GVIC reports strong second quarter earnings



    Trading Symbol: (TSX:GCT)

    VANCOUVER, Aug. 11 /CNW/ - GVIC Communications Corp ("GVIC") reported
revenue, cash flow and earnings for the period ending June 30, 2008.

    
    Highlights

    -   Revenue for the second quarter grew 22.4% and EBITA grew 35.8%
        compared to the same period last year. EBITA margin for the quarter
        increased to 26.8% from 24.2% for the same period last year.

    -   Cash flow from operations per share for the quarter grew 40.2%
        compared to the same period last year.

    -   GVIC acquired a Western Canadian community newspaper, a 50% interest
        in a strategic publishing and printing operation in Saskatchewan, the
        Electronic Products & Technology magazine and related trade shows, a
        non-controlling interest in Iron Solutions Inc. and an increased
        interest in Continental Newspapers Ltd. During the six months ended
        June 30, 2008, GVIC has completed acquisitions and investments
        totalling $40.8 million in aggregate purchase price.

    -   GVIC's strategic 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.

    -------------------------------------------------------------------------
    $000's except            3 Months     3 Months     6 Months     6 Months
     share and per            June 30,     June 30,     June 30,     June 30,
     share amounts               2008         2007         2008         2007
    -------------------------------------------------------------------------
    Revenue                   $68,884      $56,286     $127,715     $109,752
    -------------------------------------------------------------------------
    EBITA                     $18,494      $13,622      $31,597      $25,466
    -------------------------------------------------------------------------
    EBITA margin                26.8%        24.2%        24.7%        23.2%
    -------------------------------------------------------------------------
    EBITA per share             $0.06        $0.05        $0.11        $0.09
    -------------------------------------------------------------------------
    Cash flow from
     operations               $15,745      $10,793      $26,478      $19,843
    -------------------------------------------------------------------------
    Cash flow from
     operations
     per share                  $0.05        $0.04        $0.09        $0.07
    -------------------------------------------------------------------------
    Interest expense,
     net                       $2,920       $3,020       $5,727       $6,261
    -------------------------------------------------------------------------
    Net income                $12,910       $9,112      $20,562      $13,196
    -------------------------------------------------------------------------
    Net income per share        $0.04        $0.03        $0.07        $0.04
    -------------------------------------------------------------------------
    Debt outstanding,
     net of cash
     reserves and
     before deferred
     financing charges
     and other expenses      $138,761     $149,907     $138,761     $149,907
    -------------------------------------------------------------------------
    Shareholders'
     equity                  $259,084     $224,880     $259,084     $224,880
    -------------------------------------------------------------------------
    Average shares
     outstanding, net     300,425,031  288,635,131  300,425,031  294,562,650
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    For the three months ending June 30, 2008, GVIC earned $15.7 million of
consolidated cash flow from operations on revenue of $68.9 million, as
compared to $10.8 million on revenue of $56.3 million for the three months
ended June 30, 2007. GVIC's EBITA was $18.5 million and net income was
$12.9 million for the quarter, as compared to EBITA of $13.6 million and net
income of $9.1 million for the same period last year.
    For the three months ended June 30, 2008, cash flow from operations per
share increased to $0.05 from $0.04 for the same period last year, EBITA per
share was $0.06 compared to $0.05 for the same period last year and net income
per share was $0.04 compared to $0.03 for the same period last year.
    Consolidated cash flow from operations was $26.5 million for the six
months ended June 30, 2008, as compared to $19.8 million for the same period
last year. Revenue for the period was $127.7 million compared to
$109.8 million for the same period last year, EBITA was $31.6 million compared
to $25.1 million last year, and net income was $20.6 million compared to
$13.2 million last year.
    For the six months ended June 30, 2007, cash flow from operations per
share was $0.09 compared to $0.07 for the same period last year, EBITA per
share was $0.11 compared to $0.09 for the same period last year and net income
per share was $0.07 compared to $0.04 for the same period last year.

    Review of Operations

    GVIC had a strong quarter in terms of both overall performance and
"same-store" revenue and EBITA growth from operations. Same-store EBITA growth
was almost half the 35.8% EBITA growth rate. The acquisitions of JuneWarren
Publishing in January and several other operations completed during the
quarter, and acquisitions completed subsequent to the second quarter of 2007
also contributed to the significant growth. The level of growth is partially
seasonal as a result of the revenue cycle for GVIC's local newspaper and
agricultural publications (which is strongest in the second quarter and fourth
quarter) and JuneWarren revenue recognition (all of the revenue and
contribution for the Canadian Oilfield Service & Supply Directory was
recognized upon publication in June in accordance with generally accepted
accounting principles).
    "Same-store" revenue growth from existing operations was a result of
buoyant local Western Canadian economies and the industry sectors GVIC
targets, improved sales effectiveness, strong market positions and product
quality, new product offerings and regional advertising efforts that allow
advertisers to benefit from GVIC's larger group of publications and expertise.
    In particular, GVIC's 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.
    The combination of this diversification and focus on ongoing operational
improvement has allowed GVIC to generate the growth realized despite softness
in some areas of the economy such as manufacturing. Management believes that
GVIC's strategy of geographic market, information niche and product and
channel balance, combined with low debt levels (see following), have
positioned GVIC to perform well over both the near and longer term. Management
is monitoring economic conditions and business events in the United States and
Canada to ensure that operational performance is maximized and that
opportunities are identified that can benefit GVIC.
    Unlike some of the factors affecting publishers of large metropolitan
daily newspapers, 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. 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 EBITA and 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 a 45.9% growth in GVIC's cash flow
from operations (40.2% on a per share basis) for the second quarter of 2008
compared to the same period last year.
    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 second quarter of 2008, GVIC acquired 1) a Western Canadian
community newspaper, 2) a 50% interest in a strategic publishing and printing
operation in Saskatchewan, 3) the Electronic Products & Technology magazine
and related trade shows that complement GVIC's trade information group, 4) a
non-controlling interest in Iron Solutions Inc. and 5) an increased interest
in Continental Newspapers Ltd. These acquisitions and investments fit with
GVIC's strategy of growing through two core segments: 1) the business and
professional information sector and 2) the newspaper and trade publication
sector. During the six months ended June 30, 2008, GVIC has completed
acquisitions and investments totalling $40.8 million in aggregate purchase
price.
    GVIC's local newspaper group offers distribution of approximately
1.4 million copies across B.C., Alberta, Saskatchewan and Manitoba. GVIC's
trade publication group consists of the largest agricultural publication group
in Western Canada, the Business In Vancouver Media Group, and the Business
Information Group - one of Canada's largest trade information operations,
which now includes the JuneWarren and Electronic Products & Technology
publications described. 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

    During the quarter GVIC repaid $3.4 million of debt and funded
$12.0 million of acquisitions and sustaining capital investments with cash
flow from operations and cash on hand. GVIC's net consolidated debt (net of
cash on hand) to EBITA ratio is now approximately 2.5x, based on the trailing
12 months EBITA for all of GVIC's operations, regardless of the date acquired.
This lower level of leverage has reduced GVIC'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. 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. GVIC is pursuing this strategy through two
core business segments: 1) the business and professional information markets
and 2) the newspaper and trade information markets

    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.
    





For further information:

For further information: Mr. Orest Smysnuik, at (604) 872-8565

Organization Profile

GVIC COMMUNICATIONS INC.

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