VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/14/13 -- Glacier Media Inc. ("Glacier" or the "Company") (TSX: GVC) reported cash flow, earnings and revenue for the period ended March 31, 2013.
Results are reported below on an adjusted basis to include the Company's share of the results of its joint ventures. Management continues to base its operating decisions and performance evaluation utilizing these results. Refer to Change in Accounting Policy on page 5 for discussion of the accounting change and results in accordance with IFRS.
----------------------------------------------------------------------------thousands of dollars Three months ended Three months endedexcept share and per share amounts March 31, 2013 (5) March 31, 2012 (5)----------------------------------------------------------------------------Revenue $ 76,840 $ 76,421EBITDA (1) $ 7,889 $ 10,878EBITDA margin (1) 10.3% 14.2%EBITDA per share (1) $ 0.09 $ 0.12Net income attributable to common shareholders $ (430) $ 2,914Net income attributable to common shareholders per share $ 0.00 $ 0.03Cash flow from operations (1)(2)(3) $ 7,031 $ 9,431Cash flow from operations per share (1)(2)(3) $ 0.08 $ 0.11Debt net of cash outstanding before deferred financing charges $ 120,907 $ 127,182Dividends paid (4) $ - $ 2,770Dividends paid per share (4) $ - $ 0.03Weighted average shares outstanding, net 89,243,102 89,358,410----------------------------------------------------------------------------Notes:(1) Refer to "Non-IFRS Measures" section of the financial statements.(2) 2013 excludes $0.7 million of restructuring expense and $0.4 million oftransaction and transition costs.(3) For non-recurring items excluded in the prior period, refer topreviously reported financial statements.(4) Dividends totalling $1.8 million were declared in January 2013 and paidon April 5, 2013.(5) These results are presented on an adjusted basis to include theCompany's share of the results of its joint ventures, as managementcontinues to base its operating decisions and performance evaluationutilizing adjusted results.
-- For the three months ended March 31, 2013, Glacier's adjusted consolidated revenue increased 0.5% to $76.8 million from $76.4 million in the prior period. This increase was primarily due to the acquisition of control of Alta Newspaper Group Limited Partnership ("ANGLP") completed on April 1, 2012 as well as growth in a number of the Company's business information operations offset by continued weakness in community media operations;-- Adjusted consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 27.5% to $7.9 million from $10.9 million;-- Adjusted cash flow from operations (before changes in non-cash operating accounts and non-recurring items) decreased 25.4% to $7.0 million;-- Adjusted net income attributable to common shareholders was $(0.4) million compared to net income of $2.9 million;-- Adjusted EBITDA per share decreased 27.5% to $0.09 from $0.12 for the period compared to the same period in the prior year and net income attributable to common shareholders per share decreased to $0.00 from $0.03 for the same period last year;-- Adjusted cash flow from operations (before changes in non-cash operating accounts and non-recurring items) per share decreased to $0.08 per share from $0.11 for the same period last year;-- The Company's adjusted results for the quarter were affected by the acquisition of control of ANGLP on April 1, 2012; whereby the adjusted results for the three months ended March 31, 2012 only include the Company's previous percentage ownership; and-- Glacier became a 50% partner in a new venture, Weather INnovations ("WIN") Consulting - created as the result of merging WeatherFarm (a former Canadian Wheat Board asset acquired by Glacier in late 2012) and Weather INnovations Inc. (an agricultural meteorology information business), of which Glacier acquired an interest in subsequent to March 31, 2013.
Review of Operations
Glacier Media Inc. ("Glacier" or the "Company") continued to generate strong revenue, profit and cash flows from a number of its operations and through its diversified base of information communications businesses. However, weaker economic conditions in the quarter adversely affected operating results. Business and trade information revenue weakened in some operations during the three months ended March 31, 2013 due to softness in key economic sectors, particularly those in which volatile commodity pricing affect business information activity. Community media revenue continued to be softer compared to the same period last year. Revenues and EBITDA in the community media operations were affected by weaker conditions in the general economy and by related national advertising softness, as well as digital competition. Consolidated EBITDA was also affected by operating resource expense investments made to strengthen some community media assets acquired from Postmedia, and increased digital investment including a new real estate information portal, amongst other things.
Many of the Company's business information operations continue to grow and provide attractive opportunities for future growth in both existing and new verticals through multi-platform offerings, including rich information products and solutions. Community media operations continue to offer a strong value proposition through local information they provide to readers and key marketing channels they provide in the small community markets they serve across complementary multi-media platforms. As mentioned, weaker economic conditions in the first quarter adversely affected national advertising revenues - a trend which appears to be largely cyclical. Digital competition exacerbated the weaker economic conditions in the larger urban markets, but has been less of a factor in the smaller regional markets.
