Outdoor Channel Holdings, Inc. (Nasdaq:OUTD) today reported its
operating results for the first quarter ended March 31, 2013.
Consolidated revenues for the quarter were $16.9 million, an 18%
increase compared with $14.3 million in the first quarter of 2012,
driven primarily by a 20% growth in advertising revenues at The
Outdoor Channel ("TOC").
Total operating expenses for the first quarter were $26.5
million compared to $16.3 million in operating expense for the
first quarter of 2012. Excluding merger related costs of $7.6
million, which includes the previously announced $6.5 million
termination fee paid to InterMedia Outdoors Holdings, LLC
("InterMedia"), operating costs grew by $2.6 million, or 16%, on
significantly higher programming and advertising and promotion
expense, primarily relating to our first quarter program launch of
Elite Tactical Unit ("ETU") and a new season of Major League
Fishing ("MLF"). These program and promotion expense increases were
in line with guidance previously provided by the Company.
Resulting operating loss for the first quarter 2013 was $9.6
million, a $7.7 million increase from the $2.0 million of operating
loss in the first quarter of 2012. Earnings before interest, taxes,
depreciation and amortization (EBITDA), adjusted for the effects of
share-based compensation expense and merger related expenses, was
negative $648,000, a 56% increase compared to adjusted EBITDA of
negative $415,000 for the first quarter of 2012 on higher
programming and promotion costs, net of increased revenue.
On a segment basis, TOC reported revenues of $14.7 million for
the quarter, a 16% increase compared to $12.6 million of revenue
for the first quarter of 2012 driven primarily by a 20% growth in
ad revenues, primarily related to the aforementioned launches of
ETU and MLF. TOC's EBITDA, adjusted for share-based compensation
expense and merger related expenses, was negative $321,000 compared
to $253,000 of adjusted EBITDA for the first quarter of 2012 driven
primarily by higher programming and promotion expenses.
Our Production Services unit generated revenues (before
intercompany eliminations) for the quarter of $3.4 million, a 231%
increase compared to $1.0 million for the first quarter of 2012
resulting primarily from increased programming for TOC, including
ETU. Production Services' EBITDA (including intercompany
eliminations), adjusted for share-based compensation expense, was
$90,000 compared to adjusted EBITDA of negative $274,000, with the
improvement principally driven by lower SG&A expenses.
Our Aerial Cameras unit generated revenues for the quarter of
$1.5 million, a 35% increase compared to $1.1 million in revenues
for the first quarter of 2012 driven primarily by the ongoing U.S.
government project initiated in the second quarter of 2012. The
Aerial Cameras unit's EBITDA, adjusted for share-based compensation
expense, was negative $417,000 compared to adjusted EBITDA of
negative $394,000 primarily due to fewer sporting events and
reduced margins thereon, offset partially by margin contribution
from our government project which commenced in April 2012.
Our consolidated net loss for the first quarter of 2013 was $6.1
million, or $.24 per basic and diluted share, compared to a
consolidated net loss for the first quarter of 2012 of $1.2
million, or $.05 per basic and diluted share.
Pending Sale
As announced by the Company on March 13, 2013, the Company
entered into a definitive merger agreement with Kroenke Sports
& Entertainment ("KSE") under which KSE is to purchase the
Company for $8.75 per share in an all-cash transaction. On May 2,
2013, KSE amended the agreement to increase the all-cash
consideration to $9.35 per share. On May 3, 2013, the Company
received an all-cash offer from InterMedia for $9.75 per share
under essentially the same terms and conditions as the proposed KSE
merger. On May 8, 2013, the Company and KSE amended the merger
agreement to reflect an increased all-cash price of $10.25 per
share, an increase of the break-up fee to $7.5 million and an
amendment to the support agreement to require the directors and
certain executive officers to vote in favor of the KSE merger, even
if the Board determines an alternative proposal is
superior. The merger transaction is subject to shareholder and
other customary approvals.
About Outdoor Channel Holdings, Inc.
