Glacier Media Inc. (TSX:GVC) ("Glacier") reported revenue, cash flow and
earnings for the period ending September 30, 2008.
Highlights
- Revenue for the third quarter grew 21.0% and cash flow from operations grew
12.4% compared to the same period last year. Cash flow from operations per share
for the quarter grew 13.2% compared to the same period last year.
- Glacier's strategic diversification in Western Canadian local newspapers and
trade, business and professional information combined with the primacy and
essential nature of product content, strong product quality, dominant market
positions and focus on operational improvement has resulted in continued revenue
and profit growth despite challenging economic conditions.
- For the nine months ended September 30, 2008, cash flow from operations per
share increased 29.9% from the same period last year, EBITA per share increased
18.9% and net income per share increased 34.0%.
- Glacier acquired several community newspapers in Western Canada during the
quarter. In total, Glacier has completed acquisitions and investments totalling
$43.5 million in aggregate purchase price for the nine months ending September
30, 2008.
- Glacier has a strong, secure and flexible financial position with 2.2x debt to
EBITA as at quarter end and the majority of its debt comprised of a revolving
facility with no scheduled mandatory principal repayments that does not renew
until December 31, 2010.
Operating Results
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$000's except 3 Months 3 Months 9 Months 9 Months
share and per September 30, September 30, September 30, September 30,
share amounts 2008 2007 2008 2007
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Revenue $ 59,932 $ 49,551 $ 187,647 $ 159,303
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EBITA $ 10,059 $ 9,516 $ 41,657 $ 34,962
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EBITA margin 16.8% 19.2% 22.2% 21.9%
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EBITA per share $ 0.108 $ 0.102 $ 0.447 $ 0.376
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Cash flow from
operations $ 7,986 $ 7,102 $ 35,612 $ 27,399
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Cash flow from
operations per
share $ 0.086 $ 0.076 $ 0.382 $ 0.294
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Interest expense,
net $ 2,460 $ 2,515 $ 7,038 $ 8,214
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Net income $ 3,968 $ 3,819 $ 24,998 $ 18,624
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Net income per share $ 0.043 $ 0.041 $ 0.268 $ 0.200
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Debt outstanding, net
of cash reserves and
before deferred
financing charges
and other $ 121,259 $ 109,426 $ 121,259 $ 109,426
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Shareholders' equity $ 294,801 $257,397 $ 294,801 $ 257,397
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Average shares
outstanding, net 93,150,994 93,197,032 93,181,111 93,077,450
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For the three months ending September 30, 2008, Glacier earned $8.0 million of
consolidated cash flow from operations on revenue of $59.9 million, as compared
to $7.1 million on revenue of $49.6 million for the three months ended September
30, 2007. Glacier's EBITA was $10.1 million and net income was $4.0 million for
the quarter, as compared to EBITA of $9.5 million and net income of $3.8 million
for the same period last year.
For the three months ended September 30, 2008, cash flow from operations per
share increased 13.2% to $0.086 from $0.076 for the same period last year, EBITA
per share increased 5.9% to $0.108 from $0.102 for the same period last year and
net income per share increased 4.9% to $0.043 from $0.041 for the same period
last year.
Consolidated cash flow from operations was $35.6 million for the nine months
ended September 30, 2008, as compared to $27.4 million for the same period last
year. Revenue for the period was $187.6 million compared to $159.3 million for
the same period last year, EBITA was $41.7 million compared to $35.0 million
last year, and net income was $25.0 million compared to $18.6 million last year.
For the nine months ended September 30, 2008, cash flow from operations per
share increased 29.9% to $0.382 from $0.294 for the same period last year, EBITA
per share increased 18.9% to $0.447 from $0.376 for the same period last year
and net income per share increased 34.0% to $0.268 from $0.200 for the same
period last year.
Review of Operations
Glacier continued to generate strong financial performance during the quarter
despite challenging economic conditions in Canada and the United States. For the
three months ending September 30, 2008, revenue increased 21.0% and EBITA
increased 5.7% compared to the same period last year.
On a normalized basis, EBITA from operations increased 12.4% for the quarter
compared to the same period last year after adjusting for $0.6 million of
quarter over quarter adjustment to pension accruals and foreign exchange
classification (the 12.4% adjusted EBITA from operations growth is consistent
with Glacier's 12.4% growth in cash flow from operations for the quarter).
The 21.0% increase in revenue and normalized 12.4% increase in EBITA were a
result of both growth from operations and acquisitions.
As previously disclosed, Glacier's first and third quarters are typically weaker
than its second and fourth quarters given the seasonality of some of its
businesses. In particular, the EBITA growth was proportionately less than would
be normal relative to the revenue growth because the JuneWarren energy
publications acquired in January 2008 have lower profitability in the third
quarter. The PrintWest Communications Ltd. ("PrintWest Communications")
operations acquired in May 2008 also have a lower EBITA margin than Glacier's
other publications. These acquisitions resulted in a reduction in Glacier's
EBITA margin for the third quarter compared to last year.
Glacier's operations performed well in terms of "same-store" revenue and EBITA
growth. Same-store EBITA contributed approximately two-thirds of the 12.4%
normalized EBITA growth for the quarter, which was a result of both strong
organic revenue growth as well as cost management. The acquisitions completed in
the third quarter of 2008 and subsequent to the third quarter of 2007 also
contributed to the growth.
Glacier's same-store revenue growth from existing operations reflects the
primacy and essential nature of the information offered by its local newspapers,
trade and business information publications and electronic product offerings,
their effectiveness for advertisers, the industry sectors Glacier targets,
product quality, strength of market positions, improved sales effectiveness, new
product offerings and regional advertising efforts that allow advertisers to
benefit from Glacier's larger group of publications and expertise. This growth
is being achieved despite softening in some areas of the economy such as the
commodities, energy, manufacturing and other sectors.