Notwithstanding the current market softness, a variety of significant growth opportunities are still available. The Company's strategy is to invest cash flow generated from the community media operations and the business and trade information operations in both operational opportunities and acquisitions. In particular, the Company intends to increase capital allocated to business and trade information acquisitions and growth opportunities, which includes internal product development related technology investments. The Company also intends to provide returns to shareholders through increasing dividends as well as share buy-backs.
Many of Glacier's business and trade information operations continued to deliver growth, with revenue increases generated across a wide variety of verticals - driven by a diverse variety of product and information innovations. While in some verticals this growth was slower than the prior year, the various products and services still outperformed peer groups active in those sectors.
To the degree revenues have been adversely affected by general economic malaise, a number of growth initiatives are being pursued and are generating strong sales results, especially those associated with sectors of the economy which are experiencing relatively stable conditions in a pan-Canadian context. This is a result of a stronger inter-divisional collaboration framework created between the various operations.
In particular, Glacier's business and trade information operations enjoyed growth in the energy, environmental risk, environmental compliance networks, medical and financial information sectors as a result of targeted initiatives designed to align with growth areas within those sectors. Glacier's business and trade information portfolio contains many brands that have decades of service in their respective sectors. The intrinsic equity associated with these brands is a key competitive advantage as the products evolve and extend.
In addition to core business and trade information print and digital sales, management is focused on strategies designed to offer customers increasingly richer value propositions. These include multi-platform solutions - with a key focus on mobile offerings - designed to integrate more seamlessly with customer decision-making processes, thus ensuring heightened levels of decision dependency on specific information tools. Such dependence is enhanced through a focus on effective pricing and targeted timing. Consequently, these information tools are increasingly integrated in customer decision-making and as a result sales efficiency, renewal and retention improves. This includes a focus on advertising solutions that are underpinned by a strong economic development framework. As a result, Glacier expects to develop increased business with non-traditional customers.
Key efforts are under way to distinguish different types of digital content, advertising and subscriptions based on research designed to highlight individual industry sector needs. Premium subscription and related products are being enhanced and developed with a particular focus on essential content, data, search, interpretation, contextualization and analytics. A consistent focus on various ways of enriching content results in improved rates for advertising positioned alongside rich information.
Digital revenues now represent more than a quarter of Glacier's business and trade information revenues and are growing steadily. Significant focus and related investment will continue to be made to enhance Glacier's digital business and trade information verticals, through both organic development and new business acquisition. These acquisitions will be targeted to expand the markets that Glacier covers, extend the breadth of information products and marketing solutions provided, and to enrich Glacier's digital media staff, technology and other relevant resources - all focused on consistently enhancing "decision dependence".
Overall, the business and trade information operations and various markets offer attractive opportunities for growth with high levels of profitability - particularly when aligned with Glacier's leading position in key sectors. An integration framework which permits management teams in various verticals to remain entrepreneurial and market- focused will enhance the Company's ability to service its key customers with more integrated solutions.
Glacier's community media operations continue to experience weaker revenue performance in a number of markets, primarily the result of softer national advertising. The B.C. markets were affected by weaker economic conditions in Victoria, the Lower Mainland and a variety of Vancouver Island and Northern Interior markets. National advertising revenues were weaker in most markets, which appear to be the result of cautiousness due to prevailing economic conditions, as financial and government revenues have been significantly lower. Digital competition also affected print spending levels, although this trend primarily affected larger urban markets. Local advertising revenues were resilient in both the existing markets where Glacier has operated and in some of the Lower Mainland and Vancouver Island markets acquired from Postmedia - although the Victoria market continues to struggle.
Operating expense investments are being made to improve the strength and resources of the community media assets acquired from Postmedia in order to increase competitiveness and sales effectiveness. Operating investments have been partially offset by savings in overhead costs as a result of operational alignments with Glacier's existing infrastructure. While it will take time to strengthen and revitalize operations, it is encouraging that direct revenue increases are being realized as investments are made. Digital investments are also being made to exploit revenue opportunities of the larger markets, with a specific focus on content delivery and advertising effectiveness.
While economic and market challenges have affected the community media operations, management believes that these businesses remain strong and will continue to generate solid cash flow given the nature of the markets in which Glacier operates. This cash flow can be used to fund growth through both internal investment and acquisition of digital business and trade information and digital community media assets, as well as debt repayments, dividend payments and share repurchases.
