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Glacier Reports First Quarter Results(May 14, 2012)
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/14/12 -- Glacier Media Inc. (TSX:GVC) ("Glacier" or the "Company") reported cash flow, earnings and revenue for the three months ended March 31, 2012.
Summary Results ---------------------------------------------------------------------------- (thousands of dollars Three months Three months except share and per share amounts) ended ended 31-Mar-12 31-Mar-11 ---------------------------------------------------------------------------- Revenue $76,421 $61,027 Gross profit $24,755 $22,140 Gross margin (3) 32.4% 36.3% EBITDA (1) $10,878 $10,732 EBITDA margin (1) 14.2% 17.6% EBITDA per share (1) $0.12 $0.12 Interest expense, net $1,577 $1,308 Net income attributable to common shareholders before non-recurring items (1)(2) $3,468 $3,840 Net income attributable to common shareholders before non-recurring items per share (1)(2) $0.04 $0.04 Net income attributable to common shareholders $2,914 $2,740 Net income attributable to common shareholders per share $0.03 $0.03 Cash flow from operations (1)(2) $9,431 $9,885 Cash flow from operations per share (1)(2) $0.11 $0.11 Capital expenditures $2,974 $1,532 Total assets $588,667 $504,189 Debt net of cash outstanding before deferred financing charges and other expenses $127,182 $87,360 Equity attributable to common shareholders $343,613 $330,249 Weighted average shares outstanding, net 89,358,410 90,633,410 ---------------------------------------------------------------------------- Notes: (1) Refer to "Non-IFRS Measures" section for calculation of non-IFRS measures used in this table. (2) 2012 excludes $0.3 million of restructuring expense, $0.1 million of transaction costs and $0.2 million loss on disposal of property, plant and equipment. (3) Gross profit for these purposes excludes depreciation and amortiztion. (4) For non-recurring items in the prior period, refer to the prior year financial statements. Highlights -- Consolidated revenue increased 25.2% to $76.4 million for the three months ended March 31, 2012 from $61.0 million for the same period in the year prior; -- Same-store EBITDA for the first quarter of 2012 increased 5.4% as compared to the same period in the prior year; -- 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, 2012 decreased 4.6% to $9.4 million from the same period in the year prior; and -- Glacier's consolidated cash flow from operations (before changes in non- cash operating accounts and excluding restructuring expenses) per share for the three months ended March 31, 2012 was flat compared to the same period last year at $0.11 per share.
Review of Operations
Consolidated revenue grew 25.2% during the first quarter of 2012 compared to the same period last year as a result of both organic growth and several acquisitions made in 2011, primarily the November 2011 acquisition of the Postmedia British Columbia community media assets. Consolidated EBITDA grew 1.4% during the quarter compared to last year.
Glacier's consolidated revenue grew 1.7% and consolidated EBITDA grew 5.4% on a same-store basis for the quarter compared to last year.
The growth in same-store revenue was generated across 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.
Glacier's trade information and business and professional information operations generated strong growth during the quarter. These operations provide essential information for business and industry people who need this content and advertising based information to make prudent decisions. In particular, Glacier's agriculture, energy, mining, environmental, financial and medical operations experienced strong growth. A number of successful new business initiatives as well as core print and digital sales in the trade and business information operations have driven revenue gains in these operations. These initiatives are being geared to offer Glacier's customers an increasingly richer value proposition through both enhanced information content and richer and more robust product solutions that digital platforms and technology can provide, as well as enhanced customer targeting and marketing effectiveness for advertisers, amongst other things.
Digital revenues now represent more than 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 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.
As stated, Glacier's community media revenue increased significantly due to the acquisition of the Postmedia assets in November 2011. Revenue was softer in the first quarter of 2012 in the Victoria and Lower Mainland urban markets of the assets acquired, although advertising sales did recover in March in the local community markets of the Lower Mainland and Vancouver Island.
Glacier's existing Western Canadian community media operations continued to generate steady organic revenue growth during the quarter. The growth varied from market to market, with the Prairie operations achieving record revenue and EBITDA levels in particular. The growth was realized in both print and digital revenues. The performance continues to underscore the value of Glacier's small market community media operations, which 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 marketing channel they offer to advertisers. The value of Glacier's local community content is being provided to Glacier's readers in print and online, by tablet and smartphone platforms. 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 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.
As stated, consolidated EBITDA grew 1.4% to $10.9 million for the quarter compared to $10.7 million for the first quarter of 2011. EBITDA growth was reduced by the inclusion of the Postmedia assets in the consolidated results, as they incurred a loss in the first quarter of 2012. These assets have historically lost money in the first quarter, which is their weakest advertising period of the year. Glacier's consolidated EBITDA margin decreased to 14.2% for the quarter from 17.6% for the same quarter last year as a result of the lower margins of the Postmedia assets acquired. Management will seek to improve the margins and profit performance of the assets acquired 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.
The 5.4% growth in same-store consolidated EBITDA of Glacier's existing operations was a result of the profitability related to the organic revenue growth, the cost reduction measures, as well as the successful integration of the assets acquired from Rogers Communications at the end of May 2011.
The EBITDA results were achieved while increased operating investment was 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 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.
Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses was 2.58x trailing 12 months EBITDA as at March 31, 2012. The Company used its cash flow from operations to repay $5.8 million of debt during the quarter. Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses was $127.2 million as at March 31, 2012.
Glacier invested $3.0 million of capital expenditures during the quarter primarily on facility construction and expansion to accommodate new press equipment, additional production equipment, information technology infrastructure and software.
These investments have resulted in attractive direct revenue and cash flow improvements and payback consistent with Glacier's targeted return on investment.
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 to the same extent as others. As mentioned, some advertising softness has been experienced in the first quarter, primarily in the urban media markets where revenue was affected by national advertiser cautiousness. Local advertising confidence and spending has been strong in Saskatchewan and Manitoba, and a variety of B.C. and Alberta markets. The business and trade information operations have shown strong growth and continue to offer many attractive opportunities. Customer demand for Glacier's electronic information and other digital products continues to be strong.
The combination of revenue growth and cost efficiencies are expected to result in continued growth in profitability and cash flow in 2012.
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.
Glacier instituted its first dividend payments last year under its 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 and the acquisitions indicated 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.
As indicated, significant focus and related investment will continue to be made to enhance Glacier's digital 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.
In this regard, 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 and potential real estate divestitures 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.
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 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.
Glacier Media Inc.
Mr. Orest Smysnuik
Chief Financial Officer
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