Glacier Reports 2010 Year-End Results
Vancouver, B.C., March 30, 2011 – Glacier Media Inc. (“Glacier” or the “Company”) reported cash flow, earnings and revenue for the period ending December 31, 2010.
Glacier’s results for the year ended 2010 reflect the resumption of growth in its operations:
• Consolidated revenue increased 5.9% to $242.6 million from $229.1 million for the year prior;
• Glacier’s consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) increased 28.3% to $39.1 million from $30.5 million for the year prior;
• Glacier’s consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) per share increased 29.3% to $0.42 per share from $0.33 per share for the prior year;
• EBITA increased 23.2% to $44.1 million from $35.8 million for the prior year. The Company’s EBITA margin increased to 18.2% for 2010 from 15.6% the year prior; and
• Net income increased 47.6% to $20.6 million from $13.9 million for the prior year.
2010 Annual and Fourth Quarter Operating Performance
The 5.9% growth in revenue for 2010 came from organic growth, several small acquisitions and the purchase of the joint venture partners’ interests of one of the Company’s operations.
Same-store revenue growth increased during the course of the year. In the fourth quarter of 2010, same-store revenue growth was 2.4%. This was accomplished despite $1.3 million of non-recurring revenue generated in the fourth quarter of 2009 from the Olympics. Adjusted for the non-recurring revenue, same-store revenue growth was 4.6% in the fourth quarter of 2010 compared to the year prior.
EBITA in the fourth quarter was $11.7 million, or $0.6 million higher than 2009, despite $0.6 million of non-recurring EBITA being earned in the fourth quarter of 2009 from the Olympics.
The recovery in revenue occurred across the majority of Glacier’s businesses in 2010. Growth came from both traditional print sources and digital media sources, and is directly attributable to Glacier’s operational, business segment and media platform strategies.
New revenues were generated in a wide variety of areas including online, mobile, tablet, electronic product and lead generation developments, special publishing initiatives, special features, supplements, new community magazines, production and promotion of community events, custom publishing, sponsored industry specific research studies, educational offerings, conferences and tradeshows, new directories, and a number of other initiatives. Glacier was selected as the exclusive publisher of the Olympic Official Vancouver 2010 Souvenir Program and Hockey Guide. Efforts continue to be made to leverage and monetize content across print, online, wireless and other channels and platforms.
As previously indicated, management pursued a cost reduction strategy prior to and during the recession that was focused on realizing significant reductions in operating costs and efficiencies while protecting the strength of Glacier’s human resources, content quality, sales force and market and competitive positions. Additional cost savings are being realized in 2011 as a result of production and printing related technology and equipment investments, amongst other things.
Placed in context, same-store 2010 revenue and EBITA returned to 93% and 85% of 2008 levels respectively. 2008 was a record year for Glacier during which organic revenue grew 8% over the year prior and total revenue grew 15%. In addition to the improvement in economic conditions, Glacier was able to realize the $44.1 million of EBITA earned in 2010 as a result of the strong sales efforts made, discipline exercised in minimizing discounting to maintain sales price levels, and the cost reductions realized during 2009 and 2010. The results were achieved while increased operating investment was made in digital media resources and other content and quality related areas, which investment also contributed to the increased revenues.
The revenue growth that was realized prior to the recession and that resumed in 2010 continues to underscore the value of Glacier’s community newspapers, which offer a unique selling proposition and competitive advantage through the local information that they provide, of which they are a primary source. This is very different to the challenges that exist for large metropolitan daily newspapers. The value of Glacier’s local community content can and is now being provided to Glacier’s readers in print and online, by tablet and smartphone platforms. Glacier is in the beginning stages of the development of this local market digital media strategy. This timing has been geared to be proactive while aligning operating cost investment with market needs. The timing also means that significant digital revenue opportunities still exist to be realized.
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 through advertising and other revenue sources for the long term. 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.
Glacier’s trade and business information operations also experienced strong revenue recovery in 2010. Agriculture, energy, mining, medical, manufacturing and many of Glacier’s other business and trade verticals generated significant rebounds in revenue growth and profitability. The growth primarily began in June and occurred throughout the last six months of the year, although the agricultural information group and several other verticals generated strong performance throughout the entire year. A wide array of digital media initiatives resulted in strong growth in online and electronic revenues. These initiatives continue to offer Glacier’s customers an increasingly richer value proposition through both the enhancement of information value that digital media provides, the enhancement of customer targeting and marketing effectiveness provided to advertisers, and the breadth of new product opportunities and related monetization available. Significant increases in print advertising were also realized. Performance during both the recession and 2010 also highlighted the strength of Glacier’s electronic business and trade information subscription and directory offerings.
