TEMECULA, Calif., March 18, 2013 (GLOBE NEWSWIRE) -- Outdoor Channel Holdings, Inc. (Nasdaq:OUTD) today reported its operating results for the fourth quarter and full year ended December 31, 2012.
Consolidated revenues for the quarter were $25.4 million, an 8% increase compared with $23.6 million in the fourth quarter of 2011, driven primarily by a 36% growth in revenues at our Aerial Cameras unit and a 5% growth in combined advertising and subscriber revenues, net of a continued decline of third-party revenues at Winnercomm as we continue to shift more of its focus to programs produced for The Outdoor Channel.
Total operating expenses for the fourth quarter were $22.3 million, a 26% increase compared to $17.6 million in operating expense for the fourth quarter of 2011, driven primarily by approximately $2.3 million in higher advertising expenses to promote both our new program slate which launched in late December and the Channel to new subscribers, as well as increased costs related to expanded revenues at our Aerial Cameras unit and $1.3 million in expenses relating to the merger that we announced during the fourth quarter.
Resulting operating income for the fourth quarter 2012 was $3.1 million, a 48% decrease from the $6.0 million of operating income generated in the fourth quarter of 2011. Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the effects of share-based compensation expense and merger related expenses, was $6.1 million, a 19% decrease compared to $7.5 million for the fourth quarter of 2011.
On a segment basis, our Outdoor Channel unit ("TOC") reported revenues of $17.5 million for the quarter, a 5% increase compared to $16.7 million of revenue for the fourth quarter of 2011 driven primarily by mid-single digit growth in ad revenues and subscription fees. TOC's EBITDA, adjusted for share-based compensation expense and merger related expenses, was $4.1 million, a 33% decline from the $6.1 million of adjusted EBITDA for the fourth quarter of 2011 driven primarily by the higher advertising expense previously noted.
Our Production Services unit generated revenues (before intercompany eliminations) for the quarter of $2.4 million, a 3% decrease compared to $2.5 million for the fourth quarter of 2011 resulting primarily from lower third party business, net of increased programming for TOC. Production Services' EBITDA (including intercompany eliminations), adjusted for share-based compensation expense, was $155,000 compared to adjusted EBITDA of $226,000, with the decline principally driven by lower third-party revenue and related margin contributions.
Our Aerial Cameras unit generated revenues for the quarter of $6.5 million, a 36% increase compared to $4.7 million in revenue for the fourth quarter of 2011 driven by a record number of football events and the ongoing U.S. government project initiated in the second quarter of 2012. The Aerial Camera unit's EBITDA, adjusted for share-based compensation expense, increased 56% to $1.8 million primarily on improved revenues and related margin contributions.
Consolidated net income for the fourth quarter of 2012 was $1.3 million, or $.05 per diluted share, compared to consolidated net income for the fourth quarter of 2011 of $1.5 million, or $.06 per diluted share.
"We delivered steady revenue growth at our core TOC unit during the fourth quarter and for the full year as we continued to capitalize on our category leadership position," said Tom Hornish, President and Chief Executive Officer. "We also made significant gains in our total household distribution, adding another one million homes in the final quarter of 2012. Our Aerial Cameras unit also enjoyed a record quarter with expanded events and contributions from our government project. Obviously, we are in the midst of some exciting ownership changes for the Company and despite the inevitable distractions that can occur in such an environment, we're proud of our team for their continued execution of our plans to more aggressively market and program the network, our core business."
Full-Year Financial Results
On a full year basis, consolidated net revenues were $77.3 million, an 8% increase compared to $71.9 million in 2011, as revenue gains at our Aerial Cameras unit and our core TOC business more than offset the continued decline in Winnercomm's third-party business.
Operating expenses for the year were $73.0 million, a 12% increase compared to $65.1 million in operating expenses for 2011 principally on higher advertising expense at TOC, merger related costs and increased costs related to increased events and revenues at our Aerial Cameras unit, net of reduced costs associated with our ActionCam litigation.
Resulting operating income for 2012 was $4.3 million, a 36% decrease from $6.8 million in operating income for 2011 with improved operating results at our Winnercomm and Aerial Cameras units offset by increased advertising and merger related costs at TOC. EBITDA, adjusted for share-based compensation expense and merger related costs, was $12.6 million, a 1% decrease compared to $12.8 million for 2011, principally on higher advertising expense at TOC.
