Glacier Media Inc.

Glacier Media Inc.

March 23, 2009 18:35 ET

Glacier Reports 2008 Year-End Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 23, 2009) - Glacier Media Inc. ("Glacier" or the "Company") (TSX:GVC) reported cash flow, earnings and revenue for the period ending December 31, 2008.


(thousands of dollars
except share and per Year Ended Year Ended Year Ended Year Ended
share amounts) 31-Dec-08 31-Dec-07 31-Dec-06 31-Dec-05
Revenue $ 249,093 $ 216,402 $ 186,169 $ 62,568
Gross profit $ 94,247 $ 85,156 $ 66,793 $ 21,393
Gross margin 37.8% 39.4% 35.9% 34.2%
EBITA (1) $ 51,403 $ 47,313 $ 35,935 $ 11,404
EBITA margin (1) 20.6% 21.9% 19.3% 18.2%
EBITA per share (1) $ 0.55 $ 0.51 $ 0.49 $ 0.34
Interest expense, net $ 9,100 $ 10,537 $ 9,070 $ 1,354
Net income before
non-recurring item (2) $ 34,544 $ 30,579 $ 12,976 $ 5,330
Net income per share before
non-recurring item (2) $ 0.37 $ 0.33 $ 0.18 $ 0.16
Net income $ 28,269 $ 30,579 $ 12,976 $ 5,330
Net income per share $ 0.30 $ 0.33 $ 0.18 $ 0.16
Cash flow from
operations (1)(2) $ 44,363 $ 38,554 $ 27,418 $ 10,006
Cash flow from operations
per share (1)(2) $ 0.48 $ 0.41 $ 0.37 $ 0.30
Capital expenditures $ 9,483 $ 2,944 $ 1,948 $ 1,025
Total assets $ 518,950 $ 469,960 $ 476,740 $ 174,949
Net debt outstanding
before deferred
financing charges
and related expenses $ 112,577 $ 111,231 $ 124,890 $ 8,139
Shareholders' equity $ 297,517 $ 269,828 $ 237,835 $ 127,418
Weighted average shares
outstanding, net 93,131,183 93,107,923 73,932,324 33,635,334
(1) Refer to "Financial Measures" following for disclosure regarding
non-GAAP measures used in this table. (2) Excludes $6.3 million
non-recurring item.

- Glacier's consolidated revenue grew 15.1% to $249.1 million from $216.4 million for the year prior;

- Glacier's consolidated EBITA grew 8.6% to $51.4 million from $47.3 million for the year prior;

- Glacier's consolidated cash flow from operations (before changes in non-cash operating accounts and adjusted for non-recurring item) grew 15.1% to $44.4 million from $38.6 million for the year prior;

- Glacier's consolidated cash flow from operations (before changes in non-cash operating accounts and non-recurring item) per share grew 15.0% to $0.48 per share from $0.41 per share last year; and

- Glacier completed $46.4 million of acquisitions and investments during the year including a variety of community newspapers in Western Canada and agricultural information, energy information and other trade information businesses.

Operating Performance

The 15.1% growth in revenue and 15.1% growth in cash flow from operations was realized through a combination of organic growth and strategic acquisitions and was achieved despite challenging economic conditions in Canada and the United States.

Net income declined to $28.3 million as a result of a non-recurring settlement expense of $6.3 million that was paid subsequent to year end (which arose from a matter relating to the Company's purchase of the Hollinger Canada entities in 2006). On a normalized basis, net income increased to $34.5 million from $30.6 million for the year prior.

A variety of sales initiatives resulted in enhanced revenue performance across our operations in both local and multi-market advertising as well as online and information sales. Ongoing efforts are also being made to improve content quality and design and leverage and monetize content through print, online and electronic information development.

An array of cost efficiency measures were implemented to reduce expenses. Investment in printing and production technology resulted in both improved design quality and colour capacity as well as lower operating costs, with attractive returns on capital invested. Rationalization efforts have resulted in savings achieved through consolidation of various operating functions. (See "Cost Reduction Strategy" following).

Glacier continues to benefit from both its strategic diversification and 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 serves, product quality, strength of market positions, new product offerings and regional advertising efforts that allow advertisers to benefit from Glacier's larger group of publications and expertise.

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. Classified revenue also represents a small portion of Glacier's overall revenue.

Outlook for 2009

Despite the overall growth achieved in 2008, Glacier experienced softening of revenues in some of our businesses in November and December as a result of the weakening economy. Fourth quarter EBITA was lower than expected as a result of this revenue softness and the related impact on contribution, as well as $1.7 million of fourth quarter severance costs, increased newsprint expense due to higher newsprint prices (which subsequently began to fall in 2009), non-recurring expenses and year-end adjustments. This resulted in the lower 2008 EBITA margin of 20.6% compared to 21.9% for 2007.

The revenue softness affecting some of Glacier's businesses continued in the first few months of 2009 and is expected to bring further challenges as the year unfolds. While some of Glacier's advertising and other revenue sources have been affected by the recession, other areas of operations have held steady or grown, however.

Local advertising revenue has held up relatively well for Glacier's local newspapers. Financial information revenues increased despite the severe challenges faced by the investment and banking industry. Agricultural and certain other trade revenues have maintained revenue levels or grown. Subscription revenues for energy, technical and regulatory information and business directories continue to be resilient. Glacier is also investing in a substantially expanded Internet presence for its local newspaper markets, which offers new revenue growth opportunities.

