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| 8-K - FORM 8-K FILING DOCUMENT - OUTDOOR CHANNEL HOLDINGS INC | document.htm |
EXHIBIT 99.1
Outdoor Channel Holdings Reports Third Quarter 2012 Results
Third Quarter Revenues Increase 13%; Adjusted EBITDA Moderated by Increased
Promotional Investment In Line With Strategic Plan
TEMECULA, Calif., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Outdoor Channel Holdings, Inc. (Nasdaq:OUTD) today reported its financial results for the third quarter ended September 30, 2012.
Total revenues for the quarter were $21.3 million, an increase of 13% compared with $18.9 million in the third quarter of 2011 due primarily to an 8% increase in revenues at the Company's core Outdoor Channel Network segment and a 104% increase in revenues at our Aerial Cameras unit. Advertising revenue for the quarter was $11.7 million, an increase of 9% from $10.7 million in the third quarter of 2011 driven largely by higher short-form online advertising. Subscriber fees for the quarter were $5.3 million, an increase of 5%, driven by a combination of rate increases and higher subscribers. Production Services revenue, after intersegment eliminations, totaled $4.4 million for the quarter, a 37% year-over-year increase driven by the aforementioned revenue increase at our Aerial Cameras unit.
The Company's operating income for the third quarter 2012 was $3.2 million compared to an operating income of $3.5 million in the third quarter of 2011. The decline in the Company's operating income was primarily attributable to increased advertising expenses at its core network segment, in-line with the Company's strategic plan.
The Company reported a consolidated net income for the 2012 third quarter of $1.9 million, or $0.07 per fully diluted share, compared to net income $2.1 million, or $0.08 per fully diluted share, in the third quarter of 2011.
"We generated solid revenue growth at our core Channel for the quarter reflecting our success in attracting advertisers to our industry-leading network," said Tom Hornish, President & Chief Executive Officer. "To further support our programming and build our brand, we also significantly ramped up our advertising and promotion expenses, in line with our strategic plan. This resulted in a year-over-year decline in our Channel's operating profitability, offset by reduced EBITDA losses at our Production Services and Aerial Cameras units. Our Channel distribution has grown to an all-time high of 38.1 million homes as of November 2012 according to Nielsen, up 9% from a year ago levels. During the fourth quarter, we plan to continue to heavily invest in promoting the Channel, including in our expanded distribution markets, and our January 2013 show launches as part of our focus on further expanding our audience and driving long-term shareholder value."
Review of Segment Operating Results
The Outdoor Channel ("TOC") posted operating income of $3.8 million for the quarter compared to operating income of $4.8 million for the third quarter of 2011. The decreased operating income was driven primarily by increased advertising expenses and, to a lesser extent, an increase in legal and other professional fee expenses.
The Production Services unit posted an operating loss for the quarter, before the effect of intercompany eliminations, of $235,000 compared to an operating loss of $123,000 for the third quarter of 2011. The increase in the operating loss primarily reflects the reduced production on certain TOC series.
The Aerial Cameras unit posted an operating loss of $315,000 for the quarter compared to an operating loss of $825,000 for the third quarter of 2011 on a combination of stronger revenues, reduced legal expense related to its ActionCam litigation, and operating efficiencies from its September 2011 office relocations.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense (adjusted EBITDA), was $4.8 million for the quarter, compared to adjusted EBITDA of $5.0 million in the prior-year period. TOC's adjusted EBITDA totaled $5.0 million for the quarter compared to $5.8 million in the prior-year period, a 14% decrease. Production Services' adjusted EBITDA, before intercompany eliminations, was negative $125,000 for the quarter compared to negative $204,000 in the prior-year period and Aerial Cameras' adjusted EBITDA was negative $60,000 for the quarter compared to negative $581,000 in the prior-year.
Investor Conference Call
Outdoor Channel Holdings' management will host an investor conference call on November 7, 2012, at 2:30 p.m. PT (5:30 p.m. ET) to review the Company's financials and operations for its third quarter ended September 30, 2012. Investment professionals and shareholders are invited to participate in the live call by dialing 800-299-8538 (domestic) or 617-786-2902 (international) and using participant passcode 83728754. The call will be open to all other interested parties through a live, listen-only audio Internet broadcast in the Investor Relations section of the Company's Web site, www.outdoorchannel.com.
