Glacier Media Inc.
TSX : GVC

Glacier Media Inc.

November 13, 2009 19:02 ET

Glacier Reports Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 13, 2009) - Glacier Media Inc. ("Glacier" or the "Company") (TSX:GVC) reported cash flow, earnings and revenue for the period ending September 30, 2009.



Summary Results
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thousands of 3 Months 3 Months 9 Months 9 Months
dollars except Ending Ending Ending Ending
share and per September 30, September 30, September 30, September 30,
share amounts 2009 2008 2009 2008
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Revenue $ 50,838 $ 59,932 $ 169,146 $ 187,647
Gross profit $ 16,227 $ 22,571 $ 59,284 $ 75,363
Gross margin 31.9% 37.7% 35.0% 40.2%
EBITA (1) $ 5,654 $ 10,101 $ 24,670 $ 41,699
EBITA margin (1) 11.1% 16.9% 14.6% 22.2%
EBITA per
share (1) $ 0.06 $ 0.11 $ 0.27 $ 0.45
Interest
expense, net $ 1,046 $ 2,460 $ 4,727 $ 7,038
Net income
before
non-recurring
items (2) $ 4,619 $ 4,010 $ 17,032 $ 25,040
Net income before
non-recurring
items
per share
(2) $ 0.05 $ 0.04 $ 0.18 $ 0.27
Net income $ 4,243 $ 3,968 $ 15,310 $ 24,998
Net income per
share $ 0.05 $ 0.04 $ 0.17 $ 0.27
Cash flow from
operations
(1)(2) $ 4,770 $ 8,028 $ 20,637 $ 35,654
Cash flow from
operations per
share (1)(2) $ 0.05 $ 0.09 $ 0.22 $ 0.38
Capital
expenditures(3) $ 1,891 $ 3,755 $ 7,159 $ 6,472
Total assets $ 503,243 $ 517,080 $ 503,243 $ 517,080
Debt net of cash
outstanding
before deferred
financing charges
and other
expenses $ 106,097 $ 121,259 $ 106,097 $ 121,259
Shareholders'
equity $ 312,437 $ 294,801 $ 312,437 $ 294,801
Weighted average
shares
outstanding, net 92,721,210 93,150,994 92,721,210 93,181,111
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(1) Refer to "Financial Measures" following for disclosure regarding
non-GAAP measures used in this table.
(2) Three months ending September 30, 2009 amount excludes $0.4 million
restructuring expenses. Nine months ending September 30, 2009 amount
excludes $1.7 million restructuring expenses.
(3) Capital expenditures for the three and nine months ending September 30,
2009 include investment capital expenditures of $1.1 million and $4.9
million, respectively compared to $2.9 million and $4.1 million in the
same periods for the prior year. The remaining expenditures are
sustaining capital expenditures.


- Glacier's consolidated revenue for the third quarter declined 15.2% to $50.8 million from $59.9 million for the same period in the prior year. Consolidated revenue for the nine months ended September 30, 2009 decreased to $169.1 million from $187.6 million for the same period in the prior year;

- Glacier's consolidated EBITA for the quarter declined 44.0% to $5.7 million from $10.1 million for the same period last year and $24.7 million compared to $41.7 million for the nine months ended September 30, 2009 and 2008 respectively;

- The results for the quarter were affected by weaker advertising revenues incurred during the summer which negatively impacted July and August results.

- Glacier's results improved significantly in September. Local newspaper revenues recovered to 90% of September 2008 levels and EBITA was down only 2.6%. Business and professional revenue was down 9.7% and EBITA was down only 1.4%.

- Significant cost reduction initiatives have been implemented during the first three quarters of the year and ongoing efforts are being made to further reduce expenses. Total operating expenses in September were down 13.1% compared to last year on a same store basis.

- Glacier's consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) was $4.8 million and $20.6 million for the three and nine months ended September 30, 2009 respectively, as compared to $8.0 million and $35.7 million for the same three and nine month periods last year; and

- Glacier's consolidated cash flow from operations (before changes in non-cash operating accounts and excluding restructuring expenses) per share for the quarter decreased 40.3% to $0.05 per share from $0.09 per share for the same period last year and for the nine months ended September 30, 2009 decreased 41.8% to $0.22 per share from $0.38 per share last year; and

- Glacier's EBITA per share for the quarter was $0.06 compared to $0.11 for the same period last year and $0.27 compared to $0.45 for the nine months ended September 30, 2009 and 2008 respectively.

Review of Operations

Glacier's consolidated revenue for the third quarter declined 15.2% and consolidated EBITA declined 44% compared to the same period last year.

The results for the quarter were affected by weaker advertising revenues incurred during the summer which negatively impacted July and August results. Local newspaper advertisers and trade advertisers cut back spending during the summer months, likely to save money during this period of slower business and consumer activity, given the challenges the recession has caused for many advertisers.

In September, Glacier's results improved significantly. Local newspaper revenues recovered to 90% of September 2008 levels (by comparison September 2008 local newspaper revenue levels had grown 7.3% organically from the year prior) and EBITA was down only 2.6%. Business and professional revenue was down 9.7% and EBITA was down only 1.4%. The trade group performed marginally better in terms of profitability, although revenues did not rebound in September as trade advertising buys tend to be somewhat longer duration based than local community newspaper advertising buys. Glacier's standalone real estate publishing operation and commercial printing operations revenue and EBITA improved significantly.

