GateHouse Media, Inc. News
GateHouse Media Announces Full Year & Fourth Quarter Results, First Quarter 2008 Dividend and Stock Repurchase Program
FAIRPORT, N.Y.,
The Company reported full year 2007 total revenue of
Operating loss for the full year 2007 was
For the fourth quarter ended
Operating loss for the fourth quarter was
As a dividend-paying company, 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.
Michael E. Reed, GateHouse Media's Chief Executive Officer, commented, "We are pleased that we were able to deliver strong full year 2007 and fourth quarter results, in what is a weak economic environment. We continued to successfully execute on our business strategy, which resulted in record revenue and Levered Free Cash Flow. Our business model of operating in small markets, combined with our internal revenue initiatives and our cash flow improvement opportunities, position us to weather this current economic slowdown as shown in our fourth quarter results. Despite the challenging advertising marketplace in 2007, we were able to grow our Levered Free Cash Flow per share by 5.4% in 2007 over 2006 before realizing many of the synergies relating to our acquisitions, which we expect to achieve in 2008."
"During the fourth quarter we were able to complete another very attractive acquisition with our purchase of certain small market rural Morris newspapers. We also made good progress towards the integration of our 2007 acquisitions and began the realization of synergies from those transactions. This has contributed to the strong same-store cash flow results we were able to report in the fourth quarter. Our As Adjusted EBITDA in the fourth quarter of
The Company's Board of Directors approved a first quarter dividend of
"It is important that we continue to be as proactive as possible to position GateHouse to not only weather the current environment but also to be in a position to grow our free cash flow per share through this cycle. To that end, we have decided to set the current dividend at
The Company announced that a fourth quarter 2007 non-cash impairment charge related to goodwill and mastheads of
Full Year 2007
As Adjusted Revenues for the year declined 2.5% on a same-store sales basis to
As Adjusted EBITDA for the year was
Non-cash compensation expense for Restricted Stock Grants (RSGs) was
Levered Free Cash Flow for the year 2007 was
Fourth Quarter 2007
As Adjusted Revenues for the quarter declined 3.4% on a same-store sales basis to
As Adjusted EBITDA for the quarter was
Non-cash compensation expense for Restricted Stock Grants (RSGs) in the fourth quarter was
Levered Free Cash Flow for the quarter was
Dividend
The Company's Board of Directors has declared a first quarter cash dividend of
Earnings Call
The Company has scheduled a conference call to discuss results on
A webcast of the conference call will be available to the public on a listen-only basis at www.gatehousemedia.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months following the call.
For those who cannot listen to the live call, a replay will be available until
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 net income (loss) 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 while adjusting for the purchase accounting impact on revenues of the SureWest acquisition. 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.
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, 31, 31, 31, 2007 2006 2007 2006 Revenues: Advertising $127,055 $75,272 $435,769 $238,721 Circulation 35,539 16,446 119,649 52,656 Commercial printing and other 9,609 6,136 33,510 23,553 Total revenues 172,203 97,854 588,928 314,930 Operating costs and expenses: Operating costs 92,771 49,829 316,148 160,877 Selling, general, and administrative 45,441 29,184 159,198 91,272 Depreciation and amortization 17,104 7,844 57,750 24,051 Integration and reorganization costs 2,133 1,269 7,490 4,486 Impairment of long-lived assets 984 20 1,553 917 Loss on sale of assets 1,461 89 1,495 700 Goodwill and mastheads impairment 225,993 - 225,993 - Operating income (loss) (213,684) 9,619 (180,699) 32,627 Interest expense 21,825 10,366 76,726 35,994 Amortization of deferred financing costs 387 203 2,101 544 Loss on early estinguishment of debt - 1,384 2,240 2,086 Unrealized (gain) loss on derivative instrument 405 214 2,378 (1,150) Other expenses 232 - 16 - Loss from continuing operations before income taxes (236,533) (2,548) (264,160) (4,847) Income tax benefit (21,809) (10,301) (31,192) (3,273) Income (loss) from continuing operations (214,724) 7,753 (232,968) (1,574) Income from discontinued operations, net of income taxes 97 (a) - 1,544 (a) - Net income (loss) $(214,627) $7,753 $(231,424) $(1,574) Earnings (loss) per share: Basic and diluted: Income (loss) from continuing operations $(3.78) $0.23 $(5.02) $(0.06) Income from discontinued operations, net of taxes - - 0.03 - Net income (loss) $(3.78) $0.23 $(4.99) $(0.06) Dividends declared per share $0.40 $0.32 $1.57 $0.64 Basic weighted average shares outstanding 56,820,586 33,597,000 46,403,965 25,087,535 Diluted weighted average shares outstanding 56,820,586 33,978,750 46,403,965 25,087,535 (a) Included in income from discontinued operations, net of taxes are total revenues of $848 and $8,383 for the three and twelve months ended December 31, 2007 respectively from Yankton, SD, Winter Haven, FL and Huntington, WV operations. GATEHOUSE MEDIA, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share data) December 31, December 31, 2007 2006 Assets Current assets: Cash and cash equivalents $12,096 $90,302 Accounts receivable, net of allowance for doubtful accounts of $3,874 and $2,332 at December 31, 2007 and December 31, 2006, respectively 85,474 42,990 Inventory 9,046 4,664 Prepaid expenses 4,514 3,372 Deferred income taxes 3,890 2,896 Other current assets 4,208 380 Assets held for sale 1,540 - Total current assets 120,768 144,604 Property, plant, and equipment, net of accumulated depreciation of $30,597 and $11,224 at December 31, 2007 and December 31, 2006, respectively 210,209 98,371 Goodwill 701,852 480,430 Intangible assets, net of accumulated amortization of $58,111 and $20,246 at December 31, 2007 and December 31, 2006, respectively 808,794 391,096 Deferred financing costs, net 8,416 5,297 Derivative instruments - 7,972 Other assets 1,692 1,404 Long-term assets held for sale 23,264 2,323 Total assets $1,874,995 $1,131,497 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term liabilities $1,047 $487 Short-term note payable 10,000 - Accounts payable 13,190 5,655 Accrued expenses 40,672 18,167 Accrued interest 9,947 2,358 Deferred revenue 29,840 14,554 Dividend payable 23,126 9,394 Liabilities held for sale 623 - Total current liabilities 128,445 50,615 Long-term liabilities: Long-term debt 1,206,000 558,000 Long-term liabilities, less current portion 4,455 1,324 Deferred income taxes 25,327 34,709 Derivative instruments 44,101 - Pension and other postretirement benefit obligations 12,679 13,765 Total liabilities 1,421,007 658,413 Stockholders' equity: Preferred stock, $0.01 par value, 50,000,000 shares authorized at December 31, 2007; none issued and outstanding at December 31, 2007 and December 31, 2006 - - Common stock, $0.01 par value, 150,000,000 shares authorized at December 31, 2007; 57,947,073 and 39,147,263 shares issued, and 57,891,295 and 39,141,263 outstanding at December 31, 2007 and December 31, 2006, respectively 568 381 Additional paid-in capital 822,025 486,011 Accumulated other comprehensive loss (49,962) (2,644) Accumulated deficit (318,407) (10,604) Treasury stock, at cost, 55,778 and 6,000 shares at December 31, 2007 and December 31, 2006, respectively (236) (60) Total stockholders' equity 453,988 473,084 Total liabilities and stockholders' equity $1,874,995 $1,131,497 GATEHOUSE MEDIA, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Year ended Year ended December 31, 2007 December 31,2006 Cash flows from operating activities: Net loss $(231,424) $(1,574) Income from discontinued operations, net of income taxes 1,544 - Net loss from continuing operations (232,968) (1,574) Adjustments to reconcile net loss to net cash provided by continuing operating activities: Depreciation and amortization 57,750 24,051 Amortization of deferred financing costs 2,101 544 Unrealized loss (gain) on derivative instrument 2,378 (1,150) Non-cash compensation expense 4,687 1,846 Deferred income taxes (32,657) (3,448) Loss on sale of assets 1,495 700 Loss on early extinguishment of debt 2,240 2,086 Pension and other postretirement benefit obligations 800 748 Impairment of long-lived assets 1,553 917 Goodwill and mastheads impairment 225,993 - Changes in assets and liabilities, net of acquisitions: Accounts receivable, net 4,207 (1,701) Inventory 1,712 (23) Prepaid expenses 1,060 610 Other assets (2,685) 161 Accounts payable 5,081 1,614 Accrued expenses and other current liabilities 13,801 (829) Accrued interest 7,589 1,025 Deferred revenue (219) (668) Long-term liabilities (195) 308 Net cash provided by operating activities 63,723 25,217 Cash flows from investing activities: Purchases of property, plant, and equipment (8,592) (8,396) Proceeds from sale of publications and other assets 79,658 4,494 Acquisition of CP Media, net of cash acquired - (231,735) Acquisition of Enterprise NewsMedia, LLC, net