Glacier Media Inc. ("Glacier" or the "Company") (TSX:GVC) reported cash flow,
earnings and revenue for the year ended December 31, 2013.
Summary Results
Results are reported below on an adjusted basis to include the Company's share
of the results of its joint ventures. Management bases its operating decisions
and performance evaluation utilizing these results. Refer to Impact of Joint
Venture Accounting for discussion of the accounting change and results in
accordance with IFRS.
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(thousands of dollars)
except share and per share amounts 2013 (5) 2012 (5) 2011 (5)
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Revenue $328,898 $330,016 $267,394
EBITDA (1) $42,938 $50,393 $49,140
EBITDA margin (1) 13.1% 15.3% 18.4%
EBITDA per share (1) $0.48 $0.56 $0.55
Net income attributable to common
shareholders before non-recurring
items (1)(2)(3) $22,215 $18,481 $22,615
Net income attributable to common
shareholders per share before non-
recurring items (1)(2)(3) $0.25 $0.21 $0.25
Cash flow from operations (1)(2)(3) $42,380 $50,197 $44,874
Cash flow from operations per share
(1)(2)(3) $0.48 $0.56 $0.50
Debt net of cash outstanding before
deferred financing charges $104,540 $127,107 $131,413
Dividends paid (4) $5,520 $5,536 $2,681
Dividends paid per share (4) $0.06 $0.06 $0.03
Weighted average shares outstanding,
net 89,160,254 89,357,465 89,991,561
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Notes:
(1) Refer to "Non-IFRS Measures" section of the financial statements.
(2) 2013 excludes $5.7 million of restructuring expense and $1.3 million of
transaction and transition costs, $79.0 million of impairment expense,
$0.2 million gain on acquistion, and $0.4 million net gain on disposal
of assets.
(3) For non-recurring items excluded in the prior period, refer to
previously reported financial statements.
(4) Dividends in 2013 total $0.08 per share paid quarterly, dividends in
2012 total $0.06 per share paid semi-annually. Quarterly dividends
totalling $1.8 million or $0.02 per share were declared in November
2013 and paid on January 3, 2014.
(5) These results are presented on an adjusted basis to include the
Company's share of the results of its joint ventures, as management
bases its operating decisions and performance evaluation on the
adjusted results.
Key Financial Highlights (1)
-- Same-store consolidated revenue was up 1.2% for the quarter ending
December 31, 2013 and consolidated earnings before interest, taxes,
depreciation and amortization (EBITDA) was up 16.1% for the same quarter
compared to last year on an adjusted basis;
-- For the year ended December 31, 2013, Glacier's adjusted consolidated
revenues decreased 0.3% or $1.1 million to $328.9 million from $330.0
million the prior year;
-- For the year ended December 31, 2013, adjusted consolidated EBITDA
declined 14.8% to $42.9 million from $50.4 million the prior year.
EBITDA was affected by $2.0 million in one-time accounting and other
expense items, as well as $1.9 million of operating cost investments
made in agriculture digital and data, the launch of the Company's
environmental risk information business into the U.S. and REW.ca real
estate information development initiatives. Excluding these amounts,
consolidated adjusted EBITDA was $46.8 million, off 7.0% from the prior
year;
-- Adjusted cash flow from operations (before changes in non-cash operating
accounts and non-recurring items) decreased 15.6% from the prior year to
$42.4 million;
-- Adjusted net income attributable to common shareholders before non-
recurring items was $22.2 million, compared to $18.5 million the prior
year;
-- Adjusted EBITDA per share decreased 14.6% to $0.48 per share from $0.56
per share for the year compared to the prior year and net income
attributable to common shareholders before non-recurring items per share
increased to $0.25 per share from $0.21 per share for last year;
-- Adjusted cash flow from operations (before changes in non-cash operating
accounts and non-recurring items) decreased to $0.48 per share from
$0.56 per share for last year;
-- The Company (excluding its joint ventures) reduced debt by $23.3 million
during the year, of which $12.0 million was generated by the sale of
real estate assets; and
-- As a result of the continued structural changes in the print media
industry resulting from digital competition and weaker economic
conditions, and reduced valuations for print newspaper assets, the
Company recorded an impairment of its goodwill, intangible assets and
investment in associate of $79.0 million, primarily in its community
media assets.
