GVC.TO - Glacier Media

[Parsad]

'and you can ponder it over the weekend'

 

That attitude attached to ignorance makes me want to ponder people in the face.

 

Yeah, I felt the same way.  The stock is at a five-year low doing things the institutional way.  How tarnished will the memory be if the stock continues to languish for another five years?  Cheers!

[stylized_fact]

'and you can ponder it over the weekend'

 

That attitude attached to ignorance makes me want to ponder people in the face.

 

Yeah, I felt the same way.  The stock is at a five-year low doing things the institutional way.  How tarnished will the memory be if the stock continues to languish for another five years?  Cheers!

 

Maybe I'm missing something, but if Grippo could be convinced to take the side of common sense, this could be a great setup for some non-economic selling.

[NormR]

The stock is very thinly traded, just how easy would it be to buy back stock in quantity without paying a premium?

[Cardboard]

You do a Dutch auction following the announcement of a dividend cut or its elimination. This way you pay no premium vs current price despite the premium of the auction and can absorb a ton of shares from funds who are mandated to buy income.

 

Not related to Glacier, but I see a ton of irrational stuff in the corporate world and in general. I have come to the conclusion that humans in general don't like to think or make rational based decisions. They just act based on their emotions and instincts. Very scary.

 

Cardboard

[petec]

Parsad, a couple of questions.  First, given the 33% and the 7% holdings, why do the (big, but in aggregate much smaller) institutional shareholders hold so much sway?

 

And second, why do you say the company is running into the ground?  I realise the key metrics haven't made a lot of progress in the last few years but I thought that was down to weak end markets in big cities and perhaps to a disappointing acquisition of Postmedia, not because of a lack of cash to deploy.  I personally don't differentiate much between buybacks and dividends, given that I can use the dividends to buy more stock (I hold it in a tax-free account).  Either way I end up owning more of the company.  Do you think they should pay debt down much faster, or really ramp up the acquisitions?

 

Thanks for your input - you know this one far better than I do.

 

Pete

[Parsad]

Parsad, a couple of questions.  First, given the 33% and the 7% holdings, why do the (big, but in aggregate much smaller) institutional shareholders hold so much sway?

 

The two institutions I think own closer to 20%, as Montrustco alone holds 14%.

 

And second, why do you say the company is running into the ground?  I realise the key metrics haven't made a lot of progress in the last few years but I thought that was down to weak end markets in big cities and perhaps to a disappointing acquisition of Postmedia, not because of a lack of cash to deploy.  I personally don't differentiate much between buybacks and dividends, given that I can use the dividends to buy more stock (I hold it in a tax-free account).  Either way I end up owning more of the company.  Do you think they should pay debt down much faster, or really ramp up the acquisitions?

 

I didn't mean that Glacier is running into the ground, but that often institutional mentality is to just follow the status quo and the company slowly languishes and runs into the ground over years and years. 

 

In Glacier's case, the capital paid out in dividends would be better spent paying down debt.  And then buying back shares at these prices.  As well as possible acquisitions that are accretive and growing.  Any of those ideas are better than returning capital to shareholders at this point!  Cheers!

 

 

[tengen]

I didn't mean that Glacier is running into the ground, but that often institutional mentality is to just follow the status quo and the company slowly languishes and runs into the ground over years and years. 

 

In Glacier's case, the capital paid out in dividends would be better spent paying down debt.  And then buying back shares at these prices.  As well as possible acquisitions that are accretive and growing.  Any of those ideas are better than returning capital to shareholders at this point!  Cheers!

 

It seems companies/boards can get fixated on the dividend, giving it a quasi holy status. Think of the widows and orphans who depend on it! Could be a good topic for a PhD dissertation. ;-)

 

Maybe we need to get Parsad on the board...

