GVIC Communications Corp.

May 14, 2008 17:57 ET

GVIC Releases First Quarter Earnings

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2008) - GVIC Communications Corp. ("GVIC" or the "Company") (TSX:GCT)(TSX:GCT.C) reported revenue, cash flow and earnings for the period ending March 31, 2008.

Recent Developments and Highlights

- Acquired JuneWarren Publishing of Edmonton, Alberta, which publishes oil & gas information, and several community newspapers in British Columbia and Manitoba during the quarter for $30.6 million.

- GVIC's operations continued to generate strong "same-store" revenue and EBITA growth compared to last year.

- GVIC's strategy diversification in the strong Western Canadian local newspaper, agriculture, mining and energy sectors, as well as a variety of other trade and business and professional information niches, continues to produce strong consolidated revenue, EBITA and cash flow growth.

Operating Results

The following financial information is presented on a continuity of interest basis and represents the results of operations and financial position for periods prior to the April 30, 2007 acquisition of Glacier Ventures International Corp.'s ("Glacier") net assets as if GVIC owned the operations for the prior periods indicated.

3 Months 3 Months
March 31, March 31,
$000's except share and per share amounts 2008 2007
Revenue $ 58,830 $ 53,465
EBITA $ 13,103 $ 11,822
Net income $ 7,651 $ 4,085
Cash flow from operations $ 10,731 $ 9,052
Cash flow from operations per share $ 0.04 $ 0.03
EBITA per share $ 0.04 $ 0.04
Net income per share $ 0.03 $ 0.01
Debt outstanding, net of cash reserves and before
deferred financing charges and other expenses $ 141,738 $ 157,449
Average shares outstanding, net 300,425,031 288,635,131

For the three months ending March 31, 2008, GVIC earned $10.7 million of consolidated cash flow from operations on revenue of $58.8 million, as compared to $9.1 million on revenue of $53.5 million for the three months ended March 31, 2007. GVIC's EBITA was $13.1 million and net income was $7.7 million for the quarter, as compared to EBITA of $11.8 million and net income of $4.1 million for the same period last year.

For the three months ended March 31, 2008, cash flow from operations per share increased 33.3% to $0.04 from $0.03 for the same period last year, EBITA per share was $0.04 the same as the prior period and net income per share was $0.03 compared to $0.01 for the same period last year.

The growth in revenue during the first quarter compared to last year was a result of several factors. "Same-store" revenue growth from existing operations continued to be strong as a result of buoyant local economies and industry sectors, improved sales effectiveness, new product offerings and regional advertising efforts that allow advertisers to benefit from GVIC's larger group of publications and expertise. The acquisitions completed in the first quarter of 2008 and the acquisitions completed subsequent to the first quarter of 2007 (including the Company's 9% increase in its ownership of Alta Newspaper Group Limited Partnership ("ANGLP") completed in October 2007) also contributed to the revenue growth.

In particular, GVIC's diversified strategy of owning local newspapers in Western Canada as well as trade, business and professional information businesses has allowed GVIC to continue to realize steady revenue growth from existing operations. As a result of the strong Western Canadian economy, GVIC's local newspapers continued to generate revenue growth in the more than 70 communities in British Columbia, Alberta, Saskatchewan and Manitoba in which GVIC operates.

GVIC'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, which provides strong ongoing local newspaper revenue. Paid subscription revenue and national advertising represent a small percentage of GVIC's overall revenue. Approximately 85% of GVIC's newspaper distribution is free. Although also a small portion of GVIC's overall revenue, classified sales in our local markets continue to grow. GVIC is also investing in a substantially expanded Internet presence for our local markets, which offers attractive new revenue growth opportunities.

GVIC's mining, energy and agricultural publications and information products have also experienced strong revenue growth as a result of the strength in these sectors.

The combination of the increase in revenues and continued focus on cost management resulted in the strong organic growth in cash flow from existing operations achieved compared to the same period last year. The combination of the organic growth, lower leverage levels and interest expense, and the acquisitions completed resulted in an 18.5% growth in GVIC's cash flow from operations (33.3% on a per share basis) for the first quarter of 2008 compared to the same period last year.

Larger increases in revenue and cash flow are expected in the second and fourth quarters of 2008, which are typically the quarters in which GVIC's operations generate the greatest revenue and cash flow. Management continues to believe there are meaningful opportunities to realize value from GVIC's expanded operations through increased cost efficiencies, improved sales effectiveness and improved publication quality, amongst other things. While some of these improvements have been realized and contributed to GVIC's strong operating results, many of the opportunities are still to be achieved.

New Acquisitions

During the first quarter of 2008, GVIC completed acquisitions that totalled $30.6 million in aggregate purchase price. The acquisitions included 1) JuneWarren Publishing based in Edmonton, Alberta and 2) several community newspapers in British Columbia and Manitoba. These acquisitions fit with GVIC's strategy of growing through two core segments: 1) the business and professional information sectors and 2) the newspaper and trade publication sectors.

GVIC's local newspaper group offers distribution of approximately 1.4 million copies across B.C., Alberta, Saskatchewan and Manitoba. GVIC's trade information group consists of the largest agricultural publication group in Western Canada, the Business In Vancouver Media Group, JuneWarren Publishing, and the Business Information Group - one of Canada's largest trade magazine operations. GVIC's business & professional information group now includes Specialty Technical Publishers which publishes regulatory & compliance information, CD-Pharma Interactive Medical Productions which develops electronic interactive continuing medical education programs for doctors, and a variety of directories, specialty websites and electronic information published by the Business Information Group.

Improved Financial Position

As a result of the repayment of $0.9 million of long-term debt, a reduction in amounts from an affiliated company, and increased profitability, GVIC's leverage has been reduced, which has reduced the Company's interest rate paid on borrowings and overall interest expense.

GVIC's profitability and leverage levels are such that sufficient free cash flow is being generated to internally fund additional accretive acquisitions while maintaining prudent debt levels, and pursue other initiatives where appropriate that will enhance shareholder value. While realizing improvements from operations is a top priority, GVIC is continuing to pursue acquisition opportunities in the information communications sectors. Market conditions are such that attractive buying opportunities are expected to arise, and GVIC is well positioned operationally and financially to benefit.

Shares in GVIC can be traded on the Toronto Stock Exchange under the symbol GCT.

About the Company: GVIC Communications Corp. (TSX:GCT) 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.

Forward Looking Statements

Certain statements in this press release are not historical and may constitute forward-looking statements reflecting financial performance. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Forward-looking statements are based on management's estimates, beliefs and opinions on the date the statements are made. GVIC assumes no obligation to update forward-looking statements if circumstances should change. Additional information on these and other potential factors that could affect GVIC's financial results are detailed in documents filed from time to time with the applicable Canadian securities regulatory authorities.

The Toronto Stock Exchange has neither approved nor disapproved the form or content of this release.

Contact Information

  • GVIC Communications Corp.
    Mr. Orest Smysnuik
    (604) 872-8565