Glacier Reports Third Quarter Results
GLACIER REPORTS THIRD QUARTER RESULTS
Vancouver, B.C., November 12, 2015 – Glacier Media Inc. (“Glacier” or the “Company”) reported cash flow, earnings and revenue for the period ended September 30, 2015.
The following results are presented on an adjusted basis(1) to include the Company’s share of its joint venture operations on a proportionate basis, because this is the basis on which management bases its operating decisions and performance. For a reconciliation to results in accordance with International Financial Reporting Standards (IFRS), refer to the “Reconciliation of IFRS to Adjusted Results” as presented below and in Management’s Discussion & Analysis (MD&A).
Revenue and profitability for Glacier Media Inc. (“Glacier” or the “Company”) continued to be impacted by weaker energy and commodity markets in Western Canada and community media. Adjusted consolidated EBITDA(1) was $5.6 million for the period ended September 30, 2015 compared to $7.4 million for the same period last year, a decline of 24.8%.
The Company generated improved performance as the quarter progressed. September was the best month to date in 2015 for the Company with EBITDA from operating divisions being slightly better than the same month last year when commodity markets were stronger. ERIS, Inceptus, BIV Media Group and FarmMedia all generated both revenue and EBITDA gains compared to last year.
The declines in revenue were largely due to community media print advertising revenue declines and the impact of low oil prices on the Company’s energy information division, JuneWarren-Nickle’s. Approximately 30% of the $6.2 million revenue decline for the quarter was the result of planned closure and restructuring of newspaper and printing operations. These restructurings resulted in stronger and more efficient operations and improved profitability.
The declines in community media and energy were partially mitigated by strong growth in a number of business information divisions as indicated during the quarter. A wide variety of sales initiatives have resulted in the improved business information revenue performance. Glacier FarmMedia, for example, had a strong quarter, hosting two successful outdoor farm demonstration shows and growing both revenues and EBITDA significantly over last year. Business information EBITDA has held up relatively well given the market conditions.
To address the challenges facing some of the businesses, the Company is implementing a strategy to transform its business and focus efforts on a narrower spectrum of operating sectors in order to deploy resources and capital in areas where long-term growth opportunities can best be realized, and Glacier has a strong competitive position.
Glacier’s core focus is to operate as an information & marketing solutions company pursuing growth in sectors where the provision of essential information & related services provides high customer utility & value. The related “go to market” strategy is being pursued through two operational segments:
Content and marketing solutions (evolution of media business); and
Data, analytics and intelligence
As part of this transformational strategy, the decision was made to focus efforts on the provision of information and marketing solutions in the following sectors:
Agriculture. The Company has a strong national presence in the agriculture information sector. The Company’s agriculture publications, websites, weather models and networks, databases, and trade shows are the leading sources of information for Canadian farmers, ranchers, agri-businesses, and those involved in the Canadian agriculture industry. The agriculture industry is experiencing rapid change and innovation with new technologies and methods such as precision farming, an open grain marketing system and other trends increasing the need for and value of information. The Company is well positioned to capitalize on these trends.
Energy. The energy sector is a truly global industry with strong long-term needs for information. While the industry is currently suffering from a cyclical downturn, opportunities exist as operations continue and businesses look to reduce costs and increase efficiencies. The Company has strong brands such as the Daily Oil Bulletin that have served the Canadian oil patch for decades. Given the pure scale of this sector, many information product growth opportunities exist that the Company will be able to capitalize on.
Mining. Like energy, mining is a global sector with strong long-term needs for information, in which Canada is a major player and Glacier has strong brands and market positions. The Company has been investing in its mining information products and is well positioned for when the current cyclical downturn reverses.
Environmental risk & compliance. ERIS, Glacier’s environmental risk information business, is the main provider in Canada of Phase 1 environmental information and recently launched into the U.S. where it is the main competitor to the largest operator in the American market. Phase 1 environmental information is used by buyers and sellers of commercial real estate and financial lenders in evaluating mortgage lending risk, amongst other things. A variety of other growth opportunities exist in environmental risk & compliance information.
Real estate. REW.ca, the Company’s real estate listing portal in the Lower Mainland in B.C., now has 98% of the residential listings in Vancouver and recently launched into the Greater Victoria market. REW.ca has a significant growth opportunity as a platform for residential and other real estate information and marketing.
Mutual funds. Fundata is the market leader of mutual fund listings information in Canada and is expanding through analytics and other products and areas. It provides Glacier with steady and growing cash flow, and offsets some of the cyclical risk of natural resources cash flows.
Community Media. The community media business is a mature industry but generates significant cash flow for the Company. The products continue to provide value for advertisers, and opportunities exist to leverage the local brands, marketing reach and customer relationships to generate new revenues. Efforts will be made to restructure community media assets to create greater direct value and operating simplicity for Glacier.
Initiatives are being pursued to develop the Company’s operations through its Evolve, Enrich and Extend strategy. New management and staff are being hired to expand Glacier’s expertise in the information areas and opportunities it is pursuing. A variety of core products will continue to be re-developed and new products launched to address evolving market needs and opportunities. Key operating highlights in the quarter included:
Glacier FarmMedia had a better quarter with year-on-year increases in revenues and EBITDA. Low commodity prices continue to create a difficult environment but many segments of the division experienced growth. FarmMedia hosted Canada’s Outdoor Farm Show from September 15-17th in Woodstock, Ontario. This year’s show was very successful with record attendance and sold out exhibitor space. The show came two months after the successful launch of Ag In Motion, the first outdoor farm demonstration show in Western Canada. The inaugural show generated revenues in excess of $1 million and received positive reviews in the press and from attendees and exhibitors.
