TORONTO--(BUSINESS WIRE)--Postmedia Network Canada Corp. ("Postmedia" or the "Company") today released financial information for the three and six months ended February 29, 2024.
"Despite anticipated positive impacts from revisions to the Journalism Tax Credit and implementation of the Online News Act, the media industry in Canada continues to face major challenges as demonstrated by recent announcements of the creditor protection filings of each of Black Press and Saltwire," said Andrew MacLeod, President and CEO. "We remain focused on transforming our business and delivering a sustainable news media model for the future and appreciate the continued support of the provincial and federal governments, which are critical to ensuring a robust local media infrastructure."
Second Quarter Operating Results
Revenue for the quarter was $97.3 million as compared to $111.8 million in the same period in the prior year, representing a decrease of $14.5 million (13.0%). The revenue decrease was primarily due to decreases in advertising revenue of $11.3 million (20.8%) and circulation revenue of $4.1 million (11.1%), partially offset by increases in parcel revenue of $2.4 million (20.5%).
Total operating expenses excluding depreciation, amortization and restructuring decreased $10.2 million, or 9.1%, for the quarter ended February 29, 2024, relative to the same period in the prior year. The decrease relates to decreases in compensation, newsprint, production and other operating expenses, partially offset by an increase in distribution expense.
Operating loss before depreciation, amortization and restructuring in the quarter was $4.8 million, an increase of $4.3 million relative to the same period in the prior year. The increase in operating loss before depreciation, amortization and restructuring is due to the decrease in total revenue, partially offset by the decrease in operating expenses excluding depreciation, amortization and restructuring.
Net loss in the quarter ended February 29, 2024 was $20.1 million, as compared to a net loss of $20.8 million in the same period in the prior year. The decrease in net loss was primarily the result of decreases in depreciation and restructuring expenses, as well as a decrease in foreign exchange losses, partially offset by an increase in operating loss before depreciation, amortization and restructuring, and a decrease in gain on disposal of property, plant and equipment, assets held-for-sale and other assets.
Year-to-Date Operating Results
Revenue for the six months ended February 29, 2024 was $202.0 million as compared to $236.0 million in the same period in the prior year, a decrease of $34.0 million or 14.4%. The revenue decrease was primarily due to decreases in advertising revenue of $25.8 million (21.5%) and circulation revenue of $11.2 million (14.6%), partially offset by increases in parcel revenue of $6.0 million (28.6%).
Total operating expenses excluding depreciation, amortization and restructuring decreased $30.8 million or 13.3% for the six months ended February 29, 2024, relative to the same period in the prior year. The decrease relates to decreases in compensation, newsprint, production and other operating expenses, partially offset by an increase in distribution expense.
Operating income before depreciation, amortization and restructuring of $1.1 million in the six months ended February 29, 2024 represents a decrease of $3.2 million relative to the same period in the prior year. The decrease is due to the decrease in total revenue, partially offset by the decrease in operating expenses excluding depreciation, amortization and restructuring.
Net loss in the six months ended February 29, 2024 was $30.7 million, as compared to a net loss of $36.7 million in the same period in the prior year. The decrease in net loss was primarily the result of decreases in depreciation and restructuring expenses, as well as a decrease in foreign exchange losses, partially offset by a decrease in operating income before depreciation, amortization and restructuring, loss on debt refinancing, a decrease in gain on disposal of property, plant and equipment, assets held-for-sale and other assets and an increase in interest expense.
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.sedarplus.ca.