Glacier's small market community media operations offer a unique selling proposition and competitive advantage through the local information that they provide - of which they are a primary source - and the primary advertising and marketing channels they offer. The value of community content is provided to readers in print and online, by tablet and smartphone platforms. As described above, a number of new digital sales products and strategies have been introduced, and new digital sales and product staff are being hired and technology investments are being made to drive these growth initiatives. Given that the demand for local community information is expected to exist for the long term, Glacier expects to be able to monetize the information and marketing value. As 85% of Glacier's local newspaper distribution is free, this also provides for a more durable reach of readership for advertisers over time wherein total market coverage can always be provided. The attributes of these community media operations are significantly different and stronger than larger metropolitan paid daily newspapers, which have been reflected in the financial performance of Glacier's community media group. An important advantage is that being local often means being integrally rooted in the fabric of a community and Glacier's community media management and staff work assiduously to remain tied to the rhythms of the markets they serve.
As stated, adjusted consolidated EBITDA decreased $3.0 million or 27.5% to $7.9 million compared to $10.9 million in the same period last year. While adjusted consolidated revenues showed a slight increase on an overall dollar basis, due to the acquisition of control of ANGLP, the economic environment and related softness resulted in lower same- store EBITDA in certain trade information businesses and in the community media operations.
Glacier's adjusted consolidated EBITDA margin decreased to 10.3% for the three months ended March 31, 2013 from 14.2% for same period last year as a result of softness in both community media and some business information operations. Management will seek to improve these margins and profit performance through improved print and digital sales effectiveness, cost efficiency and other initiatives.
In accordance with IFRS, Glacier's EBITDA was $6.2 million for the three months ended March 31, 2013, a decrease of $1.0 million or 13.7% and its EBITDA margin decreased to 8.8% from 11.1% for the same period in the prior year. As discussed above, the economic environment and related softness resulted in a lower same-store revenue and EBITDA in certain trade information businesses and in the community media operations.
EBITDA was also impacted by higher pension and post-retirement benefit costs, accounting changes relating to certain business directory digital revenue recognition, increased operating infrastructure investment made in digital media management, staff, information technology and related resources, development of a new real estate information portal, as well as other content and quality related areas. These investments were made consistent with Glacier's complementary media platform and product strategy and business and trade information strategies.
Additional cost reduction measures are being implemented consistently with management's strategy of maintaining strong product and editorial quality while reducing operating costs where possible through initiatives that do not impact quality, sales capacity or market and competitive positions.
Management is being careful to maintain appropriate levels of resources in staff and technology as well as business development in order to facilitate long-term revenue growth.
The complementary media platform and product strategy addresses both the risks that digital media represents to the traditional print platform and the opportunities digital media offers in Glacier's local community and business and trade information markets. The strategy's premise is that customer utility and value should drive platform utilization and product design and functionality. Online, mobile, tablet and other information delivery devices will be fully utilized, while print content and design quality will also be fully maintained. While digital platforms offer many attractive new opportunities, print platforms continue to offer effective utility to both readers and advertisers. Maintaining strong print products also maintains strong brand image and awareness, which increases the likelihood of success online. Studies of time spent across media platforms and reader satisfaction support the complementary platform and product strategy. Management expects that customer utility will vary over time and will be affected by what Glacier and other media providers can creatively provide. Management believes the complementary platform and product strategy will be prudent for the foreseeable future, and will maximize revenue and profit generation.
As indicated, the business and trade information strategies are focused on increasing the value provided to customers through richer content, data and analytic value and heightening customer decision dependence of Glacier's products and services. This dependence moves Glacier's products and services further up the value ladder, with the higher revenue, profitability and recurring cash flow that this value proposition provides.
On an adjusted basis to include the Company's share of its joint ventures, Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses was 2.55x trailing 12 months EBITDA as at March 31, 2013.
Including Glacier's joint ventures, the Company invested $2.1 million of capital expenditures during the period primarily on its new printing facility at 50% owned GWNLP and software related to the transition of the digital assets from Postmedia. The investment capital expenditures are being made to generate direct revenue and cash flow improvements and payback consistent with Glacier's targeted return on investment, as well as quality improvements and other benefits.
The Company (excluding its joint ventures) repaid $2.5 million of debt during the three months ended March 31, 2013. Glacier's consolidated debt net of cash outstanding before deferred financing charges was $118.5 million as at March 31, 2013.