Outdoor Channel Holdings, Inc. owns and operates Outdoor Channel
and Winnercomm Inc. Nielsen estimated that Outdoor Channel had
approximately 39.8 million cable, satellite and telco subscribers
for May 2013. Outdoor Channel offers programming that captures the
excitement of hunting, fishing, shooting, 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 is one of America's leading and highest quality
producers of live sporting events and sports series for cable and
broadcast television. The Company 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's estimate of Outdoor Channel subscribers is
made by Nielsen 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 and merger related expenses, provides greater
comparability regarding its ongoing operating performance. This
information is not intended to be considered in isolation or as a
substitute for net income calculated in accordance with U.S. GAAP.
A reconciliation of the Company's U.S. GAAP information to EBITDA,
adjusted for the effects of share-based compensation expense and
merger related expenses, is provided in the attached table.
Safe Harbor Statement
Statements in this news release that are not historical are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements,
without limitation, about our expectations, beliefs, intentions,
strategies regarding the future long-term value of the Company
resulting from the Company's current actions or strategic
initiatives and the future anticipated value of Outdoor Channel to
our audience, distributors and advertisers. The Company's actual
results could differ materially from those discussed in any
forward-looking statements. The Company intends that such
forward-looking statements be subject to the safe-harbor provisions
contained in those sections. Such statements involve significant
risks and uncertainties and are qualified by important factors that
could cause actual results to differ materially from those
reflected by the forward-looking statements. Such factors include
but are not limited to: (1) service providers discontinuing or
refraining from carrying Outdoor Channel; (2) a decline in the
number of viewers from having Outdoor Channel placed in unpopular
cable or satellite packages, or increases in subscription fees,
established by the service providers; (3) a decline in viewership
and revenues related to increased competition within the outdoor
television segment; (4) a decrease in advertising revenue as a
result of a deterioration in general economic conditions; (5)
managing the Company's growth and the integration of future
acquisitions, if any; (6) decreased profitability if we are unable
to generate sufficient revenues from our Production Services
operations to offset its fixed costs; and other factors which are
discussed in the Company's filings with the Securities and Exchange
Commission. For these forward-looking statements, the Company
claims the protection of the safe harbor for forward-looking
statements in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934.
|
|
|
OUTDOOR CHANNEL
HOLDINGS, INC. AND SUBSIDIARIES |
Consolidated Statements
of Operations |
(in thousands, except
per share data) |
|
|
|
|
Three Months
Ended |
|
March
31 |
|
2013 |
2012 |
Revenues: |
(unaudited) |
Advertising |
$ 8,888 |
$ 7,435 |
Subscriber fees |
5,782 |
5,176 |
Production services |
2,192 |
1,710 |
|
|
|
Total revenues |
16,862 |
14,321 |
|
|
|
Cost of services: |
|
|
Programming |
4,056 |
1,798 |
Satellite transmission fees |
438 |
429 |
Production and operations |
4,486 |
4,141 |
Other direct costs |