 

 

[Studesy]

I noticed a bit of an uptick in Glacier's price today.  It has been pretty quiet for quite some time.  Looks like they disposed of some real estate assets.

http://finance.yahoo.com/news/glacier-announces-completion-real-estate-181116209.html

Does anyone know how the CRA tax issues are moving along? What is the expected timeline on this?

TIA

[tengen]

Small caps are getting slaughtered but this guy just hit a 52 week high. Maybe GVC has a specialty publication dealing with Ebola?

[doc75]

Small caps are getting slaughtered but this guy just hit a 52 week high. Maybe GVC has a specialty publication dealing with Ebola?

 

Yes, "Ebola Weekly" has has seen a real uptick in circulation.

 

Note that volume was 2500 shares, so less than $4000.  I unloaded my position the other day to move into other things (only a few thousand shares).  This one trades very strangely -- seems to like to stay at around a 6% yield. 

 

 

[petec]

Hi all,

 

I finally got round to going through the Q2 results properly and thought I'd post my summary in case it is of interest.  I'm long, but I have my concerns, mainly driven by distance and opaque segment reporting which mean I don't have a really clear idea of business quality despite all the good points made on this board.

 

Hope it is of some use,

 

Pete

 

• Revenues -2% half of which is closing of unprofitable and half is continued competitive and cyclical weakness in Community, plus a bit of downdraft in commodity-related business media.  However revenues in higher margin products are growing, and every business unit has something called a 'revenue ramp up programme' (?!?).  Costs are coming out ($10m) and ebitda was +12%, which seems quite broad based since growth was >10% in Community (Business is over half of ebitda, Community under half, and within Business half is from "rich information digital data products" which are high margin recurring revenue products).  Beyond that segment reporting is so bad I'm not sure you can say anything sensible about business trends or even quality.

• Operating cash flow is consistently close to Ebitda, although they are a bit naughty to include minority interests  worth $2.3m in their non-IFRS ebitda of $24m for 1H14 (non IFRS ebitda adds back restructuring charges and includes $7m of ebitda from JV's and associates which are not consolidated).

○ There are two reasons to exclude minorities from Ebitda.  First, when valuing the company, it doesn't belong to shareholders.  And second, when comparing to debt levels, it is not clear that the debt figure they report includes debt at JV's an associates.  These are not consolidated and may not have debt, but I can't see any proof that they don't have debt. 

○ However adding back the JV and associate ebitda seems fair, given that a) shareholders do own it and b) these businesses do pay cash to the centre although this was nearer $5m than $7m.  This is where the growth is, with ebitda here going from $4m to $7.2m 1H14/1H13.

• Consolidated debt (i.e. seems not to include debt at JVs and associates) is down to 87 from 124 at the end of 2012.  That's a rate of $6.5m a quarter plus they closed a land sale in September for $4m so year end debt could be around $70m, of which $15m is non-recourse.  That's around 1.6x ebitda ex minorities and the debt repayment rate may accelerate a little as ebitda grows and interest charges fall.  The big maturity was $100m in 2015 and has been rolled to $83m in 2016.

• At a market cap of $130m we get a year end EV of $200m.  Operating cash and free cash flow are very similar at current low capex levels and will likely be over $40m.  So we are on 5x EV/FCF and 3.25x P/FCF.  They could simply pay the debt down over the next 5 quarters and the price would have to rise 55% to keep the EV/FCF constant, plus in that time you'd get about an 8% dividend. 

• Frankly I can't see that this would trade on 5x P/FCF anyway.  That's a 20% yield and that never lasts (one way or the other).  I would personally like them to ramp the dividend as they pay down debt.  I don't see evidence that they are great capital allocators (acquisitions have not increased cash flow per share as far as I can see) and I'm no great fan of buybacks by teams that can't allocate capital.  But that's just a personal view.

 

Two threats: the tax thing, which I can't handicap but which would delay the return by about a year; and a meltdown in China, which would arguably hit the Canadian rural economy hard, affecting crop prices, oil prices, mining prices, house prices, and everything else.  This is my key fear and it's very hard to know either the probability or the impact because I find it hard to get a sense of the operating leverage here, although clearly the financial leverage is dropping by the quarter.