As previously reported, in March 2013, an affiliate of the Company received correspondence from Canada Revenue Agency ("CRA") proposing to issue a notice of reassessment with respect to the utilization of non-capital losses by the affiliate, pertaining to taxation years 2008 to 2011. The Company believes that it has reported its tax position appropriately and believes the Company's affiliate has substantial defences to the matters raised by the CRA; however, should the proposed reassessment by CRA ultimately be upheld against the Company's affiliate, the resulting payment would materially affect the Company's financial statements and cash flows. Notwithstanding, the Company's affiliate has the financial capacity to pay such amounts, if any. The likely timing to resolve this matter may take years.
Change in accounting policy
As a result of a change in IFRS accounting policies effective January 1, 2013, the Company is now required to account for its joint ventures under the equity method. Previously, the Company's joint ventures were accounted for using proportionate consolidation. As a result of the change in accounting, the Company no longer presents the revenues, expenses, assets and liabilities of its share of these operations in the Company's results on a line by line basis. The Company now carries its interest as a net investment on its balance sheet and includes the net results from these operations in its statement of operations as earnings from joint ventures and associates.
Despite this accounting change, management believes that including its share of revenues and expenses in the Company's results (consistent with its prior accounting treatment) provides an important basis for assessing the overall operations of the Company. The table below adjusts the Company's reported results under IFRS to include the revenues and expenses of its joint ventures, consistent with its historical presentation. Management continues to base its operating decisions and performance evaluation using the adjusted results and has reported its results above on this basis.
---------------------------------------------------------------------------- Three months ended March 31, 2013 (4)thousands of dollars Per Adjustmentexcept share and per share amounts IFRS (4) Adjusted----------------------------------------------------------------------------Revenue $ 70,526 $ 6,314 $ 76,840EBITDA (1) $ 6,232 $ 1,657 $ 7,889EBITDA margin (1) 8.8% 10.3%EBITDA per share (1) $ 0.07 $ 0.09Net income attributable to common shareholders $ (368) $ (62) $ (430)Net income attributable to common shareholders per share $ 0.00 $ 0.00Cash flow from operations (1)(2)(3) $ 5,685 $ 1,346 $ 7,031Cash flow from operations per share (1)(2)(3) $ 0.06 $ 0.08Debt net of cash outstanding before deferred financing charges $ 118,494 $ 2,413 $ 120,907Weighted average shares outstanding, net 89,243,102 89,243,102-------------------------------------------------------------------------------------------------------------------------------------------------------- Three months ended March 31, 2012 (4)thousands of dollars Per Adjustmentexcept share and per share amounts IFRS (4) Adjusted----------------------------------------------------------------------------Revenue $ 64,859 $ 11,562 $ 76,421EBITDA (1) $ 7,221 $ 3,657 $ 10,878EBITDA margin (1) 11.1% 14.2%EBITDA per share (1) $ 0.08 $ 0.12Net income attributable to common shareholders $ 2,746 $ 168 $ 2,914Net income attributable to common shareholders per share $ 0.03 $ 0.03Cash flow from operations (1)(2)(3) $ 5,757 $ 3,674 $ 9,431Cash flow from operations per share (1)(2)(3) $ 0.06 $ 0.11Debt net of cash outstanding before deferred financing charges $ 111,167 $ 16,015 $ 127,182Weighted average shares outstanding, net 89,358,410 89,358,410----------------------------------------------------------------------------(1) Refer to "Non-IFRS Measures" section for calculation of non-IFRSmeasures used in this table.(2) 2013 excludes $0.7 million of restructuring expense and $0.4 million oftransaction and transition costs.(3) For non-recurring items excluded in the prior period, refer topreviously reported financial statements.(4) Adjustment to include the Company's share of revenues, expenses and cashflows from its joint venture operations consistent with the Company'streatment on a historical basis and prior to implementing the new accountingstandards.
For the three months ended March 31, 2013, excluding its share of revenues and expenses from its joint ventures and in accordance with IFRS, consolidated revenues were $70.5 million, an increase of 8.7% over the same period in the prior year; EBITDA was $6.2 million, a decrease of $1.0 million or 13.7%; and cash flow from operations was $5.7 million, a decrease of $0.1 million or 1.3%. On a per share basis, EBITDA decreased $0.01 for the three months ended March 31, 2013, and cash flow from operations was $0.06, the same as the prior year. Under IFRS, the results of ANGLP are included in the statement of operations as earnings from joint ventures and associates for the three months ended March 31, 2012.
Glacier continued its strategy of acquiring businesses that provide high-value data and information by becoming a 50% partner in a new venture, Weather INnovations ("WIN") Consulting - created as the result of merging WeatherFarm (a former Canadian Wheat Board asset acquired by Glacier in late 2012) and Weather INnovations Inc. (an agricultural meteorology business), of which Glacier acquired an interest in subsequent to March 31, 2013. The partnership blends two key weather information provision systems that enable farmers and other crop producers to make near real-time decisions for operations such as seeding, spraying and harvesting. As well, the partnership will provide predictive modeling tools to manage disease and pest threats. The new business will operate closely with Glacier's existing agriculture portfolio of products and services.