On September 30th, the Company acquired an additional 34% of Weather INnovations Consulting (“WIN”) bringing its stake to 85%. The remaining 15% of WIN continues to be held by management. WIN operates the largest weather network in Canada and provides decision support to growers and agri-businesses based on localized weather and associated modelling. For Glacier, weather and remote sensing has applications beyond agriculture in areas such as water security, the environment and oil and gas.
Glacier’s energy information group, JuneWarren-Nickle’s (JWN), continues to be adversely impacted by the difficult oil and gas environment in Western Canada. The negative market conditions substantially impacted all JWN’s products in the quarter with revenues off more than 25% from the same month last year. Substantial efforts are being made to ensure the group’s products offer their customers necessary value in challenging times and remain an important part of running their businesses. JWN continues to pursue new revenue initiatives, such as the launch this year of the enhanced Canoils database module that provides enhanced information on the assets owned by energy companies. This information will be helpful as companies target asset acquisitions in distressed market conditions, as well as other purposes.
ERIS continues to execute on its North American expansion plan. Growth in the US continues to be very robust with increases coming from increased orders from existing customers and the onboarding of many new customers.
REW.ca, the Company’s online real estate portal, continued to grow rapidly with increased traffic and features. The site grew to a visit level of almost 1 million visitors and 10 million page views per month. Revenues for the site continue to scale. During the quarter the website’s reach expanded from the Lower Mainland of B.C. to include Greater Victoria.
A number of the Company’s community media operations saw substantial reductions in revenues and EBITDA. In particular, operations in Alberta and Saskatchewan experienced significant declines driven by a combination of the maturing nature of print advertising and continued weak commodity prices. Declines in national revenues continued to be the most substantial with local advertising performing relatively better.
The restructuring of Glacier’s community media operations in the Lower Mainland of B.C. (LMP) continued in the quarter. Operational efficiencies from a reduction in the number of editions being published resulted in lower operating costs. Further, the changes have resulted in improved products for both readers and advertisers as more substantial editions are published. Even with the reduction in editions, the bulk of the sales staff was retained in order to aggressively pursue new revenue sources and streams.
On an adjusted basis, including the Company’s share of the joint venture interests, Glacier’s consolidated debt net of cash outstanding before deferred financing charges was 2.4x trailing 12-months EBITDA as at September 30, 2015.
As at September 30, 2015, senior debt was $67.9 million. Management is seeking to reduce senior debt levels to less than $50 million in the near term, such that ongoing debt can be supported by the business information operations, and the community media operations can provide free cash flow for investment purposes, further debt reduction and financial flexibility.
Over the last two years, the Company has sold $49 million of real estate assets and non-core trade publications. Additional dispositions of real estate and non-core operating assets are currently being pursued.
Reconciliation of IFRS to Adjusted Results
The following table is a reconciliation of the IFRS results to the adjusted results (which include the Company’s proportionate share of its joint venture operations). Refer to the MD&A for further discussion and analysis of these results:
The qualitative discussion of the third quarter 2015 results in this President’s Message is relevant and applicable for the adjusted results and the IFRS results.
The outlook for the Company remains varied.
Depressed energy and agricultural commodity prices continue to weigh on the Western Canadian economy and the operations of the Company. Glacier’s energy information business and community media operations, particularly in the Prairies, continue to face strong headwinds. The community media operations continue to operate in a mature industry as dollars continue to shift from print to digital.
Offsetting these challenges are a number of growth and business improvement opportunities that the Company is pursuing. The overall improved performance in September reflected a number of these factors:
Many of the Company’s divisions such as ERIS, Fundata, and REW.ca offer strong growth opportunities. Recent growth is being reflected in operating results;
The substantial restructuring efforts that have been undertaken and continue in the community media business are starting to result in a material impact on profitability; and
A slight improvement in the conditions faced by the agriculture industry.
Assuming market conditions do not worsen further, these factors and others should result in better relative operating performance.
Even with the mixed outlook, the Company continues to take care to make sure it invests in and focuses on transforming its products and services to ensure that it continues to offer high value to customers in its various markets and continues to improve its long-term business strength. Further, operational and capital investments will continue to be made to support areas that are experiencing strong growth and have large opportunities.
Importantly, the Company has made substantial progress towards its objectives of both strengthening its financial position and narrowing its spectrum of operating sectors in order to redeploy capital and resources to higher-growth and higher-value products and services.
Once leverage is reduced to lower operating levels, management will seek an ongoing balance of maintaining debt at those levels and delivering increased value to shareholders through operations, strategic acquisitions and share buy-backs.
Shares in Glacier are traded on the Toronto Stock Exchange under the symbol GVC.
For further information please contact Mr. Orest Smysnuik, Chief Financial Officer, at 604-708-3264.
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 and business information markets.
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, net income from continuing operation attributable to common shareholders before non-recurring items, earnings before interest, taxes, depreciation and amortization (EBITDA) and all ‘adjusted’ measures 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.
The adjusted consolidated financial results have been adjusted to include the Company’s share of revenue, expenses, assets and liabilities from its joint venture operations on a proportionate accounting basis as this is the basis on which management bases its operating decisions and performance evaluation. IFRS does not allow for the inclusion of the joint ventures on a proportionate basis. These results include additional non-IFRS measures such as EBITDA, cash flow from operations and net income attributable to common shareholders before non-recurring items.
The adjusted results are not generally accepted measures of financial performance under IFRS. The Company’s method of calculating these financial performance measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies. Refer to the MD&A for a reconciliation of these non-IFRS measures and adjusted results.
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 generate incremental revenues, to implement cost reduction measures, to sell non-core assets, 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, 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 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.