Glacier Media Inc. (TSX:GVC) ("Glacier" or the "Company") reported
cash flow, earnings and revenue for the year ended December 31,
2012.
Summary Results
thousands of dollars
except share and per share amounts 2012 2011 2010
----------------------------------------------------------------------------
Revenue $ 330,016 $ 267,394 $ 242,605
EBITDA (1) $ 50,393 $ 49,140 $ 43,969
EBITDA margin (1) 15.3% 18.4% 18.1%
EBITDA per share (1) $ 0.56 $ 0.55 $ 0.48
Net income attributable to common
shareholders (5) $ 10,630 $ 25,731 $ 13,584
Net income attributable to common
shareholders per share (5) $ 0.12 $ 0.29 $ 0.15
Cash flow from operations (1)(2)(3) $ 44,261 $ 44,874 $ 39,074
Cash flow from operations per share
(1)(2)(3) $ 0.50 $ 0.50 $ 0.42
Debt net of cash outstanding before
deferred financing charges and other
expenses $ 127,107 $ 131,413 $ 94,732
Dividends paid (4) $ 5,362 $ 2,681 -
Dividends paid per share (4) $ 0.06 $ 0.03 -
Weighted average shares outstanding,
net 89,357,465 89,991,561 92,023,970
----------------------------------------------------------------------------
Notes:
1. Refer to "Non-IFRS Measures" section of the financial statements.
2. 2012 excludes $1.4 million of restructuring expense, $2.1 million of
transaction and transition costs, $3.1 million of other income, $1.1
million gain on acquisition, $8.5 million impairment and $0.2 million
loss on disposal of assets.
3. For non-recurring items excluded in the prior period, refer to
previously reported financial statements.
4. Glacier commenced paying semi-annual dividends in 2011. The year ended
December 31, 2011 represents only one dividend payment.
5. 2011 includes a $15.1 million one-time gain within an associate entity.
Highlights
-- Consolidated revenue increased 23.4% to $330.0 million for the year
ended December 31, 2012 from $267.4 million for year prior;
-- EBITDA increased 2.5% to $50.4 million from $49.1 million for the prior
year;
-- Glacier's consolidated cash flow from operations (before changes in non-
cash operating accounts) for the year ended December 31, 2012 was $44.3
million compared to $44.9 million for the year prior;
-- Glacier's net income attributable to common shareholders was $10.6
million compared to $25.7 million for the prior year which included a
one-time gain in earnings from associates of $15.1 million;
-- The Company repaid $15.7 million of senior debt during the year;
-- Subsequent to year-end the Company increased its annual dividend 33% to
$0.08 per share, payable quarterly.
Review of Operations
Consolidated revenue grew 23.4% during the year ended 2012
compared to last year as a result of organic growth in a variety of
operations, the November 2011 acquisition of the Postmedia British
Columbia community media assets, and the acquisition of control of
one of Glacier's community media partnerships in April 2012.
Consolidated EBITDA increased $1.3 million or 2.5% for the
year.
On a same-store basis, business information revenues showed
strong growth in key sectors, underpinned by a variety of
initiatives - including new digital tools - that further
strengthened the market positions held by key brands in those
sectors. This growth translated into strong profitability and
continues to ensure solid brand equity.
Meanwhile, community media same-store revenues and EBITDA were
affected by weaker economic conditions which included softness in
national advertising. Increased digital competition has also
affected revenues, more so in the urban markets. Consolidated
EBITDA was also impacted by operating investments made to
strengthen some of the community media properties acquired from
Postmedia as well as investments made in a new digital real estate
information business.
Overall, revenues, profitability and cash flows remained
strong.
Sales Performance
Business Information
Glacier's business information operations (which include
business & professional and trade information) continued to
deliver strong growth, with revenue increases generated across a
wide variety of verticals that are key lynchpins of the Canadian
economy. They achieved growth in sectors such as energy,
agriculture, mining and environmental risk and compliance services.
As well, the medical and financial services sectors experienced
positive growth. Central to the growth were product and service
innovation initiatives underpinned by strong brand equity. These
initiatives included new digital enhancements, integrated marketing
solutions for key customers, as well as broadened international
exposure to global markets for major advertisers.
Given that the overall Canadian economy is still challenged,
some business revenues have been adversely affected, although a
number of growth initiatives are being pursued and are expected to
produce strong sales results.
In addition to core business 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.
Key efforts are under way to distinguish different types of
digital content, advertising and subscriptions based on research
designed to highlight individual 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.
Overall, the business information operations in key sectors
offer attractive opportunities for growth with high levels of
profitability. Management is currently assessing each sector to
determine its appropriateness for future investment.