Our consolidated net income for the year finished at $1.9 million, or $.07 per diluted share, essentially unchanged compared to net income of $1.8 million, or $.07 per diluted share, for 2011.
Pending Sale
As announced by the Company on March 13, 2013, the Company has terminated its InterMedia merger agreement and entered into a definitive agreement with Kroenke Sports & Entertainment ("KSE") under which KSE will purchase the Company for $8.75 per share in an all-cash transaction. The transaction is subject to shareholder and regulatory 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 39.1 million cable, satellite and telco subscribers for March 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 costs, 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 costs, 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) | ||||
| Three Months Ended | Year Ended | |||
| December 31 | December 31 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Revenues: | (unaudited) | |||
| Advertising | $ 11,794 | $ 11,288 | $ 39,648 | $ 36,918 |
| Subscriber fees | 5,741 | 5,395 | 21,584 | 20,155 |
| Production services | 7,858 | 6,908 | 16,090 | 14,782 |
| Total revenues | 25,393 | 23,591 | 77,322 | 71,855 |
| Cost of services: | ||||
| Programming | 2,230 | 2,188 | 8,365 | 7,511 |
| Satellite transmission fees | 430 | 402 | 1,726 | 1,590 |
| Production and operations | 7,093 | 6,489 | 20,792 | 19,616 |
| Other direct costs | 5 | 39 | 382 | 280 |
| Total cost of services | 9,758 | 9,118 | 31,265 | 28,997 |
| Other expenses: | ||||
| Advertising | 3,251 | 924 | 7,423 | 2,845 |
| Selling, general and administrative | 7,196 | 6,816 | 29,502 | 30,385 |
| Merger related expenses | 1,286 | -- | 1,942 | -- |
| Depreciation and amortization | 761 | 735 | 2,898 | 2,874 |
| Total other expenses | 12,494 | 8,475 | 41,765 | 36,104 |
| Total operating expenses | 22,252 | 17,593 | 73,030 | 65,101 |
| Income from operations | 3,141 | 5,998 | 4,292 | 6,754 |
| Other-than-temporary impairment on auction-rate securities | (680) | -- | (680) | -- |
| Interest and other income, net | 30 | 3 | 90 | 18 |
| Income from operations before income taxes | 2,491 | 6,001 | 3,702 | 6,772 |
| Income tax provision | 1,240 | 4,546 | 1,808 | 4,927 |
| Net income | 1,251 | 1,455 | 1,894 | 1,845 |
| Net income attributable to noncontrolling interest | -- | -- | -- | -- |
| Net income attributable to controlling interest | $ 1,251 | $ 1,455 | $ 1,894 | $ 1,845 |
| Earnings per common share data: | ||||
| Basic | $ 0.05 | $ 0.06 | $ 0.08 | $ 0.07 |
| Diluted | $ 0.05 | $ 0.06 | $ 0.07 | $ 0.07 |
| Weighted average number of common shares outstanding | ||||
| Basic | 25,507 | 24,912 | 25,137 | 24,821 |
| Diluted | 26,214 | 25,686 | 25,736 | 25,633 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Segment Operating Results | ||||
| (in thousands) | ||||
| Three Months Ended | Year Ended | |||
| December 31 | December 31 | |||
| 2012 | 2011 | 2012 | 2011 | |
| (unaudited) | ||||
| Revenues | ||||
| TOC | $ 17,535 | $ 16,683 | $ 61,232 | $ 57,073 |
| Production Services | 2,445 | 2,529 | 6,963 | 9,228 |
| Aerial Cameras | 6,451 | 4,728 | 12,018 | 8,663 |
| Eliminations | (1,038) | (349) | (2,891) | (3,109) |
| Total revenues | $ 25,393 | $ 23,591 | $ 77,322 | $ 71,855 |
| Cost of Services | ||||
| TOC | $ 4,644 | $ 4,715 | $ 18,914 | $ 17,806 |
| Production Services | 1,881 | 2,079 | 6,022 | 7,874 |
| Aerial Cameras | 4,128 | 2,879 | 9,132 | 6,342 |
| Eliminations | (895) | (555) | (2,803) | (3,025) |
| Total cost of services | $ 9,758 | $ 9,118 | $ 31,265 | $ 28,997 |
