Glacier’s 2nd Quarter Report Indicates Weakness In Urban Market Newspapers

By August 21, 2013Business News

Glacier Media Group’s 2nd quarter results showed decreases in revenue, earnings, and cash flow despite growth in its business information operations and relative stability in its small market newspaper operations according to a report released by the company August 14.

A reduction in national advertising and weakness in the Canadian economy, however, have impacted the company’s assets in urban community media markets according to the report.

Glacier, owners of the Chilliwack Times, Langley Advance, Abbotsford Times and Maple Ridge/Pitt Meadows Times, has seen its share price take a slow but steady beating over the last year, dropping from over $2.00 a share to less than $1.60 in the last weeks of June when it rebounded slightly on the announcement that Glacier had partnered with

Since June the stock has fallen dramatically.

We have reproduced some of the highlights from the August 14th report:

• For the three months ended June 30, 2013, Glacier’s adjusted consolidated revenue decreased 2.5% to $89.1 million from $91.4 million for the same period in the prior year;
• Adjusted consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 22.0% to $13.4 million from $17.1 million for the same period in the prior year;
• Adjusted cash flow from operations (before changes in non-cash operating accounts and non-recurring items) decreased 20.8% to $12.2 million;
• Adjusted net income attributable to common shareholders before non-recurring items was $4.4 million compared to $7.2 million for the same period in the prior year;
• Adjusted EBITDA per share decreased 21.9% to $0.15 from $0.19 for the period compared to the same period in the prior year and net income attributable to common shareholders before non-recurring items per share decreased to $0.05 from $0.08 for the same period in the prior year;
• Adjusted cash flow from operations (before changes in non-cash operating accounts and non-recurring items) per share decreased 20.8% to $0.14 per share from $0.17 for the same period in the prior year;
• Glacier became a 50% partner in a new venture, Weather INnovations (“WIN”) Consulting – created as the result of merging WeatherFarm (a former Canadian Wheat Board asset acquired by Glacier in late 2012) and Weather INnovations Inc. (an agricultural meteorology information business), of which Glacier acquired an interest in on April 5, 2013;
• Business information EBITDA reached 56% of Glacier’s total EBITDA;
• Approximately 45% of Glacier’s business information EBITDA now comes from rich information digital data products which continue to grow with high levels of profitability; and
• During the quarter, $4.0 million of cash was realized through the sale of redundant real estate assets and the proceeds were used to pay down debt.

Glacier Media Stock

[excerpt] glacier-bc-newspapersjpegReview of Operations

Glacier Media Inc. (“Glacier” or the “Company”) continued to generate strong revenue, profit and cash flow from operations through its diversified base of information communications businesses. General weakness in the Canadian economy, however, has impacted year-over-year performance of many of the Company’s assets, particularly those in urban community media markets.

As a result, Glacier’s senior management has undertaken a comprehensive review of the Company’s operations. In order to provide a stronger financial position with which to operate the business going forward, and to better take advantage of growth opportunities, management will initiate a series of cost reduction, profitability improvement, redundant asset sale and other initiatives.

[excerpt] Glacier’s community media operations offer a broad coverage of Western Canadian local markets; and continue to offer a strong value proposition through local information and marketing channel utility. The soft economic conditions that adversely affected national advertising revenues in the first quarter continued in the second. This impact is particularly true of community operations in more urban markets such as the Lower Mainland of British Columbia, where both print and digital competition compounds the impact of a weaker economy. The Company’s smaller rural community media markets – largely spread across the Prairies – continue to enjoy stable performances.

The media industry, as a whole, continues to pursue new “business models” intended to manage the future value of content and marketing solutions against a backdrop of declining traditional advertising. Glacier is well advanced in this respect, with internal models structured to balance those losses with innovative customer solutions – designed to be resilient to the peaks and valleys associated with economic cycles.

Given the significant growth opportunities available in information services, the Company’s strategy is to invest cash flow generated from the community media operations and the business information operations in both operational opportunities and acquisitions. In particular, the Company intends to increase capital allocated to business information acquisitions and organic growth opportunities.

[excerpt] Abbotsford TimesCommunity Media

Through the second quarter, Glacier’s community media operations continued to experience weaker revenue performance in a number of markets, primarily the result of softer national advertising – itself the direct result of a generally weak overall economy. The B.C. markets in particular 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 ongoing cautiousness due to prevailing economic conditions, as financial and government revenues have been significantly lower.

Digital competition also affected print spending levels, although this trend was greater in the larger urban markets than in the smaller local markets. Local advertising revenues were lower in both the existing markets where Glacier has operated, and some of the Lower Mainland and Vancouver Island markets acquired from Postmedia. However, the Company’s community media assets in the Prairies continued to experience reasonable stability as a result of being in geographically isolated markets.

As a result of the softer conditions, management has undertaken a detailed overview of all markets to ensure maximization of cost control measures, with a focus on integrated initiatives to maximize productivity and capacity.

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 – particularly within the more robust micro-economies of Western Canada. This cash flow can be used to fund growth through both internal investment and acquisition of digital business information and community media assets, as well as debt repayments.

[excerpt] Outlook and Summary

While economic conditions have impacted some community media operations and some business information verticals, and digital competition has affected the community media revenues, management expects that growth will continue in Glacier’s business information operations, as well as a variety of community media markets where local market conditions are stronger.

While the print advertising business is maturing, it is important to recognize that the softer economy is playing a significant role in dampening revenues, and a strengthening of the economy should result in improved revenues at the margin. In this regard, management will continue to closely monitor economic conditions in various markets and verticals to ensure appropriate decisions are made that maintain long-term viability.

For the full release and report please click here.

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