GVIC Communications Corp. ("GVIC" or the "Company") reported revenue and earnings for the period ended March 31, 2020.
SUMMARY RESULTS
Three month ended March 31, thousands of dollars, except share and per share amounts 2020 2019 Revenue $ 43,281 $ 44,262 EBITDA $ 2,130 $ 2,167 EBITDA margin 4.9% 4.9% EBITDA per share $ 0.007 $ 0.007 Capital expenditures $ 1,323 $ 4,847 Debt net of cash outstanding before deferred financing charges and other expenses $ 58,605 $ 54,076 Net income attributable to common shareholder $ (12,689 ) $ (1,586 ) Net income attributable to common shareholder per share $ (0.042 ) $ (0.005 ) Weighted average shares outstanding, net 300,425,031 300,425,031 Results including joint ventures and associates: Revenue $ 52,393 $ 57,504 EBITDA $ 3,386 $ 5,106 EBITDA margin 6.5% 8.9% EBITDA per share $ 0.011 $ 0.017
(1) Certain results are presented to include the Company's proportionate share of its joint venture and associate operations, as this is the basis on which management bases its operating decisions and performance. The Company's joint ventures and associates include Continental Newspapers Ltd, Great West Newspapers Limited Partnership, the Victoria Times-Colonist, Rhode Island Suburban Newspapers, Inc., Village Media Inc. and Borden Bridge Development Corporation. (2) The Company sold its interest in Fundata for $55.0 million in April 2019. Results were included up to March 31, 2019. (3) Includes $3.1 million purchase of land for Canada's Outdoor Farm Show in Woodstock, Ontario in Q1 2019.
SIGNIFICANT DEVELOPMENTS IN Q1 2020 AND OUTLOOK
Outlook and Impact of Coronavirus
The Company's businesses began to feel the impact of the coronavirus (COVID-19) pandemic in the latter half of March. The operating and financial impact of the pandemic and the economic consequences accelerated rapidly post Q1.
The Company operates a broad portfolio of businesses in terms of geography, industries served and business models. Print community media, residential and commercial real estate, energy and mining and most of the Company's other businesses are being adversely impacted to a significant degree by the COVID pandemic, by advertising shortfalls and other factors affecting revenue.
Some operations are being impacted less by the crisis. For example, the Canadian agricultural industry is benefiting from the situation given that food is an essential product and a weaker Canadian dollar has helped with producer revenues. FarmMedia has held up well as a result. Digital media traffic has increased significantly, with digital revenues holding up relatively well.
Given the impact of COVID-19 and the high degree of uncertainty, management has taken a number of steps to address the COVID-19 effects and the economic fallout, including:
Management is monitoring operating performance and cash flow on a weekly basis and will take additional actions as necessary.
The current circumstances are dynamic and the impacts of COVID-19 on the Company's business operations are expected to be pronounced for a lengthy period of time. The duration and impact on overall customer demand cannot be reasonably estimated at this time, but it is anticipated this may have a further adverse impact on the Company's business, results of operations, financial position and cash flows during the remainder of 2020.
Due to the uncertainty surrounding the magnitude, duration and potential outcomes of the COVID-19 pandemic, the Company is unable at this time to predict the total impact on its operations. However, the Company is taking significant cost containment actions as indicated and is evaluating its alternatives, including working with its lenders and with strategic partners to identify initiatives, including financings and transactions, in order to enhance the Company's liquidity and financial condition.
Operating Highlights
During the first quarter of 2020, the Company's performance was such that the growth areas increasingly offset declines in the mature businesses. Overall, performance in the quarter was much improved as compared to 2019 until the pandemic impacted revenues and profit in the latter half of March.
Significant developments during Q1 2020 included:
-- Each business within the Environmental and Property Information segment (ERIS, STP and REW) experienced strong revenue and EBITDA growth.
-- Community media digital continued the ongoing trend of strong development:
Operating Progress. Continued progress was made during the quarter in expanding and enhancing the key focus areas of the business within business information and community media digital. Community media digital, ERIS, STP, REW, agricultural digital media and listings, weather information, mining cost information and eLearning all continued their growth trend until the impact of the pandemic.
Print advertising revenues overall continue to decline. The declines in print revenue were partially offset by revenue growth in the key data, analytics and intelligence products and digital media products consistent with the Company's strategy. During the quarter significant cost reduction and rationalization projects were also undertaken to help manage the print decline.
The Company expects its total revenue will continue to decline in the near term until it reaches the inflection point where the revenue from its data, analytics and intelligence products and digital media products exceeds the decline of its print. For the first two months of the quarter, the Company made good progress in this regard. March was on track to be another strong revenue month until the COVID pandemic started to impact the Company's businesses.
Q1 2020 OPERATIONAL PERFORMANCE
Consolidated revenue for the period ending March 31, 2020 was $43.3 million, down $1.0 million or 2.2% from the same period in the prior year. Consolidated EBITDA was $1.9 million for the period, down less than $0.1 million or 1.4% from the same period in the prior year.
Including the Company's share of joint ventures and associates, revenue was $52.4 million, down $5.1 million or 8.9% and EBITDA was $3.2 million, down $1.7 million or 34.9%. $0.8 million of the decline was the net result of the sale of Fundata and the acquisition of Castanet in April 2019.
The Company continued to make progress in its key growth areas in business information and digital media, which partially offset expected print revenue declines, as demonstrated by the overall revenue performance. Even with the negative impact of COVID-19 starting in the quarter the Company experienced lower consolidated revenue and EBITDA declines than in recent periods. This was largely due to the fact that revenue growth in the key growth businesses largely offset anticipated print declines where cost management initiatives continue to be implemented.
EBITDA was also reduced by the operating expense investments made in some of the key strategic development initiatives, including the REW digital real estate marketplace, new weather and agricultural markets subscription-based products, mining data and intelligence information products and new digital community media products.
These investments have been made to take advantage of opportunities that exist in the Company's markets and require timely action to be taken. The growth in revenues achieved in these operations, and the demand for the Company's products this reflects, underscores the fact that the investments have been working and value is being created.
Financial Position. As at March 31, 2020, senior debt was $20.5 million. The Company's consolidated non-recourse, non-mortgage debt is in a nil position net of cash on hand as a result of significant debt repayment.
The Company also has $3.4 million of deferred purchase price obligations owing over the next two years and $10.0 million of a vendor-take back receivable from Fundata over the next four years
Annual General Meeting. Due to the impact and timing of COVID, the Company has made the decision to delay its Annual General Meeting until later in the year. The Information Circular, including executive compensation disclosure, will be mailed to shareholders of record before the meeting.
Shares in GVIC are traded on the Toronto Stock Exchange under the symbol GCT.
For further information please contact Mr. Orest Smysnuik, Chief Financial Officer, at 604-708-3264.
ABOUT THE COMPANY
GVIC Communications Corp. is an information & marketing solutions company pursuing growth in sectors where the provision of essential information and related services provides high customer utility and value. The Company's products and services are focused in two areas: 1) data, analytics and intelligence; and 2) content & marketing solutions.