of cash acquired (154) (181,393) Acquisition of The Copley Press, Inc. Newspapers, net of cash acquired (385,756) - Acquisition of Gannett Co., Inc. Newspapers, net of cash acquired (418,576) - Other acquisitions, net of cash acquired (317,738) (11,808) Net cash used in investing activities (1,051,158) (428,838) Cash flows from financing activities: Payment of debt issuance costs (7,460) (7,166) Borrowings under term loans 1,534,757 570,000 Repayments of term loans (897,757) (12,000) Net borrowings under revolving credit facility 11,000 (8,500) Extinguishment of credit facility, net of fees - (304,426) Payment of offering costs (1,374) (3,701) Issuance of common stock, net of underwriter's discount 332,939 265,914 Purchase of treasury stock (176) (60) Payment of dividends (62,700) (9,201) Net cash provided by financing activities 909,229 490,860 Net increase (decrease) in cash and cash equivalents (78,206) 87,239 Cash and cash equivalents at beginning of period 90,302 3,063 Cash and cash equivalents at end of period $12,096 $90,302 GATEHOUSE MEDIA, INC. AND SUBSIDIARIES As Adjusted EBITDA (In thousands) Three months Three months Twelve months Twelve months ended ended ended ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 Income (loss) from continuing operations $(214,724) $7,753 $(232,968) $ 1,574) Income tax benefit (21,809) (10,301) (31,192) (3,273) Unrealized (gain) loss on derivative instrument (1) 405 214 2,378 (1,150) Loss on early extinguishment of debt (2) - 1,384 2,240 2,086 Amortization of deferred financing costs 387 203 2,101 544 Interest expense 21,825 10,366 76,726 35,994 Impairment of long-lived assets 984 20 1,553 917 Depreciation and amortization 17,104 7,844 57,750 24,051 Goodwill and masthead impairment 225,993 - 225,993 - Adjusted EBITDA from continuing operations 30,165 17,483 104,581 57,595 Non-cash compensation and other expense 7,268 3,229 14,007 5,175 Non-cash portion of postretirement benefits expense 131 416 799 748 Integration and reorganization costs 2,133 1,269 7,490 4,486 Loss on sale of assets 1,461 89 1,495 700 Impact of SureWest Directories purchase accounting 2,941 - 10,189 - Income from discontinued operations 87 - 2,393 - As Adjusted EBITDA 44,186 22,486 140,954 68,704 Net capital expenditures (46)(3) (377) (5,414)(3) (3,902) Interest expense (21,825)(4) (9,289) (71,456)(4) (31,939) Levered Free Cash Flow $22,315 $12,820 $64,084 $32,863 Pro forma EBITDA adjustment 2,370 (5) Pro forma net capital expenditures (250)(5) Pro forma interest expense (133)(5) Pro forma Levered Free Cash Flow $24,302 (1) Non-cash (gain) loss on derivative instruments is related to interest rate swap agreements which are financing related and are excluded from Adjusted EBITDA. (2) Non-cash write-off of deferred financing costs are similar to interest expense and amortization of financing fees and are excluded from Adjusted EBITDA. (3) Net capital expenditures include proceeds from the sale of other assets of $2.6 million and $3.2 million during the three months and twelve months ended December 31, 2007 respectively. (4) Interest expense excludes interest expense on the Bridge Facility for the twelve months ended December 31, 2007 of $5.2 million and interest expense on the revolving credit facility of $0.1 million for the twelve months ended December 31, 2007. The bridge loan was paid off completely and the outstanding balance of the revolving credit facility was repaid with proceeds from our follow-on public offering. (5) Pro forma for all acquisitions for the entire quarter. GATEHOUSE MEDIA, INC. AND SUBSIDIARIES As Adjusted Revenues (In thousands) Three months Three months Twelve months Twelve months ended ended ended ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 Total revenues from continuing operations $172,202 $97,854 $588,928 $314,930 Revenues from discontinued operations 848 - 8,383 - Total income statement revenues 173,050 97,854 597,311 314,930 Impact of SureWest Directories purchase accounting 4,021 - 14,331 - As Adjusted Revenues $177,071 $97,854 $611,642 $314,930
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
For more information regarding GateHouse Media and to be added to our email distribution list, please visit www.gatehousemedia.com.
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 and potential acquisition 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 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, 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 and/or the associated earnings conference call. 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.
SOURCE GateHouse Media, Inc.
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