| Other Expenses | ||||
| TOC | $ 11,288 | $ 6,905 | $ 37,186 | $ 28,966 |
| Production Services | 407 | 703 | 1,590 | 3,203 |
| Aerial Cameras | 809 | 887 | 3,009 | 3,955 |
| Eliminations | (10) | (20) | (20) | (20) |
| Total other expenses | $ 12,494 | $ 8,475 | $ 41,765 | $ 36,104 |
| Income (Loss) from Operations | ||||
| TOC | $ 1,603 | $ 5,063 | $ 5,132 | $ 10,301 |
| Production Services | 157 | (253) | (649) | (1,849) |
| Aerial Cameras | 1,514 | 962 | (123) | (1,634) |
| Eliminations | (133) | 226 | (68) | (64) |
| Income from operations | $ 3,141 | $ 5,998 | $ 4,292 | $ 6,754 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Reconciliation of U.S. GAAP Measures to U.S. Non-GAAP Measures | ||||
| (unaudited, in thousands) | ||||
| Three Months Ended | Year Ended | |||
| December 31 | December 31 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net Income | $ 1,251 | $ 1,455 | $ 1,894 | $ 1,845 |
| Add/Subtract: | ||||
| Other-than-temporary impairment on auction-rate securities | 680 | -- | 680 | -- |
| Interest and other income, net | (30) | (3) | (90) | (18) |
| Income tax | 1,240 | 4,546 | 1,808 | 4,927 |
| Depreciation and amortization | 761 | 735 | 2,898 | 2,874 |
| EBITDA | $ 3,902 | $ 6,733 | $ 7,190 | $ 9,628 |
| Adjusted for: | ||||
| Share-based compensation expense | 940 | 802 | 3,517 | 3,153 |
| Merger related costs | 1,286 | -- | 1,942 | -- |
| EBITDA as adjusted for share-based compensation expense | $ 6,128 | $ 7,535 | $ 12,649 | $ 12,781 |
| Summary of Cost of Services | ||||
| Share-based compensation expense | $ 87 | $ 60 | $ 271 | $ 238 |
| Cost of services | 9,671 | 9,058 | 30,994 | 28,759 |
| Total cost of services | $ 9,758 | $ 9,118 | $ 31,265 | $ 28,997 |
| Summary of Selling, General and Administrative | ||||
| Share-based compensation expense | $ 853 | $ 742 | $ 3,246 | $ 2,915 |
| Selling, general and administrative | 6,343 | 6,074 | 26,256 | 27,470 |
| Total selling, general and administrative | $ 7,196 | $ 6,816 | $ 29,502 | $ 30,385 |
| Summary of Interest and Other Income, net | ||||
| Interest income | $ 44 | $ 27 | $ 165 | $ 111 |
| Interest and other expense | (14) | (24) | (75) | (93) |
| Total interest and other income, net | $ 30 | $ 3 | $ 90 | $ 18 |
| EBITDA as adjusted by Segment | ||||
| Outdoor Channel | $ 4,125 | $ 6,122 | $ 11,862 | $ 14,446 |
| Production Services * | 155 | 226 | (192) | (969) |
| Aerial Cameras | 1,848 | 1,187 | 979 | (696) |
| EBITDA as adjusted for share-based compensation expense | $ 6,128 | $ 7,535 | $ 12,649 | $ 12,781 |
| * - eliminations included in Production Services segment | ||||
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (audited, in thousands) | ||
| December 31, 2012 | December 31, 2011 | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 30,476 | $ 19,498 |
| Investment in available-for-sale securities | 27,494 | 40,049 |
| Accounts receivable, net of allowance for doubtful accounts | 15,066 | 13,657 |
| Other current assets | 17,799 | 14,066 |
| Total current assets | 90,835 | 87,270 |
| Property, plant and equipment, net | 14,121 | 11,875 |
| Goodwill and amortizable intangible assets, net | 43,330 | 43,538 |
| Investments in auction-rate securities | -- | 4,940 |
| Deferred tax assets, net | 453 | 754 |
| Deposits and other assets | 953 | 809 |
| Totals | $ 149,692 | $ 149,186 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities | $ 17,313 | $ 14,955 |
| Long-term liabilities | 749 | 906 |
| Total liabilities | 18,062 | 15,861 |
| Total Outdoor Channel Holdings, Inc. stockholders' equity | 131,630 | 133,325 |