Community Media
Glacier's community media operations experienced weaker revenue
performance in a number of markets, primarily the result of softer
national advertising. The Prairie operations continued to generate
strong revenue and profitability. 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 national
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 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. The operations had been weakened by significant cost
cutting - including sales capacity - incurred over many years under
previous ownership due to high debt levels. 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 transition and ongoing integration activities for the
acquired properties characterized the first half of 2012, several
key initiatives characterized the second half of the year in that
group and existing operations. These investment initiatives are
designed to enhance digital utility for readers and advertisers, as
well as to continue to strengthen market-based links to respective
communities.
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 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. Glacier's view aligns closely with that of Warren Buffet,
whose Berkshire Hathaway now owns nearly 270 community properties.
In his annual letter to shareholders released recently, Buffett
wrote at length about the investment value proposition of community
media.
"Newspapers continue to reign supreme, however, in the delivery
of local news. If you want to know what's going on in your town -
whether the news is about the mayor or taxes or high school
football - there is no substitute for a local newspaper that is
doing its job. A reader's eyes may glaze over after they take in a
couple of paragraphs about Canadian tariffs or political
developments in Pakistan; a story about the reader himself or his
neighbors will be read to the end. Wherever there is a pervasive
sense of community, a paper that serves the special informational
needs of that community will remain indispensable to a significant
portion of its residents. ...I believe that papers delivering
comprehensive and reliable information to tightly-bound communities
and having a sensible Internet strategy will remain viable for a
long time."
Operational Performance
As stated, consolidated EBITDA increased $1.3 million or 2.5% to
$50.4 million compared to $49.1 million in the prior year. While
revenues showed a significant increase on an overall dollar basis
due to acquisitions, the economic environment and related softness
resulted in a lower EBITDA margin from these newly acquired
operations and the community media operations in general. Despite
the softness in the community media operations, consolidated EBITDA
was ahead of last year due to the strength of the performance of
the business information operations.
Glacier's consolidated EBITDA margin decreased to 15.3% for the
year from 18.4% for last year as a result of softness in overall
community media revenues and the lower margins of the Postmedia
assets. Management will seek to improve these margins and profit
performance through improved print and digital sales effectiveness,
cost efficiency and other initiatives.
Cost reduction measures continue to be implemented consistent
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.
EBITDA was also impacted by increased operating infrastructure
investment made in digital media management, staff, information
technology and related resources, as well as other content and
quality related areas. The increase in
Glacier's consolidated revenue has both allowed this investment
to be made and has been in part a result of the digital investments
already made. These investments were made consistent with Glacier's
complementary media platform and product strategy and business
information strategies.
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 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 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.
Financial Position
Glacier's consolidated debt net of cash outstanding before
deferred financing charges and other expenses was 2.47x trailing 12
months EBITDA (normalized for the acquisition of control of one of
Glacier's community media partnerships) as at December 31, 2012.
The Company repaid $25.2 million of debt during the year and
incurred $17.0 million of additional borrowings consisting of $12.6
million from the acquisition of control of ANGLP and $4.4 million
of borrowing related to its 50% interest in Great West Newspapers
Limited Partnership ("GWNLP") for the construction of its new
printing facilities. Glacier's consolidated debt net of cash
outstanding before deferred financing charges was $127.1 million as
at December 31, 2012.
Glacier invested $16.9 million of capital expenditures during
the year primarily on press facility construction and expansion to
accommodate new press equipment, additional production equipment,
information technology infrastructure and software. $14.5 million
of these capital expenditures were investment capital expenditures,
the majority of which relate to the building and installation of a
new press facility that is expected to be completed in 2013. The
investment will result in lower operating costs, better quality,
and new long-term contract-based revenues (specifically, Glacier's
joint venture operation, GWNLP, which has secured a contract to
print the Edmonton Journal commencing in 2013). 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.
Outlook and Summary
While economic conditions have impacted some community media
operations and business information verticals, and digital
competition is stronger in the larger community media markets,
management expects that growth will continue in Glacier's business
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 paying
down debt, integrating the operations acquired, enhancing existing
operations, targeting select acquisition opportunities and
returning value to shareholders.
Given strong cash flows 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.
As indicated, significant focus and related investment will
continue to be made to enhance Glacier's business 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.
Financial Measures
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.
Forward Looking Statements
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 "Sales Performance", "Operational
Performance", "Financial Position" 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 profitability will continue to
improve as the economy recovers, that cost savings will be
realized, and that annual dividends are expected to be declared.
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 Department
of Canadian Heritage, 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.
Contacts: Glacier Media Inc. Mr. Orest Smysnuik Chief Financial
Officer 604-708-3264 www.glaciermedia.ca
Glacier Media (TSX:GVC)
Historical Stock Chart
From May 2024 to Jun 2024
Glacier Media (TSX:GVC)
Historical Stock Chart
From Jun 2023 to Jun 2024