Glacier’s results for the year reflected the continued progress being made in the key business information growth initiatives as well as the evolution of the community media business.
It is important to note that digital and data products and services command higher business valuations than print products, so the Company can grow overall profit and value with lower consolidated revenues. The overall level of revenue growth in the relevant operations for the year is all the more significant in this light.
Glacier’s adjusted(1) consolidated revenue was $222.6 million for the year, down 1.4%. Adjusted consolidated EBITDA was $22.1 million for the year, down 23.6% from the prior year. The overall financial results for the year were impacted by an accounting change in one of its operations, two transactions and significant operating investment.
Revenue and EBITDA at Specialty Technical Publishers (“STP”) were both reduced by $0.9 million due to a change in accounting reflecting the transition in operations to a solely digital subscription-based business. The change coincides with operational changes being made at STP, including the phasing out of the paper versions of the product, and results in revenue being deferred over the term of the subscription contracts. The change will also impact the monthly revenues recognized going forward into the first six months of 2019.
In addition, the adjusted consolidated results were impacted by two transactions that affected the comparability of the results: 1) the sale of the Comprehensive Oilfield Service and Supply Database (“COSSD”) which was last published by the Company in June 2017 and 2) the purchase of the remaining interest in Infomine, resulting in Infomine’s results being consolidated into the Company’s results as of April 2018. Together, these two transactions resulted in a net revenue increase of $2.0 million and a net EBITDA decrease of $0.9 million as compared to the prior year.
Excluding these one-time items, Glacier’s adjusted consolidated revenue was $221.5 million for the year, down 1.9% and adjusted consolidated EBITDA was $23.9 million for the year, down $5.1 million or 17.5% from the prior year.
The decline in adjusted EBITDA was primarily due to increased operating investments made in some of the key strategic initiatives, including the REW real estate portal, agriculture show expansion, new weather and agricultural markets subscription-based products, mining data and intelligence information products and new digital community media products.
In total, the Company’s adjusted EBITDA was reduced $5.1 million as a result of the $0.92 million STP accounting change and $4.2 million of operating expense investment in the specific areas indicated. This does not include other additional ongoing operating expenses that are being incurred to deliver on the Company’s growth strategies. Additional capital expenditure investment was also made in the same areas.
These investments are being made to take advantage of opportunities that exist in the Company’s markets that require timely action to be taken. The growth in revenues being achieved, and the demand for the Company’s products this reflects, underscores the fact that the investments are working and value is being created.
The transformation of the business is progressing. Approximately two thirds of the Company’s business information revenue now comes from data, digital products and events and only one third comes from print advertising revenue. Of the data, digital products and event revenue approximately 85% comes from data and digital product revenue and 15% comes from events. This mix compares to approximately one third data, digital products and events revenue and two thirds print advertising revenue five years ago within the business information operations.
Highlights and Operational Overview
The environmental, property and financial segment grew 4.0% in adjusted revenue. Adjusted EBITDA for the segment was down 30.2% as a result of 1) the change in accounting for STP and 2) the operating investments made in key growth areas, particularly REW.ca and ERIS. Excluding the adjustment at STP, adjusted revenue was up 7.0% and adjusted EBITDA was down 18.9% for the environmental, property and financial segment.
The commodities segment’s total adjusted revenue grew 2.0% for the year. Adjusted EBITDA for the year fell by 4.7% due to the continued softness of the energy and mining markets and the ongoing operational investments. Excluding the purchase of Infomine and the sale of the COSSD, Commodity Information adjusted revenue decreased by 1.5% and adjusted EBITDA increased 3.9%.
Community media print advertising revenues continued to decline as anticipated, while digital revenues grew substantially. The 4.0% overall adjusted revenue decline for the community media business was lower than previous years (total community media adjusted revenue declined 13.5% in 2016 and 6.6% in 2017) as a result of strong digital performance. Digital revenue grew 46.3% for the year.
The Company is at an attractive juncture where it has meaningful growth opportunities in each of its sectors with which to increase value, and is achieving market traction in each one.
The agriculture, energy, mining, commercial and residential real estate and financial markets are large addressable markets that offer significant opportunities for both data, analytics & intelligence offerings as well as content & marketing solutions (the evolution of the media business). One meaningful change for the Company’s prospects is that the digital community media business is evolving in a manner that now offers significant growth and value creation opportunity. The Company’s digital community media operations are growing steadily in audience size, revenue and profitability.
Importantly, it now appears that a viable digital community media business model exists where we may be able to preserve the value of the existing print community media business with lower revenue but a more valuable digital business.
As outlined, the Company plans to continue to invest in its key strategic areas. The investments are critical to the Company’s growth plan and are resulting in demonstrable value creation. Given the uncertain North American and global economic conditions that exist and the stage of transformation some of the Company’s businesses are in, the Company will operate cautiously, but believes continued investment is necessary for long-term value creation. Cost efficiency opportunities continue to be pursued where possible to help manage profitability while investment is being made.
Management intends to build on the progress of the last few years in strengthening the Company’s financial position by further reducing debt. A strengthened balance sheet will mitigate risk while allowing the ongoing and planned operational and capital investments.
(1) Adjusted revenue and EBITDA reflects the inclusion of the Company’s proportionate share of revenues, expenses and profits from its joint ventures. For a reconciliation of adjusted results to results in accordance with International Financial Reporting Standards (“IFRS”), refer to the “Reconciliation of IFRS to Adjusted Results” as presented in the Company’s management discussion analysis.