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Outdoor Channel Holdings Reports First Quarter 2013 Results(GlobeNewswire Via Acquire Media NewsEdge) TEMECULA, Calif., May 10, 2013 (GLOBE NEWSWIRE) -- 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 SUBSIDIARIESConsolidated Statements of Operations(in thousands, except per share data) Three Months Ended March 31 20132012 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 SUBSIDIARIESSegment Operating Results(in thousands) Three Months Ended March 31 20132012 (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 SUBSIDIARIESReconciliation of U.S. GAAP Measures to U.S. Non-GAAP Measures (unaudited, in thousands) Three Months Ended March 31 20132012 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 SUBSIDIARIESCondensed Consolidated Balance Sheets(in thousands) March 31, 2013December 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 SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (unaudited, in thousands) Three Months Ended March 31, 20132012 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 $ 178CONTACT: For Company: Tom Allen Executive Vice President / Chief Operating & Financial Officer 800-770-5750 [email protected] For Investors: Brad Edwards Brainerd Communicators, Inc. 212-986-6667 [email protected] Source: Outdoor Channel Holdings, Inc. 2013 GlobeNewswire, Inc. |