(1) These results are presented on a proportionate consolidation basis, and
include the Company's shares of revenue, expenses, assets and liabilities from
its joint venture operations, which reflects the basis on which management makes
its operating decisions and performance evaluation. Refer to the Impact of Joint
Venture Accounting, below, for impact of proportionate consolidation accounting
and the Company's results in accordance with IFRS.
Review of Operations and Value Enhancement Initiatives
Glacier Media Inc. completed 2013 with a stronger fourth quarter, in which
same-store consolidated revenue increased 1.2% and consolidated EBITDA was up
16.1% for the quarter compared to last year on an adjusted basis(1).
Notwithstanding a $79.0 million accounting charge taken for impairment of
goodwill, intangible assets and investment in associate relating primarily to a
reduction in the carrying value of community media assets, which resulted in a
significant reduction in net income for 2013, the fourth quarter results were
very encouraging and represented a significant improvement in business and
operating results compared to the softness experienced earlier in the year.
Significant reduction in debt and improved strength in operating position was
also achieved during the year through principal repayments made from operating
cash flows and the sale of real estate and non-core assets. Management intends
to continue to use free cash flow to further reduce debt and pay dividends to
shareholders, amongst other things.
Improved operating performance resulted from both new revenue initiatives that
generated higher sales, complemented by significant cost reductions implemented
throughout the year. Through this process, the Company executed against a
comprehensive strategy to Evolve, Enrich and Extend its information products and
services. In 2013, new digital and data tools and services were launched, which
contributed to higher sales and profitability within key business information
verticals.
For the ended December 31, 2013, consolidated revenue decreased 0.3% to $328.9
million and consolidated EBITDA declined 14.8% to $42.9 million compared to last
year on an adjusted basis(1), primarily due to weaker community media revenues,
which were impacted by overall economic conditions in 2013 and digital
competition. These were offset by stronger business information revenues. The
variance in EBITDA was also the result of approximately $2.0 million of one-time
non-cash expenses and changes in deferred revenue accounting, as well as $1.9
million of operating cost development investments made in agriculture digital
and data, the launch of the Company's environmental risk information business
into the U.S. and REW.ca real estate information development initiatives. New
revenues began to be realized from these investments in the fourth quarter of
2013 and the first quarter of 2014.
Excluding the $3.9 million of one-time non-cash expenses, accounting changes and
development investments, adjusted(1) consolidated EBITDA for the year ending
2013 was $46.8 million, which was only 7.0% off of 2012 consolidated EBITDA of
$50.4 million, despite the economic and other challenges faced in 2013.
Business Information
Many of the Company's business information operations (which include business
and professional and trade information) continue to grow and provide attractive
opportunities for future growth. In particular, the energy, agriculture,
environmental services, financial services, manufacturing and construction
verticals performed well. Management is investing in these verticals to develop
rich information tools and services, including new environmental risk, weather
and farm management and upstream oil and gas platforms. Management is also
reviewing the spectrum of verticals in which it operates with a view of focusing
resources on those verticals with high growth and strong positions.
Business information operations now represent more than half of Glacier's
EBITDA. Further, 45% of the business information EBITDA comes from rich
information digital data products designed for scalable growth and higher
profitability. Many product lines offer resiliency in challenging economic times
as they provide critical insight and analysis to Glacier's customers.
Glacier's business information portfolio contains many brands that have decades
of service in their respective sectors. The intrinsic equity associated with
these brands is a key competitive advantage as the Company pursues its Evolve,
Enrich and Extend strategy. Consistent with this strategy, management is focused
on initiatives designed to offer customers increasingly richer value
propositions. These include multi-platform solutions designed to integrate more
seamlessly with customer decision-making processes, thus ensuring heightened
levels of decision dependency. Digital revenues now represent more than one
quarter of Glacier's business information revenues.
