Glacier Media Inc. (TSX: GVC) ("Glacier" or the "Company") reported
cash flow, earnings and revenue for the period ending December 31,
2010.
Summary Results
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(thousands of dollars except share and Year Ended Year Ended Year Ended
per share amounts) 31-Dec-10 31-Dec-09 31-Dec-08
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Revenue $242,605 $229,128 $249,093
Gross profit $89,344 $82,179 $97,252
Gross margin 36.8% 35.9% 39.0%
EBITA(1) $44,083 $35,792 $51,822
EBITA margin(1) 18.2% 15.6% 20.8%
EBITA per share(1) $0.48 $0.38 $0.56
Interest expense, net $6,223 $6,450 $9,100
Net income before non-recurring
items(1)(2)(3)(4) $25,569 $22,163 $34,963
Net income before non-recurring items per
share(1)(2)(3)(4) $0.28 $0.24 $0.38
Net income $20,560 $13,926 $28,269
Net income per share $0.22 $0.15 $0.30
Cash flow from operations(1)(2)(3)(4) $39,074 $30,456 $44,782
Cash flow from operations per
share(1)(2)(3)(4) $0.42 $0.33 $0.48
Capital expenditures $8,207 $9,345 $9,483
Total assets $507,847 $503,747 $518,950
Debt net of cash outstanding before
deferred financing charges and other
expenses $94,732 $99,939 $112,577
Shareholders' equity $326,514 $311,043 $297,517
Weighted average shares outstanding, net 92,023,370 92,721,210 93,131,183
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(1) Refer to "Financial Measures" following for disclosure regarding non-
GAAP measures used in this table.
(2) Fiscal 2010 excludes $4.0 million goodwill and intangible assets
impairment charge and $1.0 million restructuring expense.
(3) Fiscal 2009 excludes $5.8 million goodwill and intangible assets
impairment charge, $2.0 million restructuring expense, and $0.4
million non-recurring item.
(4) Fiscal 2008 excludes $6.3 million non-recurring item and $0.4 million
restructuring expense.
Highlights
Glacier's results for the year ended 2010 reflect the resumption
of growth in its operations:
-- Consolidated revenue increased 5.9% to $242.6 million from $229.1
million for the year prior;
-- Glacier's consolidated cash flow from operations (before changes in non-
cash operating accounts and excluding restructuring expenses) increased
28.3% to $39.1 million from $30.5 million for the year prior;
-- Glacier's consolidated cash flow from operations (before changes in non-
cash operating accounts and excluding restructuring expenses) per share
increased 29.3% to $0.42 per share from $0.33 per share for the prior
year;
-- EBITA increased 23.2% to $44.1 million from $35.8 million for the prior
year. The Company's EBITA margin increased to 18.2% for 2010 from 15.6%
the year prior; and
-- Net income increased 47.6% to $20.6 million from $13.9 million for the
prior year.
2010 Annual and Fourth Quarter Operating Performance
The 5.9% growth in revenue for 2010 came from organic growth,
several small acquisitions and the purchase of the joint venture
partners' interests of one of the Company's operations.
Same-store revenue growth increased during the course of the
year. In the fourth quarter of 2010, same-store revenue growth was
2.4%. This was accomplished despite $1.3 million of non-recurring
revenue generated in the fourth quarter of 2009 from the Olympics.
Adjusted for the non-recurring revenue, same-store revenue growth
was 4.6% in the fourth quarter of 2010 compared to the year
prior.
EBITA in the fourth quarter was $11.7 million, or $0.6 million
higher than 2009, despite $0.6 million of non-recurring EBITA being
earned in the fourth quarter of 2009 from the Olympics.
The recovery in revenue occurred across the majority of
Glacier's businesses in 2010. Growth came from both traditional
print sources and digital media sources, and is directly
attributable to Glacier's operational, business segment and 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.
Glacier was selected as the exclusive publisher of the Olympic
Official Vancouver 2010 Souvenir Program and Hockey Guide. Efforts
continue to be made to leverage and monetize content across print,
online, wireless and other channels and platforms.
As previously indicated, management pursued a cost reduction
strategy prior to and during the recession that was focused on
realizing significant reductions in operating costs and
efficiencies while protecting the strength of Glacier's human
resources, content quality, sales force and market and competitive
positions. Additional cost savings are being realized in 2011 as a
result of production and printing related technology and equipment
investments, amongst other things.
