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» LodgeNet Interactive Corp. Q2 2009 Earnings Call Transcript
With that said, I'll now turn the call over to Mr. Scott Petersen.Scott Petersen Thank you Ann and good afternoon everyone. During the second quarter, we continued our strategic focus on driving free cash flow, reducing our debt levels and de-leveraging our balance sheet. As we out performed our guidance on all three of these fronts. During the quarter we produced $22.6 million of free cash flow which was 56% greater than last years second quarter and the 110% greater in the year before that. While we have maximized our cash flow by tendering the conservative operating plan we implemented two years ago, maintaining our recession reduced OpEx and CapEx flat for last year. So the continuation of that plant along with our diversified revenue initiative In light of disappointing Guest Entertainment revenue we experienced during the quarter. As a result our (inaudible) continued to strengthen, our net debt dropped below the $400 million mark. Our leverage ratio improved decreasing to the 3.4 times level and that level is now below the final step down of our credit facility. Our strategic initiatives position us to solid revenue growth in the future we see good revenue growth prospects from our diversification efforts, focused on increasing revenues of hotel services sales, about advertising and healthcare our high definition convergence, our poise to accelerate as hotels increase their purchases of HD TVs 2011 and beyond and our recently announced next generation interactive television platform but mainly in vision which connects our interactive system to the internet I believe that holds significant revenue growth prospects from the sales new count and the services to both hotels and our guests. Now before going in to that I’d like to turn the call over to Frank Elsenbast at this for some comment and color regarding the ESN quarter results. Frank.
Frank ElsenbastThanks Scott, while revenue for the second quarter was below our expectations, due to short fall in guest entertainment. We had solid revenue growth from some of our strategic growth initiative a conservative management of capital investment, working capital and operating expenses allowed us to exceed our cash flow guidance for the quarter. We use this cash flow to aggressively pay down debt and drive continued deleveraging of our balance sheet. Now I'll walk you through the slides that were issued along with press release and take a closer look at some of the key drivers of our financial results. For the second quarter, total revenue was $113 million, a 7% decline versus last year. On slide number three, we'll see the breakdown between our diversified revenues in guest entertainment. During the second quarter revenue from these initiatives grew to 42% of total revenue versus 38.5% last year. Advertising and hotel services drove this improvement. Guest entertainment revenues were of 12% for the quarter due in part to the 4.6% reduction in the average number of rooms being served with the remainder driven by the decline in revenue per room. We continue to see conservative buying behavior from our consumers even as the occupancy rates have rebounded. Guest entertainment revenue was also impacted by fewer hit movies this year. During the quarter our top five Hollywood movies generated $3 million less in revenue than our top five movies did last year. On slide number four you will see the breakdown of our revenue per room, which for the quarter was $21.22, down 2% versus last year. Strong growth in hotel services and advertising offset over half of the decline in guest entertainment. It is also important to note that revenue per room from our growth initiatives grew impressive 7.3% for the quarter. Read the rest of this transcript for free on seekingalpha.com