In 2013, a variety of initiatives highlighted how sharper focus on sector and
customer needs is facilitating successful development and growth. They include:
-- Environmental Risk Information Service ("ERIS") expanded its business
into the United States;
-- WeatherFarm was re-engineered and re-launched to integrate new tools and
data sets that augment the meteorological information and analytics of
the Company's new Weather INnovations Consulting LP business, through
which real-time weather data and intelligence is supplied to Canadian
farmers and agri-business companies;
-- Glacier FarmMedia (the new DBA for Glacier's agricultural group)
contracted with the Alberta Wheat Commission to provide syndicated
market information to commission members through its website;
-- Canada's Outdoor Farm Show ("COFS") achieved record results with its
20th Anniversary exposition. Nearly 43,000 delegates attended the show,
which included more than 750 exhibitors.
Community Media
Glacier's community media operations offer broad coverage across Western Canada
in local markets, and continue to offer a strong value proposition through local
information and marketing channel utility.
As mentioned, generally weak economic conditions as well as structural changes
in the community newspaper industry adversely affected advertising revenues
during 2013. This impact has been particularly true of community operations in
urban markets, such as the Lower Mainland of British Columbia, where both print
and digital competition is stronger. Many of the Company's smaller rural
community media markets - largely spread across the Prairies - have enjoyed more
steady performance due to their strong local positions and local advertising
revenues.
The media industry, as a whole, continues to pursue new "business models"
intended to manage the future value of content against a backdrop of maturing
traditional advertising and greater digital opportunities. Glacier is well
advanced in this respect. Significant efforts are being made to develop new
community media related special content and advertising focused products that
are delivered in multiple platform formats.
While print advertising revenues were weaker in 2013, digital revenues continued
to grow in Glacier's community media operations. Significant progress was made
launching new digital offerings, with a focus on products that can be quickly
monetized. Management is focused on bottom line growth from digital investments,
rather than pursuing larger digital revenues without a positive contribution - a
trend among many digital media companies. Glacier's community media digital
revenues generated strong year-over-year growth in 2013, with an EBITDA margin
that exceeded the group's print margin.
While economic and market challenges have affected the community media
operations, management believes that these businesses remain strong and will
continue to generate solid cash flow given the nature of the markets in which
Glacier operates - particularly within the more robust micro-economies of
Western Canada. This cash flow can be used to fund growth through both internal
investment and acquisition of digital business information and community media
assets, as well as debt repayments.
Financial Position
In 2013, the Company pursued initiatives to improve its financial position
including:
-- Cost reduction initiatives. Given the softness experienced in the
Company's community media operations, a variety of significant cost
reduction measures have and are being implemented to reduce overall
operating costs. The initiatives are targeted to reduce costs by more
than $7.0 million on an annualized basis. Savings from these initiatives
began to be realized in both the third and fourth quarters of 2013. In
implementing these initiatives, management has been diligent to maintain
the operating integrity of the businesses.
-- Sale of real estate assets. The Company realized cash proceeds of $12.0
million on the sale of real estate assets in 2013.
-- Subsequent to year end, the Company entered into an agreement to sell
its real estate property in Kamloops for $4.8 million. The sale is
expected to close in the summer of 2014.
-- Other property dispositions are currently being negotiated. Given
current capitalization and interest rates, monetizing real estate value
to reduce leverage has been deemed prudent. The real estate sales have
been targeted to a) cover any required deposit relating to the
previously reported notice of possible re-assessment from Canada Revenue
Agency (CRA) for the 2008-2011 income tax years, should a deposit become
payable and b) result in a net reduction of leverage from current
levels. Any potential CRA re-assessment timing is not currently
determinable.
-- Sale of non-core assets. During the fourth quarter of 2013, the Company
sold two money-losing community newspapers and acquired several more
profitable community media assets that provide a better strategic fit.
