Glacier Media Inc. ("Glacier" or the "Company") (TSX:GVC) reported cash flow,
earnings and revenue for the year ending December 31, 2011.
Summary Results
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(thousands of dollars IFRS IFRS CGAAP (3)
except share and per share amounts) 2011 2010 2009
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Revenue $267,394 $242,605 $229,128
Gross profit $99,376 $89,344 $82,179
Gross margin 37.2% 36.8% 35.9%
EBITDA (1) $49,140 $43,969 $35,792
EBITDA margin (1) 18.4% 18.1% 15.6%
EBITDA per share (1) $0.55 $0.48 $0.38
Interest expense, net $4,616 $6,223 $6,450
Net income attributable to common
shareholders before non-recurring
items (1)(2) $22,615 $18,993 $22,163
Net income attributable to common
shareholders before non-recurring
items per share (1)(2) $0.25 $0.21 $0.24
Net income attributable to common
shareholders $25,731 $13,584 $13,926
Net income attributable to common
shareholders per share $0.29 $0.15 $0.15
Cash flow from operations (1)(2) $44,874 $39,074 $30,456
Cash flow from operations per
share (1)(2) $0.50 $0.42 $0.33
Capital expenditures $15,486 $8,400 $9,345
Total assets $593,967 $500,086 $503,747
Debt net of cash outstanding before
deferred financing charges and
other expenses $131,413 $94,732 $99,939
Equity attributable to common
shareholders $340,416 $328,575 $311,043
Weighted average shares
outstanding, net 89,991,561 92,023,970 92,721,210
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Notes:
(1) Refer to "Non-IFRS Measures" section for calculation of non-IFRS
measures used in this table.
(2) 2011 excludes $1.6 million of restructuring expense, $0.3 million of
stock based compensation, $9.2 million in impairment expense, $1.1 in
transaction costs and a $15.1 one-time gain within an associate entity.
(3) The balances for 2009 are presented under Canadian generally accepted
accounting principals prior to the adoption of IFRS.
Highlights
-- Consolidated revenue increased 10.2% to $267.4 million from $242.6
million for the year prior;
-- Glacier's consolidated cash flow from operations (before changes in non-
cash operating accounts and non-recurring items) increased 14.8% to
$44.9 million from $39.1 million for the year prior;
-- Glacier's consolidated cash flow from operations (before changes in non-
cash operating accounts and non-recurring items) per share increased
17.4% to $0.50 per share from $0.42 per share for the prior year;
-- EBITDA increased 11.8% to $49.1 million from $44.0 million for the prior
year;
-- Net income attributable to common shareholders before non-recurring
items increased to $22.6 million from $19.0 million for the prior year.
Net income attributable to common shareholders (before non-recurring
items) per share increased to $0.25 per share from $0.21 in the prior
year;
-- Completed acquisition of Postmedia Networks Inc.'s ("Postmedia")
community newspaper assets in British Columbia, the Times Colonist and
related digital media assets and real estate for $86.5 million;
-- Completed acquisition of 50% interest in InfoMine Inc., a leading
digital information provider to the global mining industry;
-- Acquired portfolio of trade information and digital assets from Rogers
Communications Inc.;
-- Acquired a number of trade shows including Canada's Outdoor Farm Show
(Canada's largest outdoor agricultural show), an event management
company and several other community newspapers;
-- Re-purchased 1,275,000 of Glacier common shares for $3.0 million through
the Company's Normal Course Issuer Bid ("NCIB"); and
-- Declared two dividends of $0.03 per Glacier common share each during the
year. These declarations reflected the initial dividends of a new policy
whereby the board of directors expects to declare an annual dividend of
$0.06 per common share, payable semi-annually.
Strong Revenue Growth
Revenue grew 10.2% during the year ended December 31, 2011 compared to the same
period last year as a result of both organic growth and acquisitions.
Growth continued to occur across the spectrum of Glacier's operations. The
growth is directly attributable to Glacier's operational, business segment and
complementary media platform strategies.
New revenues were generated in a 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. The agricultural, energy,
mining, environmental, financial, automotive, trucking, manufacturing and dental
sectors in particular were strong, generating growth in both print and digital
revenue.
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 market conditions in the various sectors in
which Glacier has operations, as well as effective operational sales efforts and
creativity.
Digital revenues now represent approximately 25% of Glacier's trade information
and business and professional information revenue. Significant focus and related
investment will continue to be made to enhance Glacier's digital trade and
business and professional information verticals.
Glacier's local community newspapers revenue continued to grow during the year.
