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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.comSource:Outdoor Channel Holdings, Inc.