On an adjusted basis to include the Company's share of its joint ventures,
Glacier's consolidated debt net of cash outstanding before deferred financing
charges and other expenses was reduced to 2.43x trailing 12 months EBITDA as at
December 31, 2013.
The Company (excluding its joint ventures) reduced debt by $23.3 million during
the year (as stated above, $12.0 million was generated from the sale of real
estate assets). Glacier's consolidated debt net of cash outstanding before
deferred financing charges was $94.7 million as at December 31, 2013.
Capital expenditures were $11.7 million for the year ended December 31, 2013
compared to $7.1 million in the prior year. $10.1 million of these capital
expenditures were investment capital expenditures, the majority of which relate
to building, building improvements, new printing equipment, new office space and
software. These investment capital expenditures are expected to result in
attractive direct revenues and cash flow improvements, including lower operating
costs and payback consistent with Glacier's targeted return on investment.
Sustaining capital expenditures for the year were $1.6 million.
Management expects the level of investment capital expenditure in 2014 to be
significantly reduced, with primarily only ongoing sustaining capital
investments being required.
As a result of the continued structural changes in the print media industry
resulting from digital competition and weaker economic conditions, and reduced
valuations for print newspaper assets, the Company recorded an impairment of its
goodwill, intangible assets and investment in associate of $79.0 million,
primarily in its community media assets.
Declaration of Dividend
The Board of Directors declared a quarterly dividend of $0.02 per share to
shareholders of record on March 25, 2014 and payable on April 7, 2014. The
dividend is consistent with the Company's dividend policy of paying $0.08 per
share per annum payable quarterly.
Impact of Joint Venture Accounting
As a result of a change in IFRS accounting policies effective January 1, 2013,
the Company is now required to account for its joint venture operations under
the equity method. Previously, the Company's joint venture operations were
accounted for using proportionate consolidation. As a result of the change in
accounting, the Company no longer includes the revenues, expenses, assets and
liabilities of its share of these operations in the Company's results. The
Company now carries its interest as a net investment on its balance sheet and
includes the net results from these operations in its statement of operations.
Despite this accounting change, management believes that including its share of
revenues and expenses in the Company's results (consistent with its prior
accounting treatment) provides an important basis for assessing the overall
operations of the Company. The table below adjusts the Company's reported
results under IFRS to include the revenues and expenses of its joint venture
operations, consistent with its historical presentation. Management continues to
base its operating decisions and performance evaluation on the adjusted results.
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(thousands of
dollars)
except share Year ended December 31, Year ended December 31,
and per 2013 (4) 2012 (4)
share Adjust- Adjust-
amounts Per IFRS ment (4) Adjusted Per IFRS ment (4) Adjusted
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Revenue $ 295,623 $ 33,275 $ 328,898 $ 297,111 $ 32,905 $ 330,016
EBITDA (1) $ 32,691 $ 10,247 $ 42,938 $ 39,435 $ 10,958 $ 50,393
EBITDA margin
(1) 11.1% 13.1% 13.3% 15.3%
EBITDA per
share (1) $ 0.37 $ 0.48 $ 0.44 $ 0.56
Net income
attributable
to common
shareholders
before non-
recurring
items
(1)(2)(3) $ 20,620 $ 1,595 $ 22,215 $ 17,337 $ 1,144 $ 18,481
Net income
attributable
to common
shareholders
per share
before non-
recurring
items
(1)(2)(3) $ 0.23 $ 0.25 $ 0.19 $ 0.21
Cash flow
from
operations
(1)(2)(3) $ 33,692 $ 8,688 $ 42,380 $ 39,819 $ 10,378 $ 50,197
Cash flow
from
operations
per share
(1)(2)(3) $ 0.38 $ 0.48 $ 0.45 $ 0.56
Debt net of
cash
outstanding
before
deferred
financing
charges $ 94,723 $ 9,817 $ 104,540 $ 123,734 $ 3,373 $ 127,107
Weighted
average
shares
outstanding,
net 89,160,254 89,160,254 89,357,465 89,357,465
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Notes:
(1) Refer to "Non-IFRS Measures" section for calculation of non-IFRS
measures used in this table.