For those who are not available to listen to the live broadcast, the call will be archived online for one year. A telephonic playback of the conference call also will be available through Wednesday, November 14, 2012, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using participant passcode 93628441.
About Outdoor Channel Holdings, Inc.
Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel, America's Leader in Outdoor TV, and Winnercomm Inc., an Emmy Award winning production and interactive company. Outdoor Channel offers programming that captures the excitement of hunting, fishing, shooting, off-road motorsports, adventure and the Western lifestyle and can be viewed on multiple platforms including high definition, video-on-demand, as well as on a dynamic broadband website. Winnercomm Inc. is one of America's leading and highest quality producers of live sporting events and sports series for cable and broadcast television. Outdoor Channel Holdings, Inc. also owns and operates the SkyCam and CableCam aerial camera systems which provide dramatic overhead camera angles for major sports events, including college and NFL football. For more information please visit http://www.outdoorchannel.com.
Nielsen Media Research Universe Estimates for Outdoor Channel
Nielsen Media Research is the leading provider of television audience measurement and advertising information services worldwide. Nielsen estimated that Outdoor Channel had approximately 38.1 million cable and satellite subscribers for November 2012. Please note that this estimate regarding Outdoor Channel's subscriber base is made by Nielsen Media Research and is theirs alone and does not represent opinions, forecasts or predictions of Outdoor Channel Holdings, Inc. or its management. Outdoor Channel Holdings, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information.
Use of Non-GAAP Financial Information
This press release includes "non-GAAP financial measures" within the meaning of the Securities and Exchange Commission rules. The Company believes that earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense ("Adjusted EBITDA)", provides greater comparability regarding its ongoing operating performance and is helpful as an indicator of the current financial performance of the Company and its capacity to generate operating cash and operationally fund capital expenditures and working capital requirements. Management believes this information is also used by analysts and investors to evaluate the Company's operating performance without regard to such items as depreciation and amortization and taxes. Adjusted EBITDA is not intended to be considered in isolation or as a substitute for net income or loss calculated in accordance with U.S. GAAP. A reconciliation of the Company's U.S. GAAP net income to Adjusted EBITDA is provided in the attached table.
Safe Harbor Statement
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "would," "could," "should," "potential," "target," "outlook," "depends," "pursue" or similar expressions, or discussions of guidance, strategies, plans, goals, initiatives, objectives or intentions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge on the SEC's website, www.sec.gov, and on the company's website at www.outdoorchannel.com.
These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Operations | ||||
| (in thousands) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30 | September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Revenues: | (unaudited) | (unaudited) | ||
| Advertising | $ 11,688 | $ 10,732 | $ 27,854 | $ 25,630 |
| Subscriber fees | 5,282 | 5,018 | 15,843 | 14,760 |
| Production services | 4,361 | 3,175 | 8,232 | 7,874 |
| Total revenues | 21,331 | 18,925 | 51,929 | 48,264 |
| Cost of services: | ||||
| Programming | 1,660 | 1,758 | 6,135 | 5,323 |
| Satellite transmission fees | 436 | 389 | 1,296 | 1,188 |
| Production and operations | 5,666 | 4,655 | 13,699 | 13,127 |
| Other direct costs | 127 | 77 | 377 | 241 |
| Total cost of services | 7,889 | 6,879 | 21,507 | 19,879 |
