GateHouse Media Improves Margins in Q3; Revenue Declines Moderate

By: Jennifer Saba GateHouse Media reported total revenue on a same-store basis fell 14.9% to $144.9 million in Q3 year-over -- a sequential improvement over previous quarters. In Q2, the Fairport, N.Y. chain reported that total revenue was down 15.2% and in Q1 it fell 16.3%.

Net income at the company was $2 million compared to a loss of $18.5 million during the same quarter last year. Operating income rose 44.2% to $14 million.

Classified and local advertising revenue were down 28.5% and 13.7% respectively, while circulation revenue declined 3.6% on a same-store basis.

GateHouse slashed costs by 16.3% or $23.2 million aided by a 38% reduction in newsprint expenses.

Levered free cash flow was $11.1 million or 19 cents a share compared to 17 cents a share in the same quarter of the previous year. GateHouse benefited from lower interest expense and capital expenditures.

Mike Reed, GateHouse CEO, said in a statement: "While current economic conditions continue to present a challenging revenue environment, the permanent cost reduction initiatives we implemented this year resulted in higher EBITDA margins and increased levered free cash flow in the quarter."

The adjusted EBITDA margin was 19% compared to 16.6% in Q1 and 6.7% in Q2.

Reed commented that September was the company's strongest month based on year-over-year revenue and is hopeful the trend will continue.


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