Glacier Reports Third Quarter Results

Glacier Reports Third Quarter Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/13/12 -- Glacier
Media Inc. (TSX:GVC) ("Glacier" or the "Company") reported cash flow,
earnings and revenue for the three and nine months ended September
30, 2012. 


 
Summary Results
 
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                                      Three      Three       Nine       Nine
(thousands of dollars                months     months     months     months
 except share and per share           ended      ended      ended      ended
 amounts)                         30-Sep-12  30-Sep-11  30-Sep-12  30-Sep-11
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Revenue                             $78,245    $61,955   $246,054   $194,375
Gross profit                        $24,013    $22,192    $82,440    $73,067
Gross margin(3)                       30.7%      35.8%      33.5%      37.6%
EBITDA(1)                            $9,815    $10,572    $37,823    $36,585
EBITDA margin(1)                      12.5%      17.1%      15.4%      18.8%
EBITDA per share(1)                   $0.11      $0.12      $0.42      $0.41
Interest expense, net                $1,304     $1,002     $4,488     $3,589
Net income attributable to                                                  
 common shareholders before non-                                            
 recurring items(1)(2)(4)            $2,855     $4,211    $12,321    $15,982
Net income attributable to                                                  
 common shareholders before non-                                            
 recurring items per                                                        
 share(1)(2)(4)                       $0.03      $0.05      $0.14      $0.18
Net income attributable to                                                  
 common shareholders                 $5,183     $3,721    $13,441    $13,510
Net income attributable to                                                  
 common shareholders per share        $0.06      $0.04      $0.15      $0.15
Cash flow from                                                              
 operations(1)(2)(4)                 $7,934     $9,880    $32,724    $33,699
Cash flow from operations per                      
                         
 share(1)(2)(4)                       $0.09      $0.11      $0.37      $0.37
Investment capital expenditures      $2,145     $2,953    $10,829     $5,049
Sustaining capital expenditures        $522     $1,126     $1,702     $3,314
Total assets                       $632,626   $513,222   $632,626   $513,222
Debt net of cash outstanding                                                
 before deferred financing                                                  
 charges and other expenses        $131,482    $91,971   $131,482    $91,971
Equity attributable to common                                               
 shareholders                      $350,773   $332,108   $350,773   $332,108
Dividends paid(5)                    $2,681     $2,681     $5,362     $2,681
Dividends paid per share(5)           $0.03      $0.03      $0.06      $0.03
Weighted average shares                                                     
 outstanding, net                89,358,410 89,383,682 89,358,410 90,204,930
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Notes:
 
(1) Refer to "Non-IFRS Measures" section of the financial statements.
(2) Third quarter 2012 excludes $0.2 million of restructuring expense, $0.6
    million of transaction and transition costs, and $3.1 million of other
    income.
(3) Gross profit for these purposes excludes depreciation and amortization.
(4) For non-recurring items excluded in the prior period, refer to
    previously reported financial statements.
(5) Glacier commenced paying semi-annual dividends in 2011. The nine months
    ended September 30, 2011 represents only one dividend payment.
 
Highlights
 
--  Consolidated revenue increased 26.3% to $78.2 million for the three
    months ended September 30, 2012 from $62.0 million for the same period
    in the year prior; 
--  EBITDA for the third quarter of 2012 decreased 7.2% to $9.8 million from
    $10.6 million in the same period in the prior year; 
--  Glacier's consolidated cash flow from operations (before changes in non-
    cash operating accounts) for the three months ended September 30, 2012
    decreased 19.7% to $7.9 million from $9.9 million in the same period in
    the year prior; 
--  Glacier's net income attributable to common shareholders was $5.2
    million compared to $3.7 million in the same period in the prior year;
    and 
--  The Company repaid $6.0 million of debt during the quarter. 

