May 17,2024

Postmedia Reports First Quarter Results

Source By:  BUSINESS WIRE
 January 11,2024

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Postmedia Reports First Quarter Results

Media
Phyllise Gelfand
Vice President, Communications
(647) 273-9287
pgelfand@postmedia.com

Investors
John Bode
Executive Vice President, Chief Financial Officer and Chief Transformation Officer
investors@postmedia.com

Postmedia Network Canada Corp. (“Postmedia” or the “Company”) today released financial information for the three months ended November 30, 2023.

“Q1 marked an important milestone in our transformation with the repayment of our first lien notes totaling $200M over the last seven years. Repayment and the subsequent refinancing of our debt and recently announced new credit ABL facility will provide needed flexibility to accelerate our transformation,” said Andrew MacLeod, Postmedia President and Chief Executive Officer.

“On an operating basis we were pleased with the growth in our parcel distribution business and the ongoing impact from the restructuring implemented in F23,” said Mr. MacLeod. “Additionally, we welcome and thank the Canadian government for its revisions to the Journalism Tax Credit and positive settlement with Google on the Online News Act. Both represent material stabilizers to Canada’s domestic media industry. We look forward to working with Federal and Provincial levels of government to implement structural reform in the Canadian media sector so the domestic industry, critical to Canadians, can regain its footing and secure our digital futures.”

First Quarter Operating Results

Revenue for the quarter was $104.6 million as compared to $124.2 million in the same period in the prior year, representing a decrease of $19.6 million (15.8%). The revenue decrease was primarily due to decreases in advertising revenue of $14.4 million (22.1%) and circulation revenue of $7.1 million (17.8%), partially offset by increases in parcel revenue of $3.6 million (39.1%).

Total operating expenses excluding depreciation, amortization and restructuring decreased $20.6 million, or 17.3%, for the quarter ended November 30, 2023, relative to the same period in the prior year. Decreases were experienced across all expense categories.

Operating income before depreciation, amortization, impairment and restructuring in the quarter was $5.9 million, an increase of $1.0 million relative to the same period in the prior year. The increase in operating income before depreciation, amortization and restructuring is due to the decrease in operating expenses, partially offset by the decrease in total revenue.

Net loss in the quarter ended November 30, 2023 was $10.6 million, as compared to a net loss of $15.9 million in the same period in the prior year. The decrease in net loss was primarily the result of a decrease in foreign exchange losses in the three months ended August 31, 2023 and the increase in operating income before depreciation, amortization and restructuring, partially offset by a decrease in gain on disposal of assets held-for-sale and other assets, loss on debt refinancing and a increases in depreciation and interest expenses.

Additional Information

Additional information, including financial statements and management’s discussion and analysis can be found on the Company’s website at www.postmedia.com or on SEDAR at www.sedar.com.

Note: All dollar amounts are expressed in Canadian dollars unless otherwise specified.

About Postmedia Network Canada Corp.

Postmedia Network Canada Corp. (TSX:PNC.A, PNC.B) is the holding company that owns Postmedia Network Inc., a Canadian newsmedia company representing more than 130 brands across multiple print, online, and mobile platforms. Award-winning journalists and innovative product development teams bring engaging content to millions of people every week whenever and wherever they want it. This exceptional content, reach and scope offers advertisers and marketers compelling solutions to effectively reach target audiences Our expertise in home delivery and expanding distribution network powers Postmedia Parcel Services. For more information, visit www.postmedia.com, www.postmediasolutions.com and www.postmediaparcelservices.com.

Forward-Looking Information

This news release may include information that is “forward-looking information” under applicable Canadian securities laws. The Company has tried, where possible, to identify such information and statements by using words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “may,” “will,” “could,” “would,” “should” and similar expressions and derivations thereof in connection with any discussion of future events, trends or prospects or future operating or financial performance. Forward-looking statements in this news release include statements with respect the implementation and results of the Company’s transformation initiatives, continued benefits of historical results into future periods, the realization of anticipated cost savings, the identification and undertaking of ongoing cost savings initiatives. By their nature, forward-looking information and statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These risks and uncertainties include, among others: competition from digital and other forms of media; the effect of economic conditions on advertising revenue; the ability of the Company to build out its digital media and online businesses; the failure to maintain current print and online newspaper readership and circulation levels; the realization of anticipated cost savings; possible damage to the reputation of the Company’s brands or trademarks; possible labour disruptions; possible environmental liabilities, litigation and pension plan obligations; fluctuations in foreign exchange rates and the prices of newsprint and other commodities.

For a complete list of our risk factors please refer to the section entitled “Risk Factors” contained in our annual management’s discussion and analysis for the years ended August 31, 2023 and 2022. Although the Company bases such information and statements on assumptions believed to be reasonable when made, they are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry in which the Company operates, may differ materially from any such information and statements in this press release. Given these risks and uncertainties, undue reliance should not be placed on any forward-looking information or forward-looking statements, which speak only as of the date of such information or statements. Other than as required by law, the Company does not undertake, and specifically declines, any obligation to update such information or statements or to publicly announce the results of any revisions to any such information or statements.

Postmedia Network Canada Corp.

