Postmedia Reports First Quarter Results

TORONTO--(BUSINESS WIRE)--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		-		-

Contacts

Media
Phyllise Gelfand
Vice President, Communications
[phone]
[e-mail]

Investors
John Bode
Executive Vice President, Chief Financial Officer and Chief Transformation Officer
[e-mail]