Could Journal Register (JRC) Miss Its Debt Service?
July 20, 2007 by Douglas A. McIntyreJournal Register (JRC) announced its Q2 earnings today. They were ugly and Wall St. punished the company by pushing it to a 52-week low of $3.68. The company missed consensus earnings estimates by three pennies.
JRC had revenue of $120.7 million. Net income was $5.5 million and interest payments on the company’s $646 million debt were $10 million.
JRC now has a market cap of $140 million, well under the value of its debt and only 25% of its revenue run rate. Gannett (GCI) has a market cap to revenue multiple of 1.5x. Clearly its does not have JRC’s debt problem.
Journal Register also announced that June advertising revenue dropped almost11%. Total revenue for the month fell to $36.6 million. That would be a quarterly run rate of about $111 million.
Last year in the third quarter JRC had revenue of $132 million. The company’s current quarterly operating expenses are about $100 million.
Could JRC’s revenue be as low at $110 million in Q3 07. If revenue loss accelerates at all, it could.
At $110 million, all of JRC’s operating income goes to interest expense. Any slip from there put the company in a world of hurt.
Douglas A. McIntyre can be reached at [email protected].
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