Two Canadian media firms report earnings results: FP Newspapers revenue falls 11.5%, net loss
Glacier Media describes second quarter as ‘challenging’ due to the continued depressed commodity and energy markets
Several Canadian companies involved in media or communications reported earnings in the past 24 hours. Here is a quick round-up of the results:
FP Newspapers reports $17.7M loss in Q2
WINNIPEG, MANITOBA – August 11, 2016 – FP Newspapers Inc. announces financial results for the quarter ended June 30, 2016. FPI is the successor to the business of the FP Newspapers Income Fund and owns securities entitling it to 49% of the distributable cash of FP Canadian Newspapers Limited Partnership.
Second quarter operating results of FPI
During the second quarter of 2016 FPI recorded a non-cash write-down of $6.2 million in the carrying value of its investment in FPLP to reflect a significant decline in the value of its investment due to lower than anticipated operating results as noted above. FPI had a net loss of $5.7 million or $0.823 per share compared to a loss of $17.7 million or $2.558 per share in the second quarter of 2015. Excluding the non-cash write-downs in the second quarters of 2016 and 2015, FPI had net earnings of $0.5 million, or $0.075 per share, during the three months ended June 30, 2016 compared to a $0.9 million or $0.137 per share for the same period in 2015.
Second quarter operating results of FPLP
FPLP’s revenue for the three months ended June 30, 2016 was $20.8 million, a decrease of $2.7 million or 11.5% from the same three months in the prior year. FPLP’s print advertising revenues for the three months ended June 30, 2016 were $12.3 million, a $2.4 million or 16.1% decrease compared to the same period last year. FPLP’s largest advertising revenue category, display advertising including colour, was $7.0 million, a decrease of $1.8 million or 20.3% from the same period in the prior year, primarily due to decreased spending in the local and national automotive, government and telecommunications categories. Classified advertising revenues for the second quarter decreased by $0.3 million or 12.9% compared to the same period last year, primarily due to lower spending in the real estate and employment categories. Flyer distribution revenues decreased by $0.3 million or 8.1% compared to the second quarter in 2015, primarily due to a decrease in flyer volumes with 33% of this decline the result of the consolidation of two large grocery chains and the reduction to one flyer program.
Circulation revenues for the three months ended June 30, 2016 were virtually unchanged from the second quarter of 2015, with lower unit sales offsetting increased revenue from higher print subscription rates and new digital subscription revenues from the Winnipeg Free Press website. Digital revenues for the second quarter decreased by $0.3 million or 29.4%, primarily due to a decrease in on-line web ads. Partly due to these decreased revenues, during the second quarter FPLP changed to another national sales representation firm.
Operating expenses for the three months ended June 30, 2016 were $19.0 million, a decrease of $1.4 million or 6.7% compared to the same quarter last year. Employee compensation costs for the second quarter decreased by $0.8 million or 8.3% from the same period in the prior year, primarily due to a reduction in the number of employees across all of our business units. Newsprint expense for FPLP’s own publications for the first quarter decreased by $0.1 million or 5.9% compared to the same period in the prior year, primarily due to lower volumes and a change in the weight of paper used, partly offset by increased prices. Newsprint expense for commercial printing and delivery expenses for the three months ended June 30, 2016 remained at relatively the same levels compared to last year. Other expenses decreased by $0.4 million or 10.6% compared to the same quarter last year, primarily due to lower outside costs from lower levels of production supplies used. Delivery expenses decreased by $0.1 million or 3.9%, primarily from lower delivery volumes. We anticipate increased declines in delivery expenses going forward due to the consolidation of carrier newspaper bundle pick-up at our Free Press building at the end of the second quarter.
During the three months ended June 30, 2016, as a result of continued revenue declines due to economic factors FPLP recorded an impairment charge relating to its goodwill of $12.7 million and in the same period in 2015 an impairment charge of $23.2 million was recorded. Excluding these impairment charges, FPLP’s net earnings were $1.5 million and $2.3 million for the three and six months ended June 30, 2016, compared to $2.8 million and $4.0 million for the same periods last year.
