- ------
Total assets $591,929 $1,149,621
======== ==========
Liabilities and Stockholders'
Equity (Deficit)
Current liabilities:
Current portion of long-term
liabilities $14,369 $1,879
Short-term note payable - 11,538
Short-term debt 8,000 17,000
Accounts payable 6,075 20,378
Accrued expenses 28,598 31,395
Accrued interest 3,235 7,895
Deferred revenue 27,826 28,444
------ ------
Total current liabilities 88,103 118,529
Long-term liabilities:
Long-term debt 1,195,000 1,195,000
Long-term liabilities, less
current portion 4,733 16,658
Derivative instruments 44,522 34,957
Pension and other postretirement
benefit obligations 13,147 13,555
------ ------
Total liabilities 1,345,505 1,378,699
--------- ---------
Stockholders’ equity (deficit):
Common stock, $0.01 par value,
150,000,000 shares authorized at
December 31 2009; 58,313,868 and
58,213,868 shares issued, and
58,104,009 and 58,020,693 outstanding
at December 31, 2009 and
December 31, 2008, respectively 568 568
Additional paid-in capital 829,009 825,580
Accumulated other comprehensive loss (48,916) (51,604)
Accumulated deficit (1,533,421) (1,003,319)
Treasury stock, at cost, 209,859
and 193,175 shares at
December 31, 2009 and
December 31, 2008, respectively (306) (303)
---- ----
Total GateHouse Media
stockholders' deficit (753,066) (229,078)
Noncontrolling Interest (510) -
---- -
Total stockholders' deficit (753,576) (229,078)
-------- --------
Total liabilities and
stockholders' deficit $591,929 $1,149,621
======== ==========
GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Year ended Year ended Year ended
December 31, December 31, December 31,
2009 2008 2007
------------ ----------- -----------
Cash flows from
operating activities:
Net loss $(530,612) $(673,306) $(231,424)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 55,821 71,573 57,750
Amortization of deferred
financing costs 1,360 1,845 2,101
Loss on derivative
instrument 12,672 10,119 2,378
Non-cash compensation
expense 3,429 3,555 4,687
Deferred income taxes - (21,348) (32,154)
(Gain) loss on sale of
assets (418) 337 1,495
(Gain) loss on early
extinguishment of debt (7,538) - 2,240
Pension and other
postretirement
benefit obligations (782) (1,499) 800
Non-cash interest expense - 618 -
Impairment of long-lived
assets 208,794 132,856 1,553
Goodwill and mastheads
impairment 275,310 496,309 225,993
Changes in assets and
liabilities, net
of acquisitions:
Accounts receivable, net 7,120 11,197 5,153
Inventory 3,704 (1,697) 2,138
Prepaid expenses (596) 274 1,143
Other assets (2,696) (790) (2,685)
Accounts payable (14,303) 6,663 5,021
Accrued expenses (3,001) (7,033) 10,548
Accrued interest (4,660) (2,052) 7,589
Deferred revenue (463) (1,349) (398)
Other long-term
liabilities 717 (766) (195)
--- ---- ----
Net cash provided by
operating activities 3,858 25,506 63,733
----- ------ ------
Cash flows from investing
activities:
Purchases of property, plant,
and equipment (2,476) (9,704) (8,602)
Proceeds from sale of
publications and other assets 11,151 48,938 79,658
Acquisition of Enterprise
NewsMedia, LLC,
net of cash acquired - - (154)
Acquisition of The Copley Press,
Inc. Newspapers, net of cash
acquired - (11) (385,756)
Acquisition of Gannett Co., Inc.
Newspapers, net of cash acquired - - (418,576)
Other acquisitions, net of cash
acquired (275) (27,548) (317,738)
---- ------- --------
Net cash provided by
(used in) investing
activities 8,400 11,675 (1,051,168)
----- ------ ----------
Cash flows from financing activities:
Payment of debt issuance costs - (7) (7,460)
Borrowings under term loans - 19,505 1,534,757
Repayments of term loans (9,000) (22,547) (897,757)
Repayments under short-term
note payable (4,000) - -
Borrowings under revolving
credit facility - 39,700 54,700
Repayments under revolving
credit facility - (50,700) (43,700)
Payment of offering costs - - (1,374)
Issuance of common stock,
net of underwriter's discount - - 332,939
Purchase of treasury stock (3) (67) (176)
Payment of dividends - (34,731) (62,700)
Issuance of subsidiary preferred
stock - 11,500 -
Payment of subsidiary preferred
stock issuance costs - (186) -
--- ---- ---
Net cash provided by
(used in) financing
activities (13,003) (37,533) 909,229
------- ------- -------
Net decrease in
cash and cash
equivalents (745) (352) (78,206)
Cash and cash equivalents at
beginning of period 11,744 12,096 90,302
------ ------ ------
Cash and cash equivalents at
end of period $10,999 $11,744 $12,096
======= ======= =======
Supplemental disclosures on cash
flow information:
Cash interest paid $67,950 $89,677 $74,910
Cash income taxes paid 487 115 131
Note payable issued related
to the acquisition of
Morris Publishing Group - - 10,000
GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
As Adjusted EBITDA
(In thousands)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Loss from
continuing
operations $(3,787) $(182,038) $(527,347) $(658,710)
Income tax
expense (benefit) 34 (7,617) 342 (21,139)
Unrealized loss on
derivative
instrument (1) 3,207 4,593 12,672 10,119
Gain on early
extinguishment
of debt - - (7,538) -
Amortization of
deferred financing
costs 340 340 1,360 1,845
Write-off of
financing costs - - 743 -
Interest expense 15,418 19,410 64,631 88,630
Impairment of
long-lived assets - 21,083 206,089 123,717
Depreciation and
amortization 11,978 16,675 55,752 69,913
Goodwill and
masthead impairment - 154,989 275,310 488,543
--- ------- ------- -------
Adjusted EBITDA
from continuing
operations 27,190 27,435 82,014 102,918
Non-cash compensation
and other expense 2,141 4,126 8,635 18,198
Non-cash portion of
postretirement
benefits expense (480) (2,511) (782) (1,499)
Integration and
reorganization costs 597 1,481 2,028 7,113
(Gain) loss on sale
of assets 1 127 (418) 337
Income (loss)
from discontinued
operations (142) (16) (472) 4,307
---- --- ---- -----
As Adjusted
EBITDA 29,307 30,642 91,005 131,374
Net capital
expenditures (512) (2,163) (2,476) (9,577)
Cash taxes (22) (47) (487) 115
Interest paid (15,027) (19,069) (67,950) (88,158)
------- ------- ------- -------
Levered Free
Cash Flow $13,746 $9,363 $20,092 $33,754
======= ====== ======= =======
(1) Non-cash loss on derivative instruments is related to interest rate
swap agreements which are financing related and are excluded from
Adjusted EBITDA.
GATEHOUSE MEDIA, INC. AND SUBSIDIARIES
As Adjusted Revenues
(In thousands)
Three Three Twelve Twelve
months months months months
ended ended ended ended
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
------------- ------------- ------------- -------------
Total revenues
from continuing
operations $150,217 $167,554 $585,038 $679,051
Revenues from
discontinued
operations 55 1,046 1,026 19,423
Revenues from
non-wholly owned
subsidiary (683) (633) (3,630) (3,364)
---- ---- ------ ------
As Adjusted
Revenues $149,589 $167,967 $582,434 $695,110
======== ======== ======== ========
SOURCE GateHouse Media, Inc.
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