| Noncontrolling interest | -- | -- |
| Total equity | 131,630 | 133,325 |
| Totals | $ 149,692 | $ 149,186 |
| OUTDOOR CHANNEL HOLDINGS, INC. AND SUBSIDIARIES | ||||
| Condensed Consolidated Statements of Cash Flows | ||||
| (in thousands) | ||||
| Three Months Ended | Year Ended | |||
| December 31 | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Operating activities: | (unaudited) | |||
| Net income | $ 1,251 | $ 1,455 | $ 1,894 | $ 1,845 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||
| Depreciation and amortization | 761 | 735 | 2,898 | 2,874 |
| Amortization of subscriber acquisition fees | 151 | 345 | 1,582 | 1,511 |
| Loss on sale of equipment | -- | 120 | 17 | 151 |
| Other-than-temporary impairment on auction-rate securities | 680 | -- | 680 | -- |
| Provision for doubtful accounts | 188 | 139 | 188 | 262 |
| Share-based employee and director compensation | 940 | 802 | 3,517 | 3,153 |
| Deferred tax provision, net | (945) | 1,454 | (666) | 1,796 |
| Excess tax benefit from share-based compensation | (68) | -- | (68) | -- |
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (854) | (2,006) | (1,597) | 2,835 |
| Income tax refund receivable and payable, net | 1,009 | 1,981 | (721) | (704) |
| Programming and production costs | 256 | (17) | (3,569) | (792) |
| Other current assets | (204) | 183 | (61) | (1,547) |
| Deposits and other assets | (2) | 10 | 101 | 107 |
| Subscriber acquisition fees | (935) | -- | (1,435) | (191) |
| Accounts payable and accrued expenses | 469 | 1,463 | 1,893 | (2,099) |
| Deferred revenue | 193 | (1,468) | 1,340 | 118 |
| Deferred obligations | (26) | 76 | 43 | 83 |
| Unfavorable lease obligations | (42) | (38) | (164) | (149) |
| Net cash provided by operating activities | 2,822 | 5,234 | 5,872 | 9,253 |
| Investing activities: | ||||
| Purchases of property, plant and equipment | (1,762) | (636) | (4,742) | (2,167) |
| Purchase of intangibles | -- | -- | -- | (85) |
| Proceeds from sale of equipment | -- | 53 | 138 | 53 |
| Purchases of available-for-sale securities | (18,988) | (19,020) | (72,256) | (83,590) |
| Proceeds from sale of available-for-sale and auction-rate securities | 16,010 | 12,118 | 89,363 | 70,736 |
| Net cash provided by (used in) investing activities | (4,740) | (7,485) | 12,503 | (15,053) |
| Financing activities: | ||||
| Purchase of treasury stock | (144) | (150) | (1,157) | (1,050) |
| Payment of dividends on common stock | (6,308) | (6,230) | (6,308) | (6,230) |
| Excess tax benefit from share-based compensation | 68 | -- | 68 | -- |
| Net cash used in financing activities | (6,384) | (6,380) | (7,397) | (7,280) |
| Net increase (decrease) in cash and cash equivalents | (8,302) | (8,631) | 10,978 | (13,080) |
| Cash and cash equivalents, beginning of period | 38,778 | 28,129 | 19,498 | 32,578 |
| Cash and cash equivalents, end of period | $ 30,476 | $ 19,498 | $ 30,476 | $ 19,498 |
| Supplemental disclosure of cash flow information: | ||||
| Income taxes paid, net of refund | $ 1,204 | $ 1,185 | $ 3,207 | $ 3,752 |
| Supplemental disclosure of non-cash investing and financing activities: | ||||
| Reclassification adjustment of other-than-temporary impairment losses on auction-rate securities recognized in net income, net of tax | $ 289 | $ -- | $ 289 | $ -- |
| Change in fair value of available-for-sale and auction-rate securities, net of tax | $ (25) | $ 40 | $ 2 | $ 65 |
| Property, plant and equipment costs incurred but not paid | $ 313 | $ 211 | $ 313 | $ 211 |
| Subscriber acquisition fees incurred but not paid | $ -- | $ 488 | $ -- | $ 488 |