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LodgeNet Interactive CEO Discusses Q2 Results - Earnings Call Transcript

Stocks in this article: LNET

What have I been doing for the last 45 days? Next slide. I have been working in the LodgeNet offices for the 45 days, conducting financial and operational reviews. I have also spent a lot of time talking to customers, employees, reviewing the organizational structuring, analyzing financials and most of my time has been really focused around here, why are we losing these rooms and why has guest entertainment revenue declined. Those have been the areas that I have spent the vast majority of my time over the last few weeks.

At this time, I am turning the call over to Frank, so he can step you through the financial results and then afterwards we are going to share our plan going forward. How we discuss these issues.

Frank Elsenbast

All right. Thanks, Phil. Our financial results for the second quarter did not meet our expectations. Room loss and challenging sales results in our Guest Entertainment business resulted in a 13% decline in revenue and AOCF for the quarter of $19.2 million.

The company did continue to make progress in certain strategic areas with over 15,000 high-def rooms added during the quarter, our mobile app room base expanded to over 600,000 rooms and app functionality increased with the introduction of Interactive Program Guide, and we continue to have a strong focus on controlling our cost structure with another quarter of year-on-year expense reductions.

Going forward, the company's primary objective is to address two issues that have the most immediate impact on our financial results. Reducing our room churn and improving the performance of our Guest Entertainment business.

I'll now walk through the financial results for the quarter and address the slides that we (Inaudible) this afternoon.

Starting on slide number five and six, we will look at our total revenue and revenue per room performance. In the second quarter, revenue was $92.8 million, a 13% decline versus prior year and below our expectations for the quarter. The decline in total revenue was driven primarily by 12% reduction in our room base versus last year and 1.5% decline in hospitality revenue per room.

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