It is also important to note that Glacier's community newspapers in Saskatchewan and Manitoba continue to generate growth in sales. The revenue of these operations grew approximately 10% in January 2009. This is indicative of the continued strength of local newspapers and their ongoing ability to benefit from growing economies. This bodes well for the ability of Glacier's local newspaper operations to experience ongoing revenue growth when the broader economy recovers given the demand for their local content and their market reach and effectiveness for advertisers.

As indicated, 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.

While overall trade publication revenue has been affected by the recession, Glacier expects to be able to maintain sufficient levels of profitability given the attributes of the businesses indicated, and the ability to reduce costs.

Cost Reduction Strategy

While Glacier expects its revenue to be relatively resilient, cost reduction measures have been implemented to offset the softness being experienced by some of the Company's operations.

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 the year which resulted in the higher profit levels achieved. Subsequent to year end, significant additional cost reduction measures have and are being implemented to offset the weakening economic conditions, including staff layoffs, reduction in hours for part-time employees, reduction in newsprint consumption savings initiatives, and a wide variety of other measures. Newsprint prices also began to fall in late February 2009.

The Company has structured the cost reduction initiatives to reduce operating expenses while maintaining the strength of Glacier's businesses and competitiveness as much as possible. Consequently, management has chosen to implement an initial phase of substantial cost reductions, then reduce expenses further if revenue levels require. This is deemed better for the business than cutting costs deeper initially than may be required and weakening operating strength as a result. Glacier intends to maintain its competitiveness in order to gain market share during the recession and be in a position to exploit opportunities and grow when the economy recovers. Particular caution will be taken to protect the quality and value of Glacier's publications and information offerings while reducing costs.

Financial Position

Glacier's consolidated debt, net of cash on hand, was $112.6 million as at December 31, 2008 (before deduction of deferred financing and other debt related charges). Glacier repaid $13.4 million of its senior term debt facility during the year and funded $46.4 million of acquisitions and investments with cash flow from operations and borrowings.

Glacier also made $3.0 million of sustaining capital expenditures and $6.5 million of investment capital expenditures during the year. The investment capital expenditures included long-term investments made to upgrade press facilities and production technology in order to both improve quality and colour capacity and reduce operating and lease costs. Investments were also made in the Company's Internet platforms. These investments generate cash returns with attractive pay-back periods.

Glacier's net consolidated debt (net of cash on hand) to EBITA ratio was approximately 2.2x as at year end. This lower level of leverage has reduced Glacier's interest rate paid on borrowings and overall interest expense.

During the fourth quarter of 2008, Glacier repaid its $12.0 million of subordinated bonds with cash on hand and an increase in the Company's revolving bank loan. 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 have required principal repayments and does not renew until December 31, 2010. Subsequent to year end Glacier entered into an agreement to restructure the facility from a revolver and line of credit into a single revolving loan facility with substantially increased borrowing capacity.


Glacier completed $46.4 million of acquisitions and equity investments during 2008. The acquisitions included 1) the JuneWarren Publishing energy information group in Alberta, 2) a number of community newspapers in British Columbia, Alberta and Manitoba, 3) a 50% interest in PrintWest Communications in Saskatchewan, 4) a trade publication in Ontario, 5) an increased interest in Continental Newspapers Ltd. and 6) a non-controlling interest in Iron Solutions, a print and on-line resource for data and commercial exchange for agricultural and other equipment.

Opportunities for Further Value Creation

Glacier's profitability and leverage levels are such that sufficient free cash flow is being generated to internally fund both operational development and additional accretive acquisitions while maintaining prudent debt levels, and pursue other initiatives where appropriate that will enhance shareholder value.

Glacier generated a 17.2% return on average adjusted equity for the twelve months ending December 31, 2008. This is calculated as cash flow from operations (before changes in non-cash operating accounts and non-recurring item) divided by consolidated average shareholders' equity for 2007 and 2008 adjusted to exclude $26.0 million of minority equity investments, for which no amount is included in cash flow from operations. Cash flow from operations does not include full year earnings for the operations acquired during 2008.

During the year Glacier repurchased 476,154 common shares at an average price of $2.36 per share through its normal course issuer bid program. Glacier was unable to purchase shares for a significant portion of the year due to "black-out" periods when acquisitions were being negotiated and financial statements were being prepared. Glacier also attempted to purchase larger amounts of shares than were actually bought but was unable to acquire the amounts desired in the market due to demand from other buyers.

While significant care will be taken to align leverage levels with economic risk as the recession unfolds, Glacier's free cash flow and borrowing capacity is such that the Company is in a position to exploit acquisition opportunities. In this regard, management is monitoring economic conditions and business events in the United States and Canada closely to identify acquisition targets. It is expected that the recession will create distressed conditions that should offer a variety of attractive acquisition opportunities. Patience will be exercised to assess optimal timing for these acquisitions. While these opportunities will be pursued, management intends to maintain prudent debt levels given the greater level of uncertainty in the economy.

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 currently pursuing this strategy through two core business segments: 1) the business and professional information markets and 2) the newspaper and trade 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 item) 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.

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 "Outlook for 2009", "Cost Reduction Strategy" and "Opportunities for Further Value Creation", and statements relating to the Company's expectations regarding revenues, expenses, cash flows and future profitability. 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 "Outlook for 2009", "Cost Reduction Strategy" and "Opportunities for Further Value Creation", 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