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 in revenue was realized in both print and digital revenues, and
underscores 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. The value of
Glacier's local community content is now being provided to Glacier's readers in
print and online, by tablet and smartphone platforms. Glacier is in the early
stages of the development of this digital community 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 leverage and 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.
Same-store consolidated revenue growth for Glacier was 3.1% for 2011. Growth
slowed in the fourth quarter of 2011 in some of Glacier's local newspaper
markets due primarily to softer national advertising. Growth has been varied in
the first few months of 2012 for some of Glacier's community media operations,
but has been stronger in the trade and business and professional information
operations. It appears that the global economic uncertainty has resulted in
cautiousness amongst some national and other advertisers, although local
advertising has generally held up well.
Strong Growth in Profitability
EBITDA grew 11.8% to $49.1 million for the year ended December 31, 2011.
Glacier's EBITDA margin improved to 18.4% from 18.1%.
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.
The EBITDA growth was a result of the profitability related to the organic
revenue growth, the cost reduction measures undertaken, as well as the
acquisitions completed during the year including the Rogers assets acquired on
May 27, 2011, the Postmedia and Canada's Outdoor Farm Show acquisitions
completed on November 30, 2011, and several other small community newspaper and
events acquisitions.
The EBITDA results were achieved while increased operating investment was made
in digital media, senior 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 these investments 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 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. Studies of time
spent across media platforms and reader satisfaction support the premise of the
complementary platform 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 that the pursuit of a complementary
platform strategy will be prudent for the foreseeable future, and will maximize
revenue and profit generation.
Financial Position
Glacier's consolidated debt net of cash outstanding before deferred financing
charges and other expenses was 2.7x trailing 12 months EBITDA as at December 31,
2011. Glacier's consolidated debt net of cash outstanding before deferred
financing charges and other expenses was $131.4 million as at December 31, 2011.
The increase in debt was primarily a result of the Postmedia acquisition
completed on November 30, 2011, while only one month of revenue and profit are
included in the 2011 year-end financial results from the Postmedia operations
acquired. This had the result of increasing Glacier's consolidated debt to
EBITDA ratio more than it is expected to be on a going forward pro forma basis.
Glacier invested $15.5 million of capital expenditures during the year. General
sustaining capital expenditures were $4.8 million for the year while investment
capital expenditures for the year were $10.7 million. These investment capital
expenditures are expected to result in attractive direct revenue and cash flow
improvements and payback consistent with Glacier's targeted return on investment
and include $3.7 million for the construction of a new press facility at our
joint venture partner Great West Newspaper Limited Partnership ("GWNLP"), $2.8
million of other press upgrades, $2.1 million for leasehold improvements
relating to new office facilities at our Business Information Group ("BIG") that
resulted in lower rent expenses, $1.1 million in software costs for the launch
of the new REW.ca real estate listing website, and $1.0 million for new software
at the Business Information Group that will facilitate more effective digital
product development and related revenue streams.
Outlook and Opportunities for Value Creation
Management will focus in the short-term on a balance of paying down debt,
integrating the operations acquired, continuing to develop existing operations,
targeting select acquisition opportunities and returning value to shareholders.
While the operations acquired are being financed with bank borrowings, Glacier
will be in a stronger position as a result of the acquisitions with manageable
debt levels and increased cash flow. As indicated, the assets acquired include
significant real estate properties, which can be sold to expedite pay down of
debt, which will also be achieved with cash flow from operations.
In addition to operational needs and acquisitions, the Company intends to return
a portion of its cash flow to shareholders through dividends. Glacier's board of
directors declared the payment of two cash dividends of $0.03 per common share
each during the year. These declarations reflected the initial dividends of a
new policy whereby the board of directors expects to declare an annual dividend
of $0.06 per common share, payable semi-annually.
Given the increased cash flow resulting from operational growth, the
acquisitions completed and the strong level of cash flow overall, an increasing
portion of the Company's cash flow can be returned to shareholders in the future
through increased dividends. The Company also intends to repurchase shares as
deemed attractive and prudent.
The Company re-purchased 1,275,000 of its common shares for $3.0 million through
its Normal Course Issuer Bid ("NCIB") during the year. The company renewed its
NCIB for a twelve month period ending on September 27, 2012, which allows the
company to repurchase up to 2.5 million shares.
As indicated, significant focus and related investment will continue to be made
to enhance Glacier's digital trade and business and 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.
In this regard, management will continue to seek a balance of maintaining debt
at manageable levels and delivering growth through both operations and
acquisitions.
Shares in Glacier can be 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 before non-recurring items and earnings before interest, taxes and
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 amortization relates to intangible assets 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 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, 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.
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