 
Review of Operations 
Consolidated revenue grew 26.3% during the third quarter of 2012
compared to the same period last year as a result of organic growth
in a variety of operations, the November 2011 acquisition of the
Postmedia British Columbia community media assets, and the
acquisition of control of one of Glacier's community media
partnerships in April 2012. Consolidated EBITDA decreased $0.8
million or 7.2% for the quarter. 
On a same-store basis, community media revenue was softer for the
quarter compared to last year and trade and business and professional
revenue was stronger. Revenues and EBITDA were affected by weaker
economic conditions and related national advertising softness.
Consolidated EBITDA was also affected by operating resource expense
investments made to strengthen some of the community media assets
acquired from Postmedia, as well as operating expense investments
made in a new digital real estate information business. Excluding a
small loss for the quarter relating to the Postmedia community media
assets acquired and the new digital real estate information costs,
consolidated EBITDA was slightly ahead of last year. Overall,
revenues, profitability and cash flow remain strong. 
Sales Performance 
Glacier's trade and business and professional information operations
continued to deliver strong growth, with revenue increases generated
across a wide variety of verticals. 
While some revenues have been adversely affected by economic
conditions, a number of growth initiatives are being pursued and are
generating strong sales results. 
In particular, Glacier's trade information and business and
professional information operations enjoyed growth in the energy,
agricultural, environmental risk, environmental compliance networks,
medical and financial information sectors. Continued softness was
experienced in several trade verticals as a result of economic
conditions. 
In addition to core business information print and digital sales,
management is focused on strategies geared to offer 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 represent more than a quarter of Glacier's trade
information and business and professional information revenue and are
growing steadily. 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. 
Overall, the business information operations and various market
sectors offer attractive opportunities for growth with high levels of
profitability. 
Glacier's community media operations experienced weaker revenue
performance in a number of markets during the quarter, primarily the
result of softer national advertising. The Prairie operations
continued to generate strong revenue and profitability. The B.C.
markets were affected by weaker economic conditions in Victoria, the
Lower Mainland and a variety of Vancouver Island and northern
Interior markets. National advertising revenues were weaker in most
markets, which appear to be the result of cautiousness due to
economic conditions, as financial and government revenues have been
significantly lower. Digital competition is also affecting national
print spending levels, although this trend is primarily occurring in
the larger urban markets. Local advertising revenues were resilient
in both the existing markets where Glacier has operated, and some of
the Lower Mainland and Vancouver Island markets acquired from
Postmedia, although the Victoria market continues to struggle. 
Operating expense investments are being made to improve the strength
and resources of the community media assets acquired from Postmedia
in order to increase competitiveness and sales effectiveness. The
operations had been weakened by significant cost cutting incurred
over many years under previous ownership due to the high debt levels
of these owners. The costs of the operating investments have been
partially offset by savings in overhead costs as a result of the
integration of the operations with Glacier's existing infrastructure.
The operating expense investments resulted in stronger local
advertising sales and classified sales in the third quarter. While it
will take time to strengthen and revitalize the operations, it is
encouraging that direct revenue increases are being realized as
investments are being made. Digital investments are also being made
to exploit the digital revenue opportunities of the larger markets in
which the community media operations acquired are located. 
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 and the nature of local
community media. This cash flow can be used to fund growth through
both internal investment and acquisition of digital business
information and digital community media assets, as well as repayment
of debt, payment of dividends and repurchase of shares. 
Glacier's small market community media operations 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 mobile
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. The
attributes of these community media operations are significantly
different and stronger than larger metropolitan paid daily
newspapers, which have been reflected in the financial performance of
Glacier's community media group. 
Profit Performance 
As stated, consolidated EBITDA decreased $0.8 million or 7.2% to $9.8
million for the quarter compared to $10.6 million for the third
quarter of 2011. While revenues showed a significant increase on an
overall dollar basis due to acquisitions, the economic environment,
related softness in national advertising, and the operating expense
investments made, resulted in lower EBITDA compared to last year. The
community media operations acquired from Postmedia are historically
weaker in the first and third quarter, and this annual cycle was
exacerbated by the weaker economy and national advertising softness.
The Postmedia community media assets acquired are historically
profitable in the second and fourth quarters. The decrease in EBITDA
was also the result of operating resource expense investments
described. As stated, consolidated EBITDA was slightly ahead of last
year excluding a small loss for the quarter relating to the Postmedia
community media assets acquired and the digital real estate
information costs. 
Glacier's consolidated EBITDA margin decreased to 12.5% for the
quarter from 17.1% for the same quarter last year as a result of the
softness in overall community media revenues and 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. 
EBITDA was also impacted by increased operating infrastructure
investment 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 and
product strategy and business information strategies. 
The complementary media platform and product 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 and
product design and functionality. 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 and
product 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 and product strategy will be
prudent for the foreseeable future, and will maximize revenue and
profit generation. 
As indicated, the business information strategies are focused on
increasing the value provided to customers through richer content,
data and analytic value and deepening the customer decision
dependence of Glacier's products and services, thereby moving
Glacier's products and services further up the value ladder, with the
higher revenue, profitability and recurring cash flow that this value
proposition provides. 
Financial Position 
Glacier's consolidated debt net of cash outstanding before deferred
financing charges and other expenses was 2.47x trailing 12 months
EBITDA (normalized for the acquisition of control of one of Glacier's
community media partnerships) as at September 30, 2012. The Company
repaid $6.0 million of debt during the quarter. Glacier's
consolidated debt net of cash outstanding before deferred financing
charges and other expenses was $131.5 million as at September 30,
2012. 
Glacier invested $2.7 million of capital expenditures during the
quarter primarily on press facility construction and expansion to
accommodate new press equipment, additional production equipment,
information technology infrastructure and software. $2.2 million of
these capital expenditures were investment capital expenditures, the
majority of which relate to the building and installation of a new
press facility that is expected to be completed in Q1 2013. The
investment will result in lower operating costs, better quality, and
new long-term contract based revenues (specifically, Glacier's joint
venture operation, Great West Newspapers Limited Partnership, which
has secured a contract to print the Edmonton Journal commencing in
2013). The investment capital expenditures are being made to generate
direct revenue and cash flow improvements and payback consistent with
Glacier's targeted return on investment, as well as quality
improvements and other benefits. 
Outlook 
While economic conditions have impacted some of the community media
operations and business information verticals, and digital
competition is stronger in the larger community media markets,
management expects that growth will continue in Glacier's trade
information and business and professional information operations, as
well as a variety of community media markets in Manitoba,
Saskatchewan, Alberta and parts of British Columbia. 
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. 
Given the strong level of cash flow resulting from operations and the
acquisitions indicated, an increasing portion of the Company's cash
flow can also be returned to shareholders in the future through
increased dividends. The board of directors intends to review the
Company's dividend policy at the beginning of 2013. 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 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 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. 
Financial Measures 
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 "Review of Operations" and the headings "Sales
Performance", "Profit Performance", "Financial Position" and
"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, that cost savings will be realized, and that
annual dividends are expected to be declared. 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
C
ompany'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
 
 
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