Placed in context, same-store 2010 revenue and EBITA returned to
93% and 85% of 2008 levels respectively. 2008 was a record year for
Glacier during which organic revenue grew 8% over the year prior
and total revenue grew 15%. In addition to the improvement in
economic conditions, Glacier was able to realize the $44.1 million
of EBITA earned in 2010 as a result of the strong sales efforts
made, discipline exercised in minimizing discounting to maintain
sales price levels, and the cost reductions realized during 2009
and 2010. The results were achieved while increased operating
investment was made in digital media resources and other content
and quality related areas, which investment also contributed to the
increased revenues.
The revenue growth that was realized prior to the recession and
that resumed in 2010 continues to underscore the value of Glacier's
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.
Glacier's trade and business information operations also
experienced strong revenue recovery in 2010. Agriculture, energy,
mining, medical, manufacturing and many of Glacier's other business
and trade verticals generated significant rebounds in revenue
growth and profitability. The growth primarily began in June and
occurred throughout the last six months of the year, although the
agricultural information group and several other verticals
generated strong performance throughout the entire year. A wide
array of digital media initiatives resulted in strong growth in
online and electronic revenues. These initiatives continue to offer
Glacier's customers an increasingly richer value proposition
through both the enhancement of information value that digital
media provides, the enhancement of customer targeting and marketing
effectiveness provided to advertisers, and the breadth of new
product opportunities and related monetization available.
Significant increases in print advertising were also realized.
Performance during both the recession and 2010 also highlighted the
strength of Glacier's electronic business and trade information
subscription and directory offerings.
Significant focus and related investment will continue to be
made to enhance Glacier's digital trade and 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.
Financial Position
Glacier's consolidated debt net of cash outstanding before
deferred financing charges and other expenses was 2.1x EBITA as at
year end. Subsequent to year end, the Company amended its revolving
loan facility on substantially the same terms and conditions. The
amended facility includes greater potential borrowing capacity and
matures on March 30, 2015.
The Company used its cash flow from operations to repay $14.0
million of revolving debt and repurchase $5.0 million of preferred
shares and $4.9 million of its common shares during the year.
Glacier's consolidated debt net of cash outstanding before deferred
financing charges and other expenses was $94.7 million as at
December 31, 2010 compared to $99.9 million as at December 31,
2009.
Glacier invested $8.2 million of capital expenditures during
2010, $4.5 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.
Glacier also invested $6.9 million of cash inclusive of bank
indebtedness in acquisitions during the year, including the
purchase of the joint venture partners' interests of one of the
Company's operations. This level of investment was intentionally
modest due to the preference to maintain a strong financial
position while economic risk was being monitored.
The Company recorded a $4.0 million impairment of goodwill and
intangible assets as at December 31, 2010. The write-down primarily
related to Glacier's continuing medical information business.
Outlook and Opportunities for Value Creation
Management expects that growth will continue in 2011 in
Glacier's various business segments. While risks remain in some
areas of the economy that affect Glacier's operations and not all
markets have recovered from the recession to the same extent as
others, advertiser confidence and spending have shown marked
improvement across the majority of Glacier's business verticals and
are resulting in overall revenue growth. Customer demand for
Glacier's electronic information products remained strong during
the recession and increased in many areas in 2010.
The combination of revenue growth and a lower cost base resulted
in significantly increased profitability during 2010 and both
revenue and profitability are expected to continue to grow
organically in 2011. The growth in profitability resulted in a
13.3% return on average adjusted equity earned for the year ending
December 31, 2010, calculated as cash flow from operations (before
changes in non-cash operating accounts and non-recurring items)
divided by consolidated average shareholders' equity for 2010 and
2009 adjusted to exclude $25.8 million of minority equity
investments, for which no amount is included in cash flow from
operations.
Given that cash flow is growing and debt is at 2.1x EBITA,
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.
Management will continue to seek a balance of maintaining debt
at manageable levels, continuing to strengthen operations, and
delivering growth through acquisition.
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 Canadian generally accepted accounting principles
(GAAP), Glacier uses certain non-GAAP measures that may be
different from the performance measures used by other companies.
These non-GAAP 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 amortization (EBITA), which are not alternatives to GAAP
financial measures. Management focuses on operating cash flow per
share as the primary measure of operating profitability, free cash
flow and value. EBITA per share is also an important measure as the
Company has low ongoing capital expenditures and amortization
largely relates to acquisition goodwill and copyrights and does not
represent a corresponding sustaining capital expense. These
non-GAAP measures do not have any standardized meanings prescribed
by GAAP 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.
Contacts: Glacier Media Inc. Mr. Orest Smysnuik Chief Financial
Officer 604-708-3264 www.glaciermedia.ca
Glacier Media (TSX:GVC)
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