In addition to the improved overall performance in September, a number of other positive factors provide encouragement for going forward performance.

Real estate advertising revenues started to recover in September. Local newspaper revenues in a number of B.C., Alberta, Saskatchewan and Manitoba markets grew compared to last year during various months of the quarter. Canadian environmental information, medical, and some trade information revenues grew during September of 2009 compared to last year. Subscription revenues for Glacier's paid local newspapers, energy, technical and regulatory information and business directories continued to be resilient. Glacier's trade information Internet revenue continued to hold up well, being essentially flat to prior year. Glacier continued to make progress on expanding its Internet presence in its local newspaper markets.

Cost Reduction Strategy

As previously reported, Glacier began efforts to identify comprehensive cost reduction opportunities and contingency plans at the beginning of 2008 in order to be prepared for a potential economic downturn. Some of these initiatives were implemented during 2008 which contributed to the higher profit levels achieved in 2008. This has made the Company's year-over-year EBITA decline appear greater than would have been the case had management waited until 2009 to reduce costs.

Beginning in the first quarter of 2009, significant additional cost reduction measures were targeted to offset the revenue declines experienced by the Company's operations, including staff layoffs, reduction in hours for part-time employees, reduction in newsprint consumption, and a wide variety of other measures. The Company has structured these cost reduction initiatives to reduce operating expenses while maintaining the strength of its businesses and competitiveness as much as possible. Consequently, management chose to monitor revenue declines as the recession unfolded and phase in further cost reductions so as not to overreach in the reduction of resources required.

Consequently, some of these initiatives were implemented part way through the first, second and third quarters and the full benefit of the savings will be realized during the remainder of the year and on a fully annualized basis in 2010. Variable costs including newsprint consumption and sales commission expense have also reduced as revenues have declined. In addition, Glacier is incurring lower interest expense as a result of lower debt levels and interest rates. Newsprint prices remained at June 2009 levels during the third quarter.

The overall cost savings resulted in Glacier's total operating expenses being 13.1% lower in September 2009 than September 2008 on a same-store basis.

The contribution of the cost savings was partially offset by lower advertising rates that resulted from price discounting in some markets. While considerable efforts are being made to maintain prices, some discounting has been required to retain revenue and corresponding profit, albeit at lower margins.

Glacier's consolidated EBITA margin was 11.1% for the quarter, which was a result of the higher level of revenue declines experienced in July and August relative to Glacier's fixed cost base. In September, Glacier's EBITA margin increased to 16.2% as a result of the revenue levels improving and the fixed cost savings initiatives being realized.

It is also important to note that Glacier's operations were generating strong organic same-store revenue growth until the third quarter of 2008, which reflects the strength of 1) its local newspapers that are a primary source of information for the communities they serve and a primary marketing channel for advertisers and 2) its trade and business and professional information operations that provide essential information for business and industry readers who need information to make informed and prudent decisions. The weakening Canadian and U.S. economies began to affect the Company's revenues primarily in the latter part of the fourth quarter of 2008. It is expected that overall revenue growth will resume as the economy recovers.

Financial Position and Investment Opportunities

Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses was $106.1 million as at September 30, 2009 compared to $111.6 million as at June 30, 2009 and $115.6 million as at March 31, 2009. $19.2 million of Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses as at September 30, 2009 is the Company's proportionate share of non-recourse long-term debt owed by joint venture partners.

The Company used its cash flow from operations to pay down $7.4 million of debt during the quarter and fund $1.9 million of capital expenditures, $1.1 million of which were investment capital expenditures made primarily to consolidate and expand several printing facilities and upgrade production technology, which investments are expected to result in attractive direct cash flow improvements and payback, as well as improved quality and colour capacity.

Glacier's consolidated debt net of cash outstanding before deferred financing charges and other expenses was 3.1x trailing 12 months EBITA as at September 30, 2009. During the first quarter of 2009, Glacier amended its senior credit facility into a single revolving loan facility that has no required principal repayments, significantly increased borrowing capacity and does not renew until December 31, 2010.

Management intends to continually assess risk levels in the context of the recession, use free cash flow generated to maintain debt at manageable ongoing levels and evaluate acquisitions, share buy-backs and operating investment opportunities within the context of expected investment returns and related risk profiles. These investments will only be undertaken if debt and operating levels are deemed prudent within the context of the increased risks entailed in a recessionary environment. While there are increasing signs that the recession may be abating, management intends to be cautious until greater certainty is apparent in this regard.

Management is monitoring opportunities in the United States and Canada closely to identify acquisitions that can benefit Glacier. It is expected that the recession will create distressed conditions that should offer a variety of attractive opportunities. Patience will be exercised to assess optimal timing for these acquisitions.

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 business segments: 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) 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 headings "Cost Reduction Strategy" and "Financial Position and Investment Opportunities", and statements relating to the Company's expectations regarding revenues, expenses, cash flows and future profitability, including our expectations that revenue growth will resume once the economy recovers, that debt will be maintained at manageable levels, and that cost savings will be realized during the remainder of the year and in 2010. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements are based on certain assumptions, including those assumptions described under the headings "Review of Operations", "Cost Reduction Strategy" and "Financial Position and Investment Opportunities", 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 postal subsidies, 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.

Contact Information

  • Glacier Media Inc.
    Mr. Orest Smysnuik
    Chief Financial Officer
    604-708-3264