9 |
11 |
|
|
|
Total cost of services |
8,989 |
6,379 |
|
|
|
Other expenses: |
|
|
Advertising |
1,704 |
648 |
Selling, general and
administrative |
7,390 |
8,553 |
Merger related expenses |
7,641 |
-- |
Depreciation and amortization |
787 |
732 |
|
|
|
Total other expenses |
17,522 |
9,933 |
|
|
|
Total operating expenses |
26,511 |
16,312 |
|
|
|
Loss from operations |
(9,649) |
(1,991) |
|
|
|
Interest and other income, net |
15 |
19 |
|
|
|
Loss before income taxes |
(9,634) |
(1,972) |
|
|
|
Income tax benefit |
(3,569) |
(814) |
|
|
|
Net loss |
(6,065) |
(1,158) |
Net loss attributable to noncontrolling
interest |
-- |
-- |
|
|
|
Net loss attributable to Outdoor Channel
Holdings, Inc. |
$ (6,065) |
$ (1,158) |
|
|
|
Loss per common share data: |
|
|
Basic |
$ (0.24) |
$ (0.05) |
Diluted |
$ (0.24) |
$ (0.05) |
|
|
|
Weighted average common shares
outstanding: |
|
|
Basic |
25,351 |
25,021 |
Diluted |
25,351 |
25,021 |
|
|
|
OUTDOOR CHANNEL
HOLDINGS, INC. AND SUBSIDIARIES |
Segment Operating
Results |
(in
thousands) |
|
|
|
|
|
|
|
Three Months
Ended |
|
March
31 |
|
2013 |
2012 |
|
(unaudited) |
Revenues |
|
|
|
|
|
TOC |
$ 14,670 |
$ 12,611 |
Production Services |
3,369 |
1,017 |
Aerial Cameras |
1,489 |
1,105 |
Eliminations |
(2,666) |
(412) |
Total revenues |
$ 16,862 |
$ 14,321 |
|
|
|
Cost of Services |
|
|
|
|
|
TOC |
$ 7,149 |
$ 4,813 |
Production Services |
2,960 |
967 |
Aerial Cameras |
1,429 |
981 |
Eliminations |
(2,549) |
(382) |
Total cost of services |
$ 8,989 |
$ 6,379 |
|
|
|
Other Expenses |
|
|
|
|
|
TOC |
$ 16,381 |
$ 8,729 |
Production Services |
330 |
431 |
Aerial Cameras |
811 |
773 |
Eliminations |
-- |
-- |
Total other expenses |
$ 17,522 |
$ 9,933 |
|
|
|
Income (Loss) from
Operations |
|
|
|
|
|
TOC |
$ (8,860) |
$ (931) |
Production Services |
79 |
(381) |
Aerial Cameras |
(751) |
(649) |
Eliminations |
(117) |
(30) |
Loss from operations |
$ (9,649) |
$ (1,991) |
|
|
|
OUTDOOR CHANNEL
HOLDINGS, INC. AND SUBSIDIARIES |
Reconciliation of U.S.
GAAP Measures to U.S. Non-GAAP Measures |
(unaudited, in thousands) |
|
|
|
|
|
|
|
Three Months
Ended |
|
March
31 |
|
2013 |
2012 |
|
|
|
Net loss |
$ (6,065) |
$ (1,158) |
|
|
|
Add/Subtract: |
|
|
|
-- |
-- |
Interest and other income, net |
(15) |
(19) |
Income tax benefit |
(3,569) |
(814) |
Depreciation and amortization |
787 |
732 |
|
|
|
EBITDA |
$ (8,862) |
$ (1,259) |
|
|
|
Adjusted for: |
|
|
|
|
|
Share-based compensation expense |
573 |
844 |
Merger related expenses |
7,641 |
-- |
|
|
|
EBITDA as adjusted for share-based
compensation and merger related expenses |
$ (648) |
$ (415) |
|
|
|
|
|
|
|
|
|
Summary of Cost of Services |
|
|
Share-based compensation expense |
$ 58 |
$ 55 |
Cost of services |
8,931 |
6,324 |
Total cost of services |
$ 8,989 |
$ 6,379 |
|
|
|
|
|
|
Summary of Selling, General and
Administrative |
|
|
Share-based compensation expense |
$ 515 |
$ 789 |
Selling, general and administrative |
6,875 |
7,764 |
Total selling, general and
administrative |
$ 7,390 |
$ 8,553 |
|
|
|
Summary of Other Income |
|
|
Interest income |
$ 30 |
$ 38 |
Interest and other expense |
(15) |
(19) |
Total other income |
$ 15 |
$ 19 |
|
|
|
|
|
|
EBITDA as adjusted by Segment |
|
|
Outdoor Channel |
$ (321) |
$ 253 |
Production Services * |
90 |
(274) |
Aerial Cameras |
(417) |
(394) |
|
|
|
EBITDA as adjusted for share-based
compensation and merger related expenses |
$ (648) |
$ (415) |
|
|
|
* - eliminations included in
Production Services segment |
|
|
|
OUTDOOR CHANNEL