[Mephistopheles]

Thanks for the write up, Pete.

 

I agree about the opaque segment reporting. One thing I don't get is that in the MD&A they break down the segments into Community Media and Business Information (which includes Trade Information), but in the financial statements they report "Community Media and Trade Information" as one and "Business and Professional" as the other. This makes no sense to me whatsoever.

 

Glad to see them continue to pay debt down and sell non-core real estate.

 

It does seem quite cheap.

[petec]

It does - although as oil continues to tank I wonder if we will see a hollowing-out of the western Canadian economy, and then it wouldn't look cheap.  Hope not.

 

Glad someone else finds the segment reporting unclear!

[petec]

Anyone see any news on Friday?  Not that I'm complaining!

[Guest 50centdollars]

Glacier Receives CRA Notice of Reassessment

Thursday, November 06, 2014

 

Glacier Receives CRA Notice of Reassessment

08:00 EST Thursday, November 06, 2014

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 6, 2014) - Glacier Media Inc. ("Glacier" or the "Company") (TSX:GVC), through an affiliate, GVIC Communications Corp. ("GVIC") received from the Canada Revenue Agency ("CRA"), tax notices of reassessment relating to the taxation years ended December 31, 2008 through 2013 inclusive. The potential for these reassessments has been anticipated for over a year and has been previously disclosed. The reassessments deny the application of non-capital losses, capital losses and scientific research & experimental development ("SR&ED") tax credits claimed for those years.

 

According to the notices of reassessment received, taxable income for the period 2008 to 2013 will increase in the amount of $122.8 million. In addition, the CRA proposes to deny unused SR&ED tax credits of $25.4 million and unused investment tax credits of $5.9 million. As a result of the increases in taxable income, additional taxes payable for the reassessed years, including interest and penalties would be approximately $45 million. GVIC is currently reviewing the reassessments to determine their accuracy.

 

GVIC will file a notice of objection to the CRA and if necessary a notice of appeal to the Tax Court of Canada. To object to the reassessments, GVIC will be required to make a deposit of 50% of the reassessed amounts.

 

The Company, GVIC and its counsel believe that the filing positions adopted by GVIC are appropriate and in accordance with the law. GVIC intends to vigorously defend such positions. The Company and GVIC have not recorded a liability in their respective consolidated financial statements for the reassessed taxes payable described above, nor have they adjusted the carrying value of deferred tax assets recorded for unused carry-forward amounts. If GVIC is successful in defending its positions, deposits made plus applicable interest will be refunded to GVIC. There is no assurance that GVIC's objections and appeals will be successful. If the CRA is successful, GVIC will be required to pay the balance of taxes owing plus applicable interest.

 

Shares in Glacier are traded on the Toronto Stock Exchange under the symbol GVC.

 

About the Company: Glacier Media Inc. is an information communications company focused on the provision of primary and essential information and related services through print, electronic and online media.

 

 

[OracleofCarolina]

http://www.marketwatch.com/story/glacier-announces-trade-media-asset-sale-2015-01-23-11173166

 

$19 million raised, they continue to shed assets

[petec]

What do people think about the impact of macro and oil in particular on GVC?  How dependant are they on the economic health of their local areas?

[Cardboard]

These guys reported yesterday. Looks decent to me.

 

What is your opinion on the likelihood that the $45 million to CRA will end up being fully payable? Any chance for it to be less and if so how much less?

 

Cardboard

[bennycx]

Looks decent but the industry was much much worse than I expected and it seems they are trying all they can just to keep afloat.. Managed to sell this at 1.55 and I guess I got my one puff on a soggy cigar butt and I'm probably not going to try my luck again..