EBITDA(1) for the three and six months ended June 30, 2016 was $2.9 million and $5.1 million compared to $4.2 million and $6.9 million for the same periods last year, a decrease of 31.6% and 26.5%, respectively. EBITDA(1) margin for the three and six months ended June 30, 2016 was 13.8% and 12.5%, compared to 17.9% and 15.4% in the same periods last year. The changes in EBITDA(1) were due to the factors described in the revenue and operating expense paragraphs above.
Distributable cash attributable to FPI(2) for the three months ended June 30, 2015 was $(0.1) million or ($0.010) per share, compared to $0.1 million or $0.014 per share for the same period last year.
Print advertising revenue year-over-year declines continued in the second quarter and similar declines are being experienced early into the third quarter. A number of staffing changes have been made in July to help strengthen our businesses. Grant Suderman who was hired as a consultant early in the first quarter has accepted the position of Vice President of Advertising Sales and Marketing. Mr. Suderman has many years of experience managing sales staff. Laurie Finley, who served in this capacity for over twenty years, will be taking on the General Manager position at Derksen Printers which was vacant following Glenn Buffie’s resignation earlier this year. Jim Mihaly, who has many years of newspaper experience, has been hired as the Publisher of the Brandon Sun. We are optimistic the staff changes will help generate new ideas and new ways to think about the challenges our businesses are facing.
The Winnipeg Free Press implemented a subscription price increase at the beginning of July. On average home delivered newspaper subscriptions increased by 12%. The increase was deemed required largely in response to the continued weakness in advertising sales and the resulting pressures on overall resources.
In the third quarter we completed a renewal of a mortgage financing agreement on our Derksen Printers building in Steinbach. The new loan is for $0.9 million and replaces a $0.7 million loan that was due on July 28, 2016, with the remainder to be available for working capital needs.
Work continues on the Winnipeg Free Press advertising software installation and we are planning to be live on the new system effective October 1, 2016.
Glacier Media describes second quarter as ‘challenging’
VANCOUVER, BRITISH COLUMBIA – August 11, 2016 – Glacier Media Inc. reported cash flow, earnings and revenue for the period ended June 30, 2016.
The second quarter was challenging for Glacier Media Inc. primarily due to the continued depressed commodity and energy markets. Adjusted consolidated revenue was $60.6 million for the three-month period ended June 30, 2016 compared to $70.9 million for the same period in the prior year. Approximately 19% ($2.0 million) of the total $10.3 million adjusted revenue decline for the period resulted from planned closures and restructuring of newspaper and printing operations. These restructurings resulted in stronger and more efficient operations and improved profitability. During the quarter, the Company published its Comprehensive Oilfield Service & Supply Database (“COSSD”). Revenue for this publication declined significantly due to the extremely difficult energy environment in Western Canada, accounting for another 18% ($1.9 million) of the total adjusted revenue decline for the quarter.
Adjusted consolidated EBITDA(1) decreased to $7.4 million for the three-months ended June 30, 2016 compared to $9.8 million for the same period in the prior year. The Company’s operations directly affected by the weak energy and commodity environments experienced significant EBITDA declines, including a sizeable EBITDA decline related to the COSSD (most of the revenue decline directly impacts EBITDA).
The Company’s operations not adversely impacted by the weaker energy sector and excluding the operating investment related to the launch of the Company’s Environmental Risk Information Services into the U.S., grew in EBITDA compared to the same period in the prior year. The Company’s community media segment EBITDA grew by 15% compared to the same period in the prior year. Community media continues to benefit from the 2015 and year-to-date restructuring efforts in many of its operations.
For the six-months ended June 30, 2016, the Company’s adjusted consolidated EBITDA declined $1.1 million. Excluding the COSSD (which is published once a year in the second quarter) EBITDA grew $0.4 million or 3%.
On an adjusted basis(1), including the Company’s share of its joint venture interests, Glacier’s consolidated debt net of cash outstanding before deferred financing charges was 2.2x trailing 12-months EBITDA as at June 30, 2016.
During the period ended June 30, 2016, the Company undertook a rights offering which closed on July 4, 2016. The offering raised net proceeds of $13.2 million, all of which was used to reduce the Company’s senior debt. A total of 20,745,626 common shares were issued after quarter end as a result of the rights offering. The total outstanding number of common shares after the rights offering is 109,828,731.
