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LodgeNet Interactive Corporation (LNET)

Q4 2011 Earnings Call

February 22, 2012 5:00 PM ET


Ann Parker – Director, Investor Relations

Scott Petersen – Chairman and CEO

Frank Elsenbast – Senior Vice President and CFO


Justin Ruiss – Sidoti

Travis Goff – Goff Capital

Michael Kupinski – Noble Financial

Varkey Chacko – CCI Llc

John Koerber – Bennett Management


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Good day, ladies and gentlemen, and thank you for your patience. You’ve joined the LodgeNet Interactive Corporation Q4 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer section, and instructions will be given at that time. (Operator Instructions)

As a reminder, this conference may be recorded. I would now like to turn the call over to your host, the Director of Investor Relations, Ms. Ann Parker. Ma’am, you may begin.

Ann Parker

Thank you, Operator. Good day, everyone. I’d like to thank all of you for taking the time today to listen to our fourth quarter and full year [2001] conference call. You should have received copies of our earnings release, if not, please call me at 605-988-1000. We’ll make sure you do get a copy.

Our speakers for today’s call will be Scott Petersen, Chairman and CEO of LodgeNet; and Frank Elsenbast, our Senior Vice President and CFO. Scott and Frank will review our fourth quarter and full year 2011 earnings, and we’ll then welcome your questions and your comments.

This call is being webcast live over the Internet through our company website, We also have slides posted on our website, which correspond to today’s comments and they can found under the Investors section.

Before we get started, I’d like to remind you that some topics to be discussed today that do not relate to historical performance may include or constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks, uncertainties and other factors that could cause actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward-looking statements. Certain of the risk factors, which could affect the company, are set forth in the company’s 10-K and other filings.

With that said, I’ll now turn the call over to Mr. Scott Petersen.

Scott Petersen

Thank you, Ann, and good afternoon, everyone. 2011 was a transformational year for LodgeNet. Our success and transformation was evidenced at three levels. First, we launched several strategic growth initiatives during the year. We announced our new Four Screen strategy at our annual Customer Technology Symposium in October, which articulates a clear path for growth beyond our traditional business.

With this strategy, we are definitively moving beyond the hotel guest room, provide an expanded array of solutions and services to hotels and travelers, whether they be in the room, on the property or on the way. And in support of our Four Screen strategy, we released Envision, our new cloud-connected interactive television platform. At year end hotel adoption was accelerating.

Yesterday, we just announced the 7,100-room Venetian Resort-Hotel of Casino, Las Vegas. It’s moving to Envision and I’m pleased to report our total contracted Envision room just passed the 60,000-room level with the Omni Hotels announcement we made today. That’s 20,000 additional rooms in the last month and a half. So we’re looking forward to a very strong year in 2012 for Envision.

And we also recently launched our Mobile App, which in one level turns a guest’s iPhone or iPad into a powerful guest remote control. But more importantly creates for the first time a one-to-one marketing relationship for us with consumers and travelers, and the opportunity to deliver additional services to our hotel partners. And in the fourth quarter, our installation rate for high-definition interactive TV platform accelerated to 15,000 rooms, taking our base over the 300,000-room milestone.

Second, our transformation was evidenced by an increase in the revenue we generated on a per room basis. For the second straight quarter, this important metric was up and this is the first time since 2007 the hospitality revenues per room were up year-over-year, and these increases are a direct result our strategy to diversify our revenue base by selling more to our core customers and generate a new revenues from advertising-based services.

And lastly, our transformation is being reflected in our profitability metrics, which improves substantially during the year. Operating income was up 22% over 2011, excuse me, 2010 and our net to common improved 65% from a negative $0.71 in 2010 to a loss of only $0.25 per share this past year.

After Frank covers the details of our financial results during the quarter, I’ll give you some additional thoughts on how our highly attractive market position and a proven path for growth opportunities we have before us. Frank?

Frank Elsenbast

Thanks, Scott. Our fourth quarter operating results met or exceeded our guidance on revenue, adjusted operating cash flow and earnings per share. And we entered 2012 a much stronger company with a more diversified revenue base, a deleveraged balance sheet and established growth programs.

Starting on slide number four, I will take you to the slides which detail the financial results for the quarter and full year 2011.

Revenue for the full year was $421 million, which was a 7% decline versus prior year. We continue to diversify our revenue base with our diversification initiatives growing 3% in 2011. Our healthcare business grew at 21% for the year as they added 12 new facilities and ended the year with nearly 16,000 beds, an increase of 30% over last year.

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