[doc75]

Results out yesterday.  The highlight is that the dividend has been cut entirely.  This obviously didn't surprise the market terribly, given that it was down less than 6%.  I imagine we'll see a continued slide, even if they *should* have cut the dividend a while back.

 

 

[Parsad]

Results out yesterday.  The highlight is that the dividend has been cut entirely.  This obviously didn't surprise the market terribly, given that it was down less than 6%.  I imagine we'll see a continued slide, even if they *should* have cut the dividend a while back.

 

I was at the AGM about 18 months ago and argued that cutting the dividend only made common sense.  It seemed to me that management agreed, but they were being held hostage by two institutional investors.  I got into an argument with one of the institutional idiots, but the board ending up siding with him.  I sold our shares over the next week. 

 

Now they go and cut the dividend after wasting 7 quarters of dividend payments that they could have retained.  You cannot have good management and governance, if management is catering to the whims of a couple of large shareholders, when that capital could be used to turn the company around.  Cheers!

[muscleman]

Results out yesterday.  The highlight is that the dividend has been cut entirely.  This obviously didn't surprise the market terribly, given that it was down less than 6%.  I imagine we'll see a continued slide, even if they *should* have cut the dividend a while back.

 

I was at the AGM about 18 months ago and argued that cutting the dividend only made common sense.  It seemed to me that management agreed, but they were being held hostage by two institutional investors.  I got into an argument with one of the institutional idiots, but the board ending up siding with him.  I sold our shares over the next week. 

 

Now they go and cut the dividend after wasting 7 quarters of dividend payments that they could have retained.  You cannot have good management and governance, if management is catering to the whims of a couple of large shareholders, when that capital could be used to turn the company around.  Cheers!

 

I remember a few years ago you had a post asking people to guess the best idea at that time. People said it was GVC. It is a bit disappointing that this didn't work out. But it happens. It is impossible to win every investment.  :)

 

 

[drzola]

I' still stuck with mine thinking the divvie was safe here Ugh!

[Parsad]

Results out yesterday.  The highlight is that the dividend has been cut entirely.  This obviously didn't surprise the market terribly, given that it was down less than 6%.  I imagine we'll see a continued slide, even if they *should* have cut the dividend a while back.

 

I was at the AGM about 18 months ago and argued that cutting the dividend only made common sense.  It seemed to me that management agreed, but they were being held hostage by two institutional investors.  I got into an argument with one of the institutional idiots, but the board ending up siding with him.  I sold our shares over the next week. 

 

Now they go and cut the dividend after wasting 7 quarters of dividend payments that they could have retained.  You cannot have good management and governance, if management is catering to the whims of a couple of large shareholders, when that capital could be used to turn the company around.  Cheers!

 

I remember a few years ago you had a post asking people to guess the best idea at that time. People said it was GVC. It is a bit disappointing that this didn't work out. But it happens. It is impossible to win every investment.  :)

 

I think it had the potential to be a very good investment at that time, but unfortunately I couldn't persuade the board to consider something as simple as a dividend cut.  That would have been followed by significant asset sales, focus the remaining business, and turn it into a holding company looking for better, growing businesses.  But if management agrees with an institutional investor who wants the dividend to remain in place, and modest changes quarter after quarter...well that's a problem.  Maybe Tim has them realizing that changes have to come quicker now...I don't know.  But they weren't interested in that 18 months ago.  Cheers! 

[Viking]

Over the years I have bought and sold Glacier a couple of times. As I learned more about the company I had two concerns at stopped me from treating it as a long term hold type of stock:

1.) management: I could never get comfortable that management had a shareholder first focus. This is a problem with many media companies.

2. ) the industry is in decline (making management even more important)

 

Over the years I have done much better buying best of class companies in growing industries when they are out of favour. I have not done nearly as well with companies like Glacier , in declining industries. I also find there is an emotional toll when investing in declining industries as there tends to be lots of negative news and more negative surprises than positive ones. What got me interested in Glacier initially was when I saw it as a holding of Francis Chow many years ago.