Business News
American Community Newspapers Inc. Reports 2008 First Quarter Earnings Results
Thursday 01. May 2008 - American Community Newspapers Inc. (AMEX:ANE) ("ACN") today reported financial results for the first quarter ended March 30, 2008.
Comparisons are made on a pro forma basis to the 2007 first quarter results as ACN (formerly Courtside Acquisition Corp.) had no prior year reported operating results due to its acquisition of an operating company on July 2, 2007.
2008 First Quarter Pro Forma Performance:
— Total revenue was $15.9 million, down 11.7% from pro forma total
revenue of $18.0 million in the prior year quarter. The decline was
primarily due to the macro-economic weakness and the resulting soft
advertising environment, specifically in real-estate and housing
related categories with the Company’s Minneapolis-St. Paul cluster
continuing to be the most affected. Excluding the Minneapolis-St.
Paul cluster, total revenue was down 7.9%. In addition, the Company
faced difficult year-over-year comparisons. In the first quarter of
2007, ACN delivered organic revenue growth of 4.6%, while the
newspaper industry experienced a revenue decline of 4.8%, according to
the Newspaper Association of America during this same period.
— Advertising revenue decreased 12.1% to $14.5 million from the first
quarter of 2007.
— Pro forma adjusted EBITDA was $2.8 million, down 14.9% from the prior
year quarter. Excluding the Minneapolis-St. Paul cluster, pro forma
adjusted EBITDA was up 9.7%.
— Newspaper cash flow, which is defined as pro forma adjusted EBITDA
prior to corporate expenses, was $3.3 million, down 10.9%
year-over-year. Excluding the Minneapolis-St. Paul cluster, newspaper
cash flow was up 11.7%.
— Net loss was $4.5 million, or $0.31 per diluted share, compared to a
net loss of $0.29 per diluted share in the prior year quarter on a pro
forma basis.
— Internet advertising revenues increased 10.9% year-over-year in the
2008 first quarter and represented 2.6% of total revenue in the first
quarter of 2008. ACN newspaper Web sites generated 6.1 million page
views and had 1.2 million unique users during the month of March 2008.
— ACN’s 100 print products had a total circulation of 1.4 million in the
2008 first quarter. ACN has a free, controlled-distribution model for
most of its print products, with circulation accounting for only 4.2%
of total Company revenues in the period.
“The challenging economic climate combined with the on-going transformation of the newspaper and advertising industries has resulted in a very difficult business environment,” said Gene Carr, Chairman and Chief Executive Officer of ACN. “Our revenue decline in the quarter was also exacerbated by tough year-over-year comparisons as we posted organic advertising revenue growth of nearly 5% in the first quarter of 2007, well ahead of the industry’s performance. We remain confident in the power of the community newspaper business model with its unique ability to provide truly local news and information that is not available anyplace else. We believe we have the right clusters of assets in place and the strict operating discipline to get through the current economic cycle and re-emerge as a stronger company. We are proactively managing our business both in print and online to ensure we are capitalizing on our assets and operating as efficiently as possible. While our Minneapolis-St. Paul cluster continues to have a significant impact on our financial results, we are pleased to report we have begun seeing some early traction in this important market under the leadership of our new group publisher Bob Cole.”
Mr. Carr concluded, “I would like to thank our employees for their hard work and commitment to delivering quality news reporting to all of our communities, which is evident by the numerous industry awards received by our staff and publications. ACN is a recognized leader in our communities and our newspapers remain the medium of choice both for local readers and advertisers, giving us the confidence we have the platform and brands in place for long- term growth.”
Based on recent operating trends and current economic conditions, for the second quarter of fiscal 2008 ACN does not expect to be in compliance with financial ratio covenants contained in its credit agreements. ACN has begun discussions with its banking group to explore the possibility of obtaining waivers and modifying the terms of its financial covenants.