GVIC Reports Third Quarter Results
/EINPresswire.com/ -- VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 11/12/15 -- GVIC Communications Corp. ("GVIC" or the "Company") (TSX: GCT) reported cash flow, earnings and revenue for the period ended September 30, 2015.
Summary Results
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).
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(thousands of
dollars) except
share and per share Three months ended Nine months ended September
amounts September 30, 30,
2015 (1) 2014 (1)(3) 2015 (1) 2014 (1)(3)
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Revenue $ 59,720 $ 65,895 $ 196,470 $ 213,445
EBITDA $ 5,794 $ 7,563 $ 22,839 $ 31,866
EBITDA margin 9.7% 11.5% 11.6% 14.9%
EBITDA per share $ 0.019 $ 0.025 $ 0.076 $ 0.106
Net income
attributable to
common shareholders
before non-
recurring items (2) $ 608 $ 2,164 $ 2,634 $ 9,357
Net income
attributable to
common shareholders
before non-
recurring items per
share (2) $ 0.002 $ 0.007 $ 0.009 $ 0.031
Cash flow from
operations (2) $ 4,265 $ 7,944 $ 19,450 $ 32,303
Cash flow from
operations per
share (2) $ 0.014 $ 0.026 $ 0.065 $ 0.108
Debt net of cash
outstanding before
deferred financing
charges $ 106,076 $ 110,869 $ 106,076 $ 110,869
Dividends paid $ 1,803 $ 1,803 $ 5,408 $ 5,408
Dividends paid per
share $ 0.006 $ 0.006 $ 0.018 $ 0.018
Weighted average
shares outstanding,
net 300,425,031 300,425,031 300,425,031 300,425,031
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Notes:
(1) 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.
(2) Net income attributable to common shareholders and cash flow from
operations have been adjusted for non-recurring items.
(3) 2014 has been presented with certain assets as discontinued operations.
Revenue and profitability for GVIC Communications Corp. ("GVIC" or the "Company") continued to be impacted by weaker energy and commodity markets in Western Canada and community media. Adjusted consolidated EBITDA(1) was $5.8 million for the period ended September 30, 2015 compared to $7.6 million for the same period last year, a decline of 23.4%.
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. 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.
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(thousands of dollars) Business Community Total
Information Media Operations
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2015 Q3 Revenue 21,749 37,971 59,720
Divisional EBITDA 4,430 3,441 7,871
Centralized and corporate
expenses (2,077)
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EBITDA 5,794
2014 Q3 Revenue 19,997 45,898 65,895
Centralized and corporate
expenses 4,993 4,883 9,876
EBITDA (2,313)
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7,563
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Transformation Strategy
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 GVIC has a strong competitive position.
GVIC'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:
1. Content and marketing solutions (evolution of media business); and 2. Data, analytics and intelligence
Sector Focus
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 very 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 GVIC 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, GVIC'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 GVIC 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 GVIC.
Operational Overview
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 GVIC'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:
-- 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
GVIC, weather and remote sensing has applications beyond agriculture in
areas such as water security, the environment and oil and gas.
-- GVIC'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 GVIC'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.
Financial Position
On an adjusted basis, including the Company's share of the joint venture interests, GVIC's consolidated debt net of cash outstanding before deferred financing charges was 3.0x 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:
---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (thousands of dollars) Three months ended September 30, 2015 except share and per share amounts Per IFRS Differential Adjusted (1) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue $ 50,320 $ 9,400 $ 59,720 EBITDA (1) $ 2,253 $ 3,541 $ 5,794 EBITDA margin (1) 4.5% 9.7% EBITDA per share (1) $ 0.007 $ 0.012 $ 0.019 Net income (loss) attributable to common shareholders $ (7,243) $ (69) $ (7,312) Weighted average shares outstanding, net 300,425,031 300,425,031 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (thousands of dollars) Three months ended September 30, 2014 except share and per share Per IFRS Adjusted amounts (2) Differential (1)(2) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue $ 55,986 $ 9,909 $ 65,895 EBITDA (1) $ 3,803 $ 3,760 $ 7,563 EBITDA margin (1) 6.8% 11.5% EBITDA per share (1) $ 0.013 $ 0.012 $ 0.025 Net income (loss) attributable to common shareholders $ 1,792 $ 967 $ 2,759 Weighted average shares outstanding, net 300,425,031 300,425,031 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
-------------------------------------------------------------------------- -------------------------------------------------------------------------- (thousands of dollars) Nine months ended September 30, 2015 except share and per share amounts Per IFRS Differential Adjusted (1) -------------------------------------------------------------------------- -------------------------------------------------------------------------- Revenue $ 167,333 $ 29,137 $ 196,470 EBITDA (1) $ 11,901 $ 10,938 $ 22,839 EBITDA margin (1) 7.1% 11.6% EBITDA per share (1) $ 0.040 $ 0.036 $ 0.076 Net income attributable to common shareholders $ (4,969) $ (132) $ (5,101) Weighted average shares outstanding, net 300,425,031 300,425,031 -------------------------------------------------------------------------- -------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (thousands of dollars) Nine months ended September 30, 2014 except share and per share amounts Per IFRS (2) Differential Adjusted (1)(2) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue $ 183,374 $ 30,071 $ 213,445 EBITDA (1) $ 20,880 $ 10,986 $ 31,866 EBITDA margin (1) 11.4% 14.9% EBITDA per share (1) $ 0.070 $ 0.036 $ 0.106 Net income attributable to common shareholders $ 7,425 $ 708 $ 8,133 Weighted average shares outstanding, net 300,425,031 300,425,031 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
Notes:
(1) 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.
(2) 2014 has been presented with certain assets as discontinued operations.
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.
Outlook
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. GVIC'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 and strategic acquisitions.
Shares in GVIC are traded on the Toronto Stock Exchange under the symbol GCT.
About the Company: GVIC Communications Corp. is an information communications company focused on the provision of primary and essential information and related services through print, electronic and online media. GVIC is pursuing this strategy through its core businesses: the community media, trade information and business and professional information markets.
Financial Measures
To supplement the consolidated financial statements presented in accordance with International Financial Reporting Standards (IFRS), GVIC 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 reported 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 operation 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 flo ws and future profitability and the effect of GVIC'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, to pay dividends 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 GVIC'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.
Contacts:
GVIC Communications Corp.
Mr. Orest Smysnuik
Chief Financial Officer
604-708-3264
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