Second Quarter Highlights
- Total digital revenue increased 17.3% for the quarter.
- Total revenues for the second quarter were $119.6 million, down 5.1% from the prior year and an improvement from first quarter trends. Excluding the impact of legislation changes in Massachusetts which slowed foreclosures, total revenues declined 4.1% to the prior year.
- Operating costs and SG&A expense increased $2.6 million from the prior year, or 2.5%, to $106.1 million. Adjusting for one-time items, operating costs and SG&A expense were flat to the prior year at $101.9 million. Core business operating costs and SG&A expenses, excluding GateHouse Ventures, declined $4.1 million, or 4.1%
- As Adjusted EBITDA was $17.7 million. Excluding GateHouse Ventures our core newspaper business had As Adjusted EBITDA of $21.3 million.
GateHouse Media, Inc. (the "Company" or "GateHouse Media") (OTC Pink Sheets: GHSE), a leading multi-media company providing news and information to local communities, today reported financial results for the second quarter ended June 30, 2013. Total revenues were $119.6 million, which represents a decline of 5.1% versus the prior year. Excluding the impact of the reduced Massachusetts foreclosure revenues due to changes in legislation enacted in August 2012, total revenues were down 4.1% to the prior year. As Adjusted EBITDA was $17.7 million and $18.9 million excluding one-time investments made at Propel Marketing Company ("Propel"), part of GateHouse Ventures. As Adjusted EBITDA on the core business, excluding GateHouse Ventures, was $21.3 million.
Commenting on GateHouse Media's results, Michael E. Reed, Chief Executive Officer of GateHouse Media, said, "We saw slightly improved revenue trends in almost every revenue category during the second quarter as compared to the first quarter. We are also seeing some further improvement in July. However, we remain very cautious on our near term outlook as print advertising revenue, despite the improved trend, continues to decline in the high single digit range, and still represents the largest revenue category within our business. Our primary customers, small businesses, continue to operate under tough economic conditions and face secular pressures as well. It's important that we continue to drive changes in our business model diversifying our revenue streams to be more balanced among advertising, subscription, marketing services and transaction based revenue streams.
"Our total revenue was down 5.1% to prior year in the second quarter. We continue to be negatively impacted by the new foreclosure legislation passed in Massachusetts last August which slowed the foreclosure rates in the state. Adjusting for that, we estimate our revenue would have been down 4.1% for the quarter. We did have some real bright spots in certain revenue categories during the quarter compared to the prior year. For example, total digital revenues were up 17.3%, preprint revenues were up about 1.0% and subscription income was up nearly 1.0%.
"We continue to expand our digital marketing solutions company, Propel, at a rapid pace. Our revenues in the second quarter surpassed $1.5 million which represented 50% growth over the first quarter. We will continue to invest in this business as we see the potential to drive significant revenue growth and meet the changing needs of our customers as they adapt their lead generation strategies to the ever changing digital environment. In addition, it will allow us to broaden our revenue streams as we aim to be less reliant on print advertising revenue. Like many new businesses some of our initial investment has been centered around building the infrastructure necessary to sustain a successful and fast growing operation. We are confident that this investment will allow us to have a set of digital marketing products that serves the changing needs of our traditional advertising customers and opens the door for a vastly expanded pool of potential new customers.
"We continue to make progress on reducing our core business operating expenses. We were able to reduce them by $4.1 million or 4.1% in the second quarter. Overall our expenses for the quarter were up 2.6% driven by our investment in Propel and legal costs we have incurred as we proactively explore options for improving our balance sheet. As Adjusted EBITDA for our core newspaper business was $21.3 million in the quarter which was down 14.9% to prior year. Our total company As Adjusted EBITDA, excluding all one- time, non- recurring and non-cash expenses was $18.9 million for the quarter. Liquidity remains strong with more than $25 million in cash on hand at the end of the second quarter."
Second Quarter 2013
Total revenues were $119.6 million for the quarter, a decline of 5.1% compared to the prior year. The results were driven by strong digital revenue growth of 17.3% offset by declines in print advertising. The improvement in digital revenue was driven primarily by increases from new growth in initiatives, particularly Propel Marketing, as well as digital advertising in our core business. Total advertising revenue declined 8.9% as growth in digital advertising was more than offset by declines in local print and classified revenue, which were down 8.1% and 14.5%, respectively. Circulation revenue increased slightly from the prior year as did our preprint revenues.
Total operating and SG&A expenses in the quarter were $106.1 million, an increase of $2.6 million or 2.5% compared to the prior year. The increase was primarily related to investments made in Propel and legal costs incurred due to exploring alternatives to improve the Company's capital structure. Adjusting for one-time costs incurred and other non-cash expenses, operating costs and SG&A expense were flat to the prior year at $101.9 million. Core business operating costs and SG&A expenses, excluding GateHouse Ventures, declined $4.1 million, or 4.1%, primarily as a result of lower total compensation.
Operating income for the quarter was $2.3 million compared to operating income of $11.6 million in the prior year. As Adjusted EBITDA for the quarter was $17.7 million, a decline of $6.3 million from the prior year on a same store basis. Both the decline in Operating income and As Adjusted EBITDA are primarily due to lower print advertising revenues and our investments in Propel, partially offset by the 4.1% decline in core operating expenses. Excluding new growth initiatives, core business As Adjusted EBITDA was $21.3 million, a decline of $3.7 million compared to the prior year. Levered Free Cash Flow for the quarter was $3.5 million compared to $8.5 million in the prior year.
One-time costs incurred and other non-cash expenses in the quarter were $6.3 million, and related primarily to legal fees and other expenses related to exploring alternatives to improve the Company's capital structure.-second.html#storylink=cpy