| Other expenses: | ||||
| Advertising | 1,938 | 446 | 4,172 | 1,921 |
| Selling, general and administrative | 7,605 | 7,387 | 22,962 | 23,569 |
| Depreciation and amortization | 668 | 695 | 2,137 | 2,139 |
| Total other expenses | 10,211 | 8,528 | 29,271 | 27,629 |
| Total operating expenses | 18,100 | 15,407 | 50,778 | 47,508 |
| Income from operations | 3,231 | 3,518 | 1,151 | 756 |
| Interest and other income, net | 23 | (2) | 60 | 15 |
| Income from operations before income taxes | 3,254 | 3,516 | 1,211 | 771 |
| Income tax provision | 1,391 | 1,437 | 568 | 381 |
| Net income | 1,863 | 2,079 | 643 | 390 |
| Net income attributable to noncontrolling interest | -- | -- | -- | -- |
| Net income attributable to controlling interest | $ 1,863 | $ 2,079 | $ 643 | $ 390 |
| Earnings per common share data: | ||||
| Basic | $ 0.07 | $ 0.08 | $ 0.03 | $ 0.02 |
| Diluted | $ 0.07 | $ 0.08 | $ 0.03 | $ 0.02 |
| Weighted average number of common shares outstanding | ||||
| Basic | 25,421 | 24,874 | 25,106 | 24,791 |
| Diluted | 26,014 | 25,634 | 25,707 | 25,609 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Segment Operating Results | ||||
| (in thousands) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30 | September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| (unaudited) | (unaudited) | |||
| Revenues | ||||
| TOC | $ 16,970 | $ 15,750 | $ 43,697 | $ 40,390 |
| Production Services | 2,107 | 3,293 | 4,518 | 6,699 |
| Aerial Cameras | 3,351 | 1,642 | 5,567 | 3,935 |
| Eliminations | (1,097) | (1,760) | (1,853) | (2,760) |
| Total revenues | $ 21,331 | $ 18,925 | $ 51,929 | $ 48,264 |
| Cost of Services | ||||
| TOC | $ 4,084 | $ 4,353 | $ 14,270 | $ 13,091 |
| Production Services | 1,938 | 2,658 | 4,141 | 5,795 |
| Aerial Cameras | 2,935 | 1,322 | 5,004 | 3,463 |
| Eliminations | (1,068) | (1,454) | (1,908) | (2,470) |
| Total cost of services | $ 7,889 | $ 6,879 | $ 21,507 | $ 19,879 |
| Other Expenses | ||||
| TOC | $ 9,086 | $ 6,625 | $ 25,898 | $ 22,061 |
| Production Services | 404 | 758 | 1,183 | 2,500 |
| Aerial Cameras | 731 | 1,145 | 2,200 | 3,068 |
| Eliminations | (10) | -- | (10) | -- |
| Total other expenses | $ 10,211 | $ 8,528 | $ 29,271 | $ 27,629 |
| Income (Loss) from Operations | ||||
| TOC | $ 3,800 | $ 4,772 | 3,529 | 5,238 |
| Production Services | (235) | (123) | (806) | (1,596) |
| Aerial Cameras | (315) | (825) | (1,637) | (2,596) |
| Eliminations | (19) | (306) | 65 | (290) |
| Income from operations | $ 3,231 | $ 3,518 | $ 1,151 | $ 756 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Reconciliation of U.S. GAAP Measures to U.S. Non-GAAP Measures | ||||
| (unaudited, in thousands) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30 | September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net income | $ 1,863 | $ 2,079 | $ 643 | $ 390 |
| Add/Subtract: | ||||
| Interest and other income, net | (23) | 2 | (60) | (15) |
| Income tax | 1,391 | 1,437 | 568 | 381 |
| Depreciation and amortization | 668 | 695 | 2,137 | 2,139 |
| EBITDA | $ 3,899 | $ 4,213 | $ 3,288 | $ 2,895 |
| Adjusted for: | ||||
| Share-based compensation expense | 886 | 775 | 2,577 | 2,351 |
| EBITDA as adjusted for share-based compensation expense | $ 4,785 | $ 4,988 | $ 5,865 | $ 5,246 |
| Summary of Cost of Services | ||||
| Share-based compensation expense | $ 67 | $ 59 | $ 184 | $ 178 |
| Cost of services | 7,822 | 6,820 | 21,323 | 19,701 |
| Total cost of services | $ 7,889 | $ 6,879 | $ 21,507 | $ 19,879 |
| Summary of Selling, General and Administrative | ||||
| Share-based compensation expense | $ 819 | $ 716 | $ 2,393 | $ 2,173 |
| Selling, general and administrative | 6,786 | 6,671 | 20,569 | 21,396 |
| Total selling, general and administrative | $ 7,605 | $ 7,387 | $ 22,962 | $ 23,569 |
| Summary of Other Income | ||||
| Interest income | $ 44 | $ 24 | $ 121 | $ 86 |
| Interest and other expense | (21) | (26) | (61) | (71) |
| Total other income | $ 23 | $ (2) | $ 60 | $ 15 |
| EBITDA as adjusted by Segment | ||||
| Outdoor Channel | $ 4,970 | $ 5,773 | $ 7,081 | $ 8,324 |