HOLDINGS, INC. AND SUBSIDIARIES |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
|
|
|
|
|
|
|
March 31, 2013 |
December 31,
2012 |
|
(unaudited) |
|
|
|
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 26,294 |
$ 30,476 |
Investments in available-for-sale
securities |
24,924 |
22,943 |
Investments in auction-rate
securities |
-- |
4,551 |
Accounts receivable, net of
allowance for doubtful accounts |
11,871 |
15,066 |
Other current assets |
19,752 |
17,799 |
Total current assets |
82,841 |
90,835 |
|
|
|
Property, plant and equipment, net |
13,883 |
14,121 |
Goodwill and amortizable intangible assets,
net |
43,286 |
43,330 |
Deferred tax assets, net |
453 |
453 |
Deposits and other assets |
894 |
953 |
|
|
|
Totals |
$ 141,357 |
$ 149,692 |
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities |
$ 15,153 |
$ 17,313 |
Long-term liabilities |
689 |
749 |
Total liabilities |
15,842 |
18,062 |
|
|
|
Total stockholders' equity |
125,515 |
131,630 |
Noncontrolling interest |
-- |
-- |
Total equity |
125,515 |
131,630 |
|
|
|
Totals |
$ 141,357 |
$ 149,692 |
|
|
|
OUTDOOR CHANNEL
HOLDINGS, INC. AND SUBSIDIARIES |
Condensed Consolidated
Statements of Cash Flows |
(unaudited, in thousands) |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2013 |
2012 |
|
|
|
Operating activities: |
|
|
Net loss |
$ (6,065) |
$ (1,158) |
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities: |
|
|
Depreciation and amortization |
787 |
732 |
Amortization of subscriber acquisition
fees |
152 |
472 |
Loss on sale of equipment |
1 |
10 |
Provision for doubtful
accounts |
-- |
15 |
Share-based employee and director
compensation |
573 |
844 |
Deferred tax benefit, net |
(2,790) |
-- |
|
|
|
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
3,195 |
3,644 |
Income tax refund receivable and payable,
net |
(1,990) |
(2,781) |
Programming and production
costs |
49 |
(1,540) |
Other current assets |
1,725 |
1,487 |
Deposits and other assets |
(1) |
34 |
Accounts payable and accrued
expenses |
(376) |
(1,672) |
Deferred revenue |
(503) |
538 |
Deferred obligations |
(22) |
61 |
Unfavorable lease obligations |
(43) |
(39) |
Net cash provided by (used in) operating
activities |
(5,308) |
647 |
|
|
|
Investing activities: |
|
|
Purchases of property, plant and
equipment |
(821) |
(646) |
Proceeds from sale of
equipment |
-- |
87 |
Purchases of available-for-sale
securities |
(11,995) |
(24,143) |
Proceeds from sale of available-for-sale
and auction-rate securities |
14,561 |
26,037 |
Net cash provided by investing
activities |
1,745 |
1,335 |
|
|
|
Financing activities: |
|
|
Purchase of common stock |
(619) |
(547) |
Net cash used in financing
activities |
(619) |
(547) |
|
|
|
Net increase (decrease) in cash and cash
equivalents |
(4,182) |
1,435 |
Cash and cash equivalents, beginning of
period |
30,476 |
19,498 |
Cash and cash equivalents, end of
period |
$ 26,294 |
$ 20,933 |
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
Merger related expenses paid |
$6,592 |
-- |
Income taxes paid |
$ 1,213 |
$ 1,960 |
|
|
|
Supplemental disclosure of non-cash
investing and financing activities: |
|
|
Effect of net increase in fair value of
available-for-sale and auction-rate securities |
$ (4) |
$ 26 |
Property, plant and equipment costs
incurrred but not paid |
$ 328 |
$ 178 |
CONTACT: For Company:
Tom Allen
Executive Vice President / Chief Operating & Financial Officer
800-770-5750
tallen@outdoorchannel.com
For Investors:
Brad Edwards
Brainerd Communicators, Inc.
212-986-6667
edwards@braincomm.com
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