(1) For a reconciliation of adjusted results to results in accordance with International Financial Reporting Standards (“IFRS”), refer to the “Reconciliation of IFRS to Adjusted Results” as presented in the Company’s Management Discussion & Analysis.
Business information’s adjusted consolidated revenue(1) decreased to $23.3 million for the three-months ended June 30, 2016 compared to $ 25.1 million for the same period in the prior year. Business information’s adjusted consolidated EBITDA(1) decreased to $3.0 million for the three-months ended June 30, 2016 compared to $6.2 million for the same period in the prior year.
Conditions in the agricultural sector remain soft with low commodity prices and increasing industry consolidation. Conditions in the second half of the year do appear to be improving.
Certain Glacier FarmMedia (“GFM”) operations did continue to grow in the quarter. Weather INnovations Consulting (“WIN”) continues to close new revenue contracts. During the quarter, WIN signed a significant new contract with the Food and Environment Research Agency, a U.K. crown corporation for high-end weather units.
In July, GFM held its second annual Ag In Motion show, the Western Canadian farm demonstration show held in Saskatchewan. The show was extremely successful experiencing significant increases in the number of exhibitors, attendance and revenue.
The near-term outlook for the energy sector remains uncertain. Conditions at JuneWarren Nickle’s Energy Group (“JWN”) continue to be adversely impacted by market conditions. JWN has implemented substantial cost reduction measures while concurrently pursuing revenue initiatives such as new research contracts and data information products.
The Company continued to invest in its database of energy companies, properties and assets (CanOils). Asset information has become increasingly valuable as companies look to navigate the industry downturn and investors look for distressed assets. Consequently, revenues from the Company’s database products have performed well despite the dramatic downturn.
The mining sector continues to be impacted by a four-year slump. While the Company’s mining information businesses had another challenging quarter there are initial signs of a turn around. Some lines of business that have not grown for some time grew in the quarter. This growth mimics some initial positive signs in the underlying mining industry.
Environmental Risk Information Services (“ERIS”) continues to experience strong revenue growth, adding a number of new customers during the quarter. Revenue for the quarter increased 20% compared to the same period in the prior year.
Operating investments continue to be made to allow ERIS to scale to the next revenue tier and maintain strong product quality. The tangible benefits of these investments will come to bear over the coming quarters.
STP’s revenues grew significantly during the quarter as a result of continued growth in EMIS and electronic network sales.
Real Estate Information
REW.ca, the Company’s online real estate portal, continued to grow rapidly with increased traffic and features. In June 2016, the site grew to a visit level of 1.8 million visitors per month, a 95% increase over the same period in the prior year. Revenues continue to scale more than doubling versus the same period in the prior year. The Company continues to invest in site features and relevant data.
Fundata Canada Inc. (“Fundata”) experienced another strong quarter with increases in revenue and EBTIDA compared to the same period in the prior year. Fundata continues to have strong initial response to its new Point of Sales Fund Facts offering.
General Business Information
Business in Vancouver (“BIV”) experienced a very strong quarter with increases in revenue and EBITDA compared to the same period in the prior year. BIV’s success is attributable to strong newspaper and special event performance complemented by new product offerings such as the Women in Business publication.
Community media’s adjusted consolidated revenue(1) decreased to $37.4 million for the three-months ended June 30, 2016 compared to $45.9 million for the same period in the prior year. Community media’s adjusted consolidated EBITDA(1) increased to $6.4 million for the three-months ended June 30, 2016 compared to $5.5 million for the same period in the prior year.
Overall, the Company’s community media segment experienced adjusted revenue declines driven by a combination of the maturing nature of print advertising and the impact of continued weak commodity prices on many Western Canadian communities. However, adjusted EBITDA increased in the quarter, as the Company continues to realize savings from the restructurings implemented throughout 2015 and 2016. In many cases, the changes have resulted in improved products for both readers and advertisers as fewer but more substantial editions are published.
Digital community media revenues and EBITDA grew by more than 20% for the three-months ended June 30, 2016, compared to the same period in the prior year.
The Company continues to pursue cost-reduction initiatives in all markets, where practical, while maintaining product quality and sales effectiveness.