| Production Services * | (125) | (204) | (347) | (1,195) |
| Aerial Cameras | (60) | (581) | (869) | (1,883) |
| EBITDA as adjusted for share-based compensation expense | $ 4,785 | $ 4,988 | $ 5,865 | $ 5,246 |
| * - eliminations included in Production Services segment | ||||
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands) | ||
| September 30, 2012 | December 31, 2011 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 38,778 | $ 19,498 |
| Investment in available-for-sale securities | 19,964 | 40,049 |
| Accounts receivable, net of allowance for doubtful accounts | 14,400 | 13,657 |
| Other current assets | 16,628 | 14,066 |
| Total current assets | 89,770 | 87,270 |
| Property, plant and equipment, net | 13,346 | 11,875 |
| Goodwill and amortizable intangible assets, net | 43,380 | 43,538 |
| Investments in auction-rate securities | 4,980 | 4,940 |
| Deferred tax assets, net | 826 | 754 |
| Deposits and other assets | 360 | 809 |
| Totals | $ 152,662 | $ 149,186 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities | $ 16,282 | $ 14,955 |
| Long-term liabilities | 808 | 906 |
| Total liabilities | 17,090 | 15,861 |
| Total Outdoor Channel Holdings, Inc. stockholders' equity | 135,572 | 133,325 |
| Noncontrolling interest | -- | -- |
| Total equity | 135,572 | 133,325 |
| Totals | $ 152,662 | $ 149,186 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (unaudited, in thousands) | ||
| Nine Months Ended | ||
| September 30, | ||
| 2012 | 2011 | |
| Operating activities: | ||
| Net income | $ 643 | $ 390 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 2,137 | 2,139 |
| Amortization of subscriber acquisition fees | 1,431 | 1,166 |
| Loss on sale of equipment | 17 | 31 |
| Provision for doubtful accounts | -- | 123 |
| Share-based employee and director compensation | 2,577 | 2,351 |
| Deferred tax provision, net | 279 | 342 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (743) | 4,841 |
| Income tax refund receivable and payable, net | (1,730) | (2,685) |
| Programming and production costs | (3,825) | (775) |
| Other current assets | 143 | (1,730) |
| Deposits and other assets | 103 | 97 |
| Subscriber acquisition fees | (500) | (191) |
| Accounts payable and accrued expenses | 1,424 | (3,562) |
| Deferred revenue | 1,147 | 1,586 |
| Deferred obligations | 69 | 7 |
| Unfavorable lease obligations | (122) | (111) |
| Net cash provided by operating activities | 3,050 | 4,019 |
| Investing activities: | ||
| Purchases of property, plant and equipment | (2,980) | (1,531) |
| Purchase of intangibles | -- | (85) |
| Proceeds from sale of equipment | 138 | -- |
| Purchases of available-for-sale securities | (53,268) | (64,570) |
| Proceeds from sale of available-for-sale and auction-rate securities | 73,353 | 58,618 |
| Net cash provided by (used in) investing activities | 17,243 | (7,568) |
| Financing activities: | ||
| Purchase of treasury stock | (1,013) | (900) |
| Payment of dividends on common stock | -- | |
| Purchase and retirement of stock related to repurchase program | -- | -- |
| Net cash used in financing activities | (1,013) | (900) |
| Net increase (decrease) in cash and cash equivalents | 19,280 | (4,449) |
| Cash and cash equivalents, beginning of period | 19,498 | 32,578 |
| Cash and cash equivalents, end of period | $ 38,778 | $ 28,129 |
| Supplemental disclosure of cash flow information: | ||
| Income taxes paid | $ 2,016 | $ 2,594 |
| Supplemental disclosure of non-cash investing and financing activities: | ||
| Effect of net increase in fair value of available-for-sale and auction-rate securities | $ 40 | $ 45 |
| Property, plant and equipment costs incurred but not paid | $ 595 | $ 389 |
CONTACT: For Company:
Tom Allen
Executive Vice President, Chief Operating Officer /
Chief Financial Officer
951-699-6991, ext. 287
tallen@outdoorchannel.com
For Investors:
Brad Edwards
Brainerd Communicators, Inc.
212-986-6667
edwards@braincomm.com
For Media:
Nancy Zakhary
Brainerd Communicators, Inc.
212-986-6667
nancy@braincomm.com