Glacier Reports First Quarter Results
Vancouver, B.C., June 13, 2011 – Glacier Media Inc. (“Glacier” or the “Company”) reported cash flow, earnings and revenue for the three months ended March 31, 2011.
• Consolidated revenue increased 6.2% to $61.0 million for the three months ended March 31, 2011 from $57.5 million for the same period in the year prior;
• Glacier’s consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) for the three months ended March 31, 2011 increased 14.1% to $9.9 million from $8.7 million for the same period in the year prior;
• Glacier’s consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) per share increased 16.8% to $0.11 per share for the first quarter of 2011 from $0.09 per share for the same period in the prior year; and
• EBITDA for the first quarter of 2011 increased 6.5% to $10.7 million from $10.1 million for the first quarter of 2010.
Review of Operations
Revenue grew 6.2% during the first quarter of 2011 compared to the same period last year as a result of both organic growth and several acquisitions and investments. Same-store revenue grew 3.3% for the quarter compared to last year. This was accomplished despite $0.9 million of non-recurring revenue generated in the first quarter of 2010 from the sale of the Official Vancouver 2010 Olympic Souvenir Program and Hockey Guide. Adjusted for the non-recurring revenue, same-store revenue growth was 4.8% in the first quarter of 2011 compared to the year prior.
The growth in revenue occurred across the breadth of Glacier’s operations. Growth came from both print and digital media sources, and is directly attributable to Glacier’s operational, business segment and complementary 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. Efforts continue to be successful in leveraging and monetizing content across Glacier’s channels and platforms.
Revenue growth was strong in a wide variety of Glacier’s trade information and business and professional information operations. These operations provide essential information for business and industry people who need this content and advertising based information to make prudent decisions. The growth was driven by the general economic recovery, strength in the various sectors Glacier has operations in, as well as effective operational sales efforts and creativity. In particular, a number of successful new business initiatives as well as core digital sales in the trade and business information operations have driven digital revenue growth in these operations, with considerable success generated in agriculture, energy, mining, environmental and financial digital information and media operations, amongst others.
Digital revenues now represent approximately 25% of Glacier’s trade information and business & professional information revenue. Significant focus and related investment will continue to be made to enhance Glacier’s digital trade and business & professional 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 local community newspapers revenue continued to grow during the quarter. The growth resulted from the combination of the economic strength experienced in Western Canada, the nature of media in the small markets in which Glacier operates, and strong operational focus and effort. The growth was realized in both print and digital revenues. The revenue growth that was realized prior to the recession and that resumed in 2010 and 2011 continues to underscore the value of Glacier’s small market 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.
EBITDA grew 6.5% to $10.7 million for the first quarter of 2011. This was achieved despite a 20% increase in newsprint costs (newsprint expense was $0.4 million higher for the quarter vs. last year). Glacier’s EBITDA margin increased slightly to 17.6% despite the increase in newsprint costs. Significant cost reductions were made to reduce operating costs during the recession and in 2010. A printing outsourcing initiative was completed during the first quarter of 2011. These initiatives are 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.
The EBITDA results were achieved while increased operating investment was made in digital media resources and 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. Investments are being made both in people as well as software and technology.
These investments were made consistent with Glacier’s complementary media platform strategy. This strategy is geared to address 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 is based upon the premise that customer utility and value should drive the structuring of platform utilization. Online, mobile, tablet and other information delivery devices will be fully utilized, while print content and design quality will also be fully maintained. While the digital platforms offer many attractive new opportunities, the print platform continues 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. Management believes that the pursuit of a complementary platform strategy will be prudent for the foreseeable future, and will maximize revenue and profit generation.
Glacier’s consolidated debt net of cash outstanding before deferred financing charges and other expenses was 1.95x trailing 12 months EBITDA as at March 31, 2011. The Company used its cash flow from operations to repay $5.3 million of debt during the quarter. Glacier’s consolidated debt net of cash outstanding before deferred financing charges and other expenses was $87.4 million as at March 31, 2011.
During the quarter the Company amended its senior revolving loan facility on substantially the same terms and conditions. The amended facility includes greater potential borrowing capacity, greater flexibility at lower costs, no required principal repayments during its term and matures on March 30, 2015.
Glacier invested $1.5 million of capital expenditures during the quarter, $0.8 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.
Subsequent to quarter end, the Company completed a number of acquisitions for a total cost of $11.1 million. The acquisitions included the purchase of a portfolio of assets from Rogers Communications Inc.’s business and professional group. The assets are comprised of a variety of trade publications and digital brands, together with their associated readership database, events and digital products. Properties acquired include established and leading publications such as Le Bulletin des agriculteurs, Food in Canada, Canadian Packaging, HPAC and Meetings & Incentive Travel (including Incentiveworks, Canada’s largest trade show for the meetings, incentive travel and promotions industry). The assets will be integrated into Glacier’s Business Media Group, a leading operator of Canadian trade publications and industry-focused web sites, and Glacier’s Farm Business Communications.
Outlook and Opportunities for Value Creation
Management expects that growth will continue in Glacier’s various business segments. Economic conditions continue to strengthen across the majority of Glacier’s verticals, although not all markets have recovered from the recession to the same extent as others. Advertiser confidence and spending have shown marked improvement and are resulting in overall revenue growth. Customer demand for Glacier’s electronic information and other digital products continues to be strong.
The combination of revenue growth and a lower cost base is expected to result in continued growth in organic profitability in 2011.
With cash flow growing and debt at 1.95x EBITDA, 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.
Subsequent to year-end, Glacier’s board of directors declared the payment of a cash dividend of $0.03 per common share payable to shareholders of record as of July 15, 2011. This declaration reflects the initial dividend of a new policy whereby the board of directors expects to declare an annual dividend of $0.06 per common share, payable semi-annually. The dividend is consistent with Glacier’s ongoing objective of maximizing shareholder value and related return on investment for shareholders. Glacier has reached a stage where it is generating sufficient cash flow from operations and has available financial capacity to pursue and internally finance acquisition opportunities, invest in operations as required, repurchase its shares as deemed attractive, and introduce the payment of a dividend.
In this regard, management will continue to seek a balance of maintaining debt at manageable levels and delivering growth through operations and acquisitions.
Shares in Glacier are 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 condensed interim 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 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.