Significant focus and related investment will continue to be made to enhance Glacier’s digital trade and business information verticals, through both organic development and the acquisition of new businesses. These acquisitions will be targeted to expand the markets that Glacier covers, expand the breadth of information products and marketing solutions provided, and to expand Glacier’s digital media staff, technology and other relevant resources.
Glacier’s consolidated debt net of cash outstanding before deferred financing charges and other expenses was 2.1x EBITA as at year end. Subsequent to year end, the Company amended its revolving loan facility on substantially the same terms and conditions. The amended facility includes greater potential borrowing capacity and matures on March 30, 2015.
The Company used its cash flow from operations to repay $14.0 million of revolving debt and repurchase $5.0 million of preferred shares and $4.9 million of its common shares during the year. Glacier’s consolidated debt net of cash outstanding before deferred financing charges and other expenses was $94.7 million as at December 31, 2010 compared to $99.9 million as at December 31, 2009.
Glacier invested $8.2 million of capital expenditures during 2010, $4.5 million of which were investment capital expenditures made primarily to complete the consolidation and expansion of several printing facilities and upgrade production technology. These investments have resulted in attractive direct revenue and cash flow improvements and payback consistent with Glacier’s targeted return on investment, as well as improved quality and colour capacity.
Glacier also invested $6.9 million of cash inclusive of bank indebtedness in acquisitions during the year, including the purchase of the joint venture partners’ interests of one of the Company’s operations. This level of investment was intentionally modest due to the preference to maintain a strong financial position while economic risk was being monitored.
The Company recorded a $4.0 million impairment of goodwill and intangible assets as at December 31, 2010. The write-down primarily related to Glacier’s continuing medical information business.
Outlook and Opportunities for Value Creation
Management expects that growth will continue in 2011 in Glacier’s various business segments. While risks remain in some areas of the economy that affect Glacier’s operations and not all markets have recovered from the recession to the same extent as others, advertiser confidence and spending have shown marked improvement across the majority of Glacier’s business verticals and are resulting in overall revenue growth. Customer demand for Glacier’s electronic information products remained strong during the recession and increased in many areas in 2010.
The combination of revenue growth and a lower cost base resulted in significantly increased profitability during 2010 and both revenue and profitability are expected to continue to grow organically in 2011. The growth in profitability resulted in a 13.3% return on average adjusted equity earned for the year ending December 31, 2010, calculated as cash flow from operations (before changes in non-cash operating accounts and non-recurring items) divided by consolidated average shareholders’ equity for 2010 and 2009 adjusted to exclude $25.8 million of minority equity investments, for which no amount is included in cash flow from operations.
Given that cash flow is growing and debt is at 2.1x EBITA, Glacier is reviewing acquisition opportunities that fit with the Company’s business strategy. Given the current juncture of the business cycle, many attractive opportunities are expected to arise.
Management will continue to seek a balance of maintaining debt at manageable levels, continuing to strengthen operations, and delivering growth through acquisition.
Shares in Glacier can be traded on the Toronto Stock Exchange under the symbol GVC.
For further information please contact Mr. Orest Smysnuik, Chief Financial Officer, at 604-708-3264.
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 Canadian generally accepted accounting principles (GAAP), Glacier uses certain non-GAAP measures that may be different from the performance measures used by other companies. These non-GAAP measures include cash flow from operations (before changes in non-cash operating accounts and non-recurring items), net income before non-recurring items and earnings before interest, taxes and amortization (EBITA), which are not alternatives to GAAP financial measures. Management focuses on operating cash flow per share as the primary measure of operating profitability, free cash flow and value. EBITA per share is also an important measure as the Company has low ongoing capital expenditures and amortization largely relates to acquisition goodwill and copyrights and does not represent a corresponding sustaining capital expense. These non-GAAP measures do not have any standardized meanings prescribed by GAAP 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 heading “Outlook and Opportunities for Value Creation” and statements relating to the Company’s expectations regarding revenues, expenses, cash flows and future profitability, including our expectations that growth will continue in Glacier’s business segments, our expectations as to organic revenue and profitability growth, that profitability will continue to improve as the economy recovers, and that cost savings will be realized. 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, 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.