(2) 2013 excludes $5.7 million of restructuring expense, $1.3 million of
transaction and transition costs, $79.0 million of impairment expense,
$0.2 million gain on acquistion and $0.4 million net gain on disposal
of assets.
(3) For non-recurring items excluded in the prior period, refer to
previously reported financial statements.
(4) Adjustment to include the Company's share of revenues, expenses and
cash flows from its joint venture operations consistent with the
Company's treatment on a historical basis and prior to implementing the
new accounting standards.
Under IFRS, revenues for the year ended December 31, 2013 decreased 0.5% to
$295.6 million from $297.1 million for the year prior. Cash flow from operations
(before changes in non-cash operating accounts and non-recurring items)
decreased 15.4% to $33.7 million and earnings before interest, taxes,
depreciation and amortization (EBITDA) decreased 17.1% to $32.7 million compared
to the year prior. Net income attributable to common shareholders (before
non-recurring items) increased by $3.3 million to $20.6 million.
Cash flow from operations (before changes in non-cash operating accounts and
non-recurring items) for the year ended December 31, 2013 decreased to $0.38 per
share from $0.45 per share for the same period prior year. EBITDA decreased to
$0.37 per share from $0.44 per share and net income attributable to common
shareholders (before non-recurring items) per share increased to $0.23 per share
from $0.19 per share.
Outlook
The Company continues to grow its business information operations through its
Evolve, Enrich and Extend strategy, which focuses on providing richer content,
data and information, related analytics and business and market intelligence in
order to achieve greater customer utility and decision dependence. The strategy
is also being used to improve the community media operations. Management expects
growth will continue in Glacier's business information operations, as well as
community media markets where local market conditions are stronger and digital
competition is relatively weaker.
While media maturation factors are having an impact as described, the softer
economy is playing a significant role in dampening revenues, and economic
strengthening should result in improved revenues at the margin. Management will
continue to closely monitor economic conditions in various markets and verticals
to ensure long-term viability.
Management will focus in the short-term on a balance of paying down debt,
reducing costs and improving profitability, enhancing existing operations,
targeting select acquisition opportunities and returning value to shareholders
through growth in cash flow per share and payment of dividends.
As indicated, significant focus and related investment will continue to be made
to enhance Glacier's business information verticals, through both organic
development and acquisition. These acquisitions will be targeted to expand
markets that Glacier covers, expand the breadth of information products and
marketing solutions, and expand Glacier's digital media staff, technology and
related resources.
Once leverage is reduced to more moderate levels, management will seek an
ongoing balance of maintaining debt at those levels and delivering increased
value to shareholders through both operations and acquisitions, as well as
dividends and share buy-backs.
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 community media, 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 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 relating to the Company's expectations regarding
revenues, expenses, cash flows and future profitability and the effect of
Glacier's strategic initiatives, including its expectations to grow its business
information operations, to implement cost reduction measures, to sell real
estate properties and utilize proceeds of such sales to cover required CRA
re-assessment deposits, to produce products and services that provide growth
opportunities, to organic development and new business acquisitions, to improve
profitability, to grow cash flow per share, to pay dividends, to repurchase
shares and to reduce debt levels and as to its expectations as to the level of
investment in capital expenditures. These forward-looking statements are based
on certain assumptions, including continued economic growth and recovery and the
realization of cost savings in a timely manner and in the expected amounts, 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 include failure to implement or achieve the intended results
from Glacier's strategic initiatives, the failure to implement or realize cost
savings in a timely manner or in the expected amounts, the failure to negotiate
or complete the sale of real estate assets, the failure to identify, negotiate
and complete the acquisition of new businesses, the failure to develop new
products, and the other risk factors 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 other risk 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's Aid to Publishers, 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, tax risk 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Glacier Media Inc.
Mr. Orest Smysnuik
Chief Financial Officer
604-708-3264
Glacier Media (TSX:GVC)
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