Consolidated Statements of Operations

(UNAUDITED)

   

(In thousands of Canadian dollars, except per share amounts)

 

For the three months ended November 30,

 

 

2023

 

2022

 

 

 

 

 

Revenues

 

 

 

 

Advertising

 

50,852

 

65,273

Circulation

 

32,588

 

39,650

Parcel services

 

12,791

 

9,196

Other

 

8,383

 

10,057

Total revenues

 

104,614

 

124,176

Expenses

 

 

 

 

Compensation

 

35,261

 

44,078

Newsprint

 

3,250

 

5,326

Distribution

 

31,894

 

33,219

Production

 

11,274

 

16,279

Other operating

 

17,062

 

20,444

Operating income before depreciation, amortization and restructuring

 

5,873

 

4,830

Depreciation

 

3,495

 

2,664

Amortization

 

2,114

 

2,135

Restructuring

 

1,561

 

1,615

Operating loss

 

(1,297)

 

(1,584)

Interest expense

 

8,678

 

8,317

Net financing expense related to employee benefit plans

 

346

 

349

Gain on disposal of assets held-for-sale and other assets

 

(914)

 

(1,527)

Loss on derivative financial instruments and financial assets at fair value through profit and loss

 

86

 

441

Loss on debt refinancing

 

367

 

-

Foreign currency exchange losses

 

748

 

6,742

Loss before income taxes

 

(10,608)

 

(15,906)

Provision for income taxes

 

-

 

-

Net loss attributable to equity holders of the Company

 

(10,608)

 

(15,906)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to equity holders of the Company

 

 

 

 

Basic

 

$(0.11)

 

$(0.16)

Diluted

 

$(0.11)

 

$(0.16)

Postmedia Network Canada Corp.

Consolidated Statements of Financial Position

(UNAUDITED)

     

(In thousands of Canadian dollars)

 

As at

November 30,

2023

 

As at

August 31,

2023

 

 

 

 

 

Assets

 

 

 

 

Current Assets

 

 

 

 

Cash

 

7,207

 

6,191

Restricted cash

 

-

 

6,968

Trade and other receivables

 

54,032

 

46,764

Assets held-for-sale

 

5,174

 

2,560

Inventory

 

3,061

 

3,408

Prepaid expenses and other assets

 

8,868

 

8,837

Total current assets

 

78,342

 

74,728

Non-Current Assets

 

 

 

 

Property and equipment

 

42,434

 

48,299

Right of use assets

 

25,292

 

26,780

Derivative financial instruments and other assets

 

1,798

 

3,335

Intangible assets

 

15,733

 

16,236

Total assets

 

163,599

 

169,378

 

 

 

 

 

Liabilities and Deficiency

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

46,495

 

35,409

Provisions

 

6,698

 

10,401

Deferred revenue

 

17,289

 

17,841

Current portion of lease obligations

 

8,180

 

8,320

Current portion of long-term debt

 

15,390

 

17,772

Total current liabilities

 

94,052

 

89,743

Non-Current Liabilities

 

 

 

 

Long-term debt

 

294,953

 

292,524

Employee benefit obligations and other liabilities

 

34,656

 

35,131

Lease obligations

 

22,845

 

24,286

Total liabilities

 

446,506

 

441,684

 

 

 

 

 

Deficiency

 

 

 

 

Capital stock

 

820,131

 

820,131

Contributed surplus

 

19,126

 

18,923

Deficit

 

(1,122,164)

 

(1,111,360)

Total deficiency

 

(282,907)

 

(272,306)

Total liabilities and deficiency

 

163,599

 

169,378

Postmedia Network Canada Corp.

Consolidated Statements of Cash Flows

(UNAUDITED)

   

(In thousands of Canadian dollars)

 

For the three months ended November 30,

 

 

2023

 

2022

 

 

 

 

 

Cash Generated (Utilized) by:

 

 

 

 

Operating Activities

 

 

 

 

Net loss attributable to equity holders of the Company

 

(10,608)

 

(15,906)

Items not affecting cash:

 

 

 

 

Depreciation

 

3,495

 

2,664

Amortization

 

2,114

 

2,135

Loss on debt refinancing

 

367

 

-

Loss on derivative financial instruments and financial assets at fair value through profit and loss

 

86

 

441

Non-cash interest

 

7,251

 

6,410

Gain on disposal of assets held-for-sale and other assets

 

(914)

 

(1,527)

Non-cash foreign currency exchange losses

 

1,008

 

6,725

Share-based compensation plans

 

203

 

295

Net financing expense relating to employee benefit plans

 

346

 

349

Employee benefit plan funding in excess of compensation expense

 

(780)

 

(875)

Net change in non-cash operating accounts

 

(6,126)

 

(8,984)

Cash flows used in operating activities

 

(3,558)

 

(8,273)

 

 

 

 

 

Investing Activities

 

 

 

 

Net proceeds from the sale of assets held-for-sale and other assets

 

914

 

4,556

Purchases of property and equipment

 

(244)

 

(78)

Purchases of intangible assets

 

(123)

 

(2)

Cash flows from investing activities

 

547

 

4,476

 

 

 

 

 

Financing activities

 

 

 

 

Repayment of senior secured notes

 

(24,475)

 

-

Restricted cash

 

6,968

 

(4,556)

Advances from senior secured asset-based revolving credit facility

 

8,500

 

7,000

Repayment of senior secured asset-based revolving credit facility

 

(14,500)

 

-

Repayment of unsecured promissory notes

 

(4,696)

 

-

Issuance of first lien senior secured notes

 

20,158

 

-

Issuance of asset-based lending facility

 

15,393

 

-

Debt issuance costs

 

(1,740)

 

-

Lease payments

 

(1,581)

 

(1,591)

Cash flow from financing activities

 

4,027

 

853

 

 

 

 

 

Net change in cash for the period

 

1,016

 

(2,944)

Cash at beginning of period

 

6,191

 

12,061

Cash at end of period

 

7,207

 

9,117

 

 

 

 

 

Supplemental disclosure of operating cash flows

 

 

 

 

Interest paid

 

2,280

 

2,711

Income taxes paid

 

-

 

-

 


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