Outlook and Summary
While economic conditions have adversely impacted some community media operations and business and trade information verticals and digital competition is stronger in the larger community media markets, management expects that growth will continue in most of Glacier's business and trade information operations, as well as a variety of community media markets where local market conditions are stronger. In this regard, management will continue to closely monitor economic conditions in various markets and verticals to ensure appropriate decisions are made in a timely fashion.
Management will focus in the short-term on a balance of reducing certain operating expenses where appropriate, paying down debt, integrating the operations acquired, enhancing existing operations, targeting select acquisition opportunities and returning value to shareholders.
Given continued significant cash flow resulting from operations and acquisitions as indicated, an increasing portion of cash generated can also be returned to shareholders through increased dividends. In January 2013, the Board of Directors reviewed the Company's dividend policy and announced a 33% increase in the annual dividend to $0.08 from $0.06 per share - to be paid quarterly instead of semi-annually, the first dividend of which was paid on April 5, 2013. The second quarterly dividend of $0.02 per share has been declared on May 14, 2013, to shareholders of record on June 14, 2013 and payable on July 5, 2013.
As indicated, significant focus and related investment will continue to be made to enhance Glacier's business and trade information verticals, through both organic development and acquisition. These acquisitions will be targeted to expand markets that Glacier covers; expand the breadth of information products and marketing solutions; and expand Glacier's digital media staff, technology and related resources.
Management will continue to seek a balance of maintaining debt at manageable levels and delivering growth through both operations and acquisitions. In particular, management will seek to time investment in the acquisition and organic growth opportunities to allow cash flow from operations to be used to pay down the increased borrowings incurred in the fourth quarter of 2011.
Shares in Glacier are traded on the Toronto Stock Exchange under the symbol GVC.
About the Company: Glacier Media Inc. is an information communications company focused on the provision of primary and essential information and related services through print, electronic and online media. Glacier is pursuing this strategy through its core businesses: the local newspaper, trade information and business and professional information markets.
To supplement the consolidated financial statements presented in accordance with International Financial Reporting Standards (IFRS), Glacier uses certain non-IFRS measures that may be different from the performance measures used by other companies. These non-IFRS measures include cash flow from operations (before changes in non-cash operating accounts and non-recurring items), net income attributable to common shareholders before non-recurring items and earnings before interest, taxes, depreciation and amortization (EBITDA), which are not alternatives to IFRS financial measures. Management focuses on operating cash flow per share as the primary measure of operating profitability, free cash flow and value. EBITDA per share is also an important measure as the Company has low ongoing capital expenditures and depreciation and amortization largely relates to acquisition goodwill and copyrights and does not represent a corresponding sustaining capital expense. These non-IFRS measures do not have any standardized meanings prescribed by IFRS and accordingly they are unlikely to be comparable to similar measures presented by other issuers.
This news release contains forward-looking statements that relate to, among other things, the Company's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates. These forward-looking statements include, among other things, statements under the headings "Review of Operations, "Sales Performance", "Operational Performance" and "Outlook and Summary" and statements relating to the Company's expectations regarding revenues, expenses, cash flows and future profitability, including its expectations that growth will continue in Glacier's business segments, its expectations as to acquisitions and organic revenue and profitability growth, that cost savings will be realized, and that annual dividends are expected to be declared, and that the Company expects to repurchase shares. These forward looking statements are based on certain assumptions, including continued economic growth and recovery and the realization of cost savings, and are subject to risks, uncertainties and other factors which may cause results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, and undue reliance should not be placed on such statements.
Important factors that could cause actual results to differ materially from these expectations are listed in the Company's Annual Information Form under the heading "Risk Factors" and in the Company's MD&A under the heading "Business Environment and Risks", many of which are out of the Company's control. These factors include, but are not limited to, the ability of the Company to sell advertising and subscriptions related to its publications, foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural industry, discontinuation of the Department of Canadian Heritage's Canada Periodical Fund, general market conditions in both Canada and the United States, changes in the prices of purchased supplies including newsprint, the effects of competition in the Company's markets, dependence on key personnel, integration of newly acquired businesses, technological changes, tax risk and financing and debt service risk.
The forward-looking statements made in this news release relate only to events or information as of the date on which the statements are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Glacier Media Inc.
Mr. Orest Smysnuik
Chief Financial Officer