Management believes that the strength of Glacier's publication and information
offerings and mix of geographic market, information niche and product and
channel balance combined with low debt levels (see following) have positioned
Glacier to endure the challenging economic environment and perform well over
both the near and longer term.
Management is monitoring economic conditions and business events in the United
States and Canada closely to ensure that operational performance is maximized
and that acquisition opportunities are identified that can benefit Glacier.
Glacier has strong operating platforms with which to integrate these
acquisitions and realize immediate improvements in profitability through cost
efficiencies, and expected increases in sales. While these opportunities will be
pursued, management intends to maintain prudent debt levels given the greater
level of uncertainty in the economy.
Unlike some of the factors affecting publishers of large metropolitan daily
newspapers, Glacier's local daily and weekly community newspapers continue to be
the primary source of local information for readers, and continue to enjoy high
readership levels because of the demand for this information. The local
newspapers are also a primary marketing channel for local and regional
advertisers. Paid subscription revenue and national advertising represent a
small percentage of Glacier's overall revenue. Approximately 85% of Glacier's
newspaper distribution is free. Although also a small portion of Glacier's
overall revenue, classified sales in our local markets continue to perform well.
Glacier is also investing in a substantially expanded Internet presence for its
local newspaper markets, which offers attractive new revenue growth
opportunities.
Glacier's trade and business information operations are demonstrating their
resilience derived from the essential nature of their content. In difficult
economic times, their content is of significant value to business and industry
readers who need information with which to be well informed and make prudent
decisions in challenging market conditions.
Glacier's trade and business information operations benefit from a depth and
breadth of content. Glacier publishes over 200 titles in more than 20 business
and industry niches including medical, dental, environmental, occupational
health & safety, insurance, construction, communications, real estate,
manufacturing, transportation, agriculture, energy, mining, financial, legal,
compliance, and securities law, amongst others. The group has a strong mix of
channel and format balance, with particular focus being placed on electronic and
online information revenue growth.
Management continues to believe there are meaningful opportunities to realize
value from Glacier's expanded operations through increased cost efficiencies,
improved sales effectiveness and focus on publication quality, amongst other
things. While some of these improvements have been realized and contributed to
Glacier's strong operating results, many of the opportunities are still to be
achieved.
New Acquisitions
During the third quarter of 2008, Glacier acquired several Western Canadian
community newspapers for $2.5 million located in Alberta, Saskatchewan and
Manitoba. These acquisitions fit with Glacier's strategy of growing through the
local newspaper, trade and business and professional information sectors. During
the nine months ended September 30, 2008, Glacier has completed acquisitions and
investments totalling $43.5 million in aggregate purchase price.
Glacier's local newspaper group offers distribution of approximately 1.5 million
copies across B.C., Alberta, Saskatchewan and Manitoba. Glacier's trade
publication group consists of the largest agricultural publication group in
Western Canada, the Business In Vancouver Media Group, and the Business
Information Group - one of Canada's largest trade information operations.
Glacier's business & professional information group includes Specialty Technical
Publishers which publishes regulatory & compliance information, Eco Log which is
an electronic environmental information and report service, CD Pharma
Interactive Medical Productions which develops electronic interactive continuing
medical education programs for doctors, Fundata which provides investment fund
related electronic and print information and analytics to the Canadian and
global investment community and a wide variety of Canadian newspapers and media,
and a variety of directories, specialty websites and electronic information
published by the Business Information Group.
Improved Financial Position
During the quarter Glacier repaid $0.9 million of debt and funded $6.3 million
of acquisitions and sustaining capital investments with cash flow from
operations. Glacier's net consolidated debt (net of cash on hand) to EBITA ratio
was approximately 2.2x as at September 30, 2008, based on the trailing 12 months
EBITA for all of Glacier's operations, regardless of the date acquired. This
lower level of leverage has reduced Glacier's interest rate paid on borrowings
and overall interest expense.
As previously disclosed, in December 2007 Glacier converted its senior debt
facility into a revolving facility with the ability to re-borrow up to a certain
level with no scheduled mandatory principal repayments. Glacier has an operating
loan facility in addition to the revolving facility.
Subsequent to quarter end, Glacier repaid its $12.0 million of subordinated
bonds with cash on hand and an increase in the Company's revolving senior debt
facility. This is expected to reduce annual interest expense by approximately
$0.9 million.
Overall, Glacier has a strong, secure and flexible financial position with the
majority of its debt comprised of the revolving facility that does not renew
until December 31, 2010.
Glacier's profitability and moderate leverage levels are such that sufficient
free cash flow is being generated to internally fund additional accretive
acquisitions while maintaining prudent debt levels, and pursue other initiatives
where appropriate that will enhance shareholder value. While realizing
improvements from operations is a top priority, Glacier is continuing to pursue
acquisition opportunities in the information communications sectors.
Market conditions are such that attractive buying opportunities are expected to
arise, and Glacier is well positioned operationally and financially to benefit.
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 expanding across North America through both internal growth and the
strategic acquisition of information communications companies that provide
essential information and related services through print, electronic and online
media. Glacier is pursuing this strategy through two core business segments: 1)
the business and professional information markets and 2) the newspaper and trade
information markets.
Forward Looking Statements
Certain statements in this press release are not historical and may constitute
forward-looking statements reflecting financial performance. Investors are
cautioned that all forward-looking statements involve risks and uncertainties.
Forward-looking statements are based on management's estimates, beliefs and
opinions on the date the statements are made. Glacier assumes no obligation to
update forward-looking statements if circumstances should change. Additional
information on these and other potential factors that could affect Glacier's
financial results are detailed in documents filed from time to time with the
applicable Canadian securities regulatory authorities.
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