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 | For the six months ended | ||||||||||
February 29,
| February 28,
| February 29,
| February 28,
| |||||||||
Revenues | ||||||||||||
Advertising | 43,152 | 54,483 | 94,004 | 119,756 | ||||||||
Circulation | 32,865 | 36,988 | 65,453 | 76,638 | ||||||||
Parcel services | 14,170 | 11,762 | 26,961 | 20,958 | ||||||||
Other | 7,151 | 8,592 | 15,534 | 18,649 | ||||||||
Total revenues | 97,338 | 111,825 | 201,952 | 236,001 | ||||||||
Expenses | ||||||||||||
Compensation | 34,513 | 40,777 | 69,774 | 84,855 | ||||||||
Newsprint | 2,812 | 4,321 | 6,062 | 9,647 | ||||||||
Distribution | 37,491 | 33,085 | 69,385 | 66,304 | ||||||||
Production | 10,340 | 14,169 | 21,614 | 30,448 | ||||||||
Other operating | 16,975 | 20,003 | 34,037 | 40,447 | ||||||||
Operating (loss) income before depreciation, amortization and restructuring | (4,793 | ) | (530 | ) | 1,080 | 4,300 | ||||||
Depreciation | 2,271 | 4,220 | 5,766 | 6,884 | ||||||||
Amortization | 2,059 | 2,483 | 4,173 | 4,618 | ||||||||
Restructuring | 1,719 | 4,444 | 3,280 | 6,059 | ||||||||
Operating loss | (10,842 | ) | (11,677 | ) | (12,139 | ) | (13,261 | ) | ||||
Interest expense | 9,092 | 8,625 | 17,770 | 16,942 | ||||||||
Net financing expense related to employee benefit plans | 343 | 350 | 689 | 699 | ||||||||
Gain on disposal of property and equipment, assets held-for-sale, and other assets | (84 | ) | (1,609 | ) | (998 | ) | (3,136 | ) | ||||
(Gain) loss on derivative financial instruments and financial assets at fair value through profit and loss | (217 | ) | (55 | ) | (131 | ) | 386 | |||||
Loss on debt refinancing | - | - | 367 | - | ||||||||
Foreign currency exchange losses | 121 | 1,793 | 869 | 8,535 | ||||||||
Loss before income taxes | (20,097 | ) | (20,781 | ) | (30,705 | ) | (36,687 | ) | ||||
Net loss attributable to equity holders of the Company | (20,097 | ) | (20,781 | ) | (30,705 | ) | (36,687 | ) | ||||
Loss per share attributable to equity holders of the Company | ||||||||||||
Basic | $ | (0.20 | ) | $ | (0.21 | ) | $ | (0.31 | ) | $ | (0.37 | ) |
Diluted | $ | (0.20 | ) | $ | (0.21 | ) | $ | (0.31 | ) | $ | (0.37 | ) |
Postmedia Network Canada Corp. Consolidated Statements of Financial Position (UNAUDITED) | ||||
(In thousands of Canadian dollars) | As at
| As at
| ||
Assets | ||||
Current Assets | ||||
Cash | 5,486 | 6,191 | ||
Restricted cash | - | 6,968 | ||
Trade and other receivables | 38,530 | 46,764 | ||
Assets held-for-sale | 5,174 | 2,560 | ||
Inventory | 2,758 | 3,408 | ||
Prepaid expenses and other assets | 9,084 | 8,837 | ||
Total current assets | 61,032 | 74,728 | ||
Non-Current Assets | ||||
Property and equipment | 39,689 | 48,299 | ||
Right of use assets | 23,804 | 26,780 | ||
Derivative financial instruments and other assets | 2,016 | 3,335 | ||
Intangible assets | 15,366 | 16,236 | ||
Total assets | 141,907 | 169,378 | ||
Liabilities and Deficiency | ||||
Current Liabilities | ||||
Accounts payable and accrued liabilities | 35,923 | 35,609 | ||
Provisions | 4,685 | 10,201 | ||
Deferred revenue | 16,683 | 17,841 | ||
Current portion of lease obligations | 7,894 | 8,320 | ||
Current portion of long-term debt | 15,728 | 17,772 | ||
Total current liabilities | 80,913 | 89,743 | ||
Non-Current Liabilities | ||||
Long-term debt | 308,252 | 292,524 | ||
Employee benefit obligations and other liabilities | 34,613 | 35,131 | ||
Lease obligations | 21,503 | 24,286 | ||
Total liabilities | 445,281 | 441,684 | ||
Deficiency | ||||
Capital stock | 820,357 | 820,131 | ||
Contributed surplus | 19,077 | 18,923 | ||
Deficit | (1,142,808 | ) | (1,111,360 | ) |
Total deficiency | (303,374 | ) | (272,306 | ) |
Total liabilities and deficiency | 141,907 | 169,378 | ||
Postmedia Network Canada Corp. Consolidated Statements of Cash Flows (UNAUDITED) | ||||||||
(In thousands of Canadian dollars) | For the three months ended | For the six months ended | ||||||
February 29,
| February 28,
| February 29,
| February 28,
| |||||
Cash Generated (Utilized) by: | ||||||||
Operating Activities | ||||||||
Net loss attributable to equity holders of the Company | (20,097 | ) | (20,781 | ) | (30,705 | ) | (36,687 | ) |
Items not affecting cash: | ||||||||
Depreciation | 2,271 | 4,220 | 5,766 | 6,884 | ||||
Amortization | 2,059 | 2,483 | 4,173 | 4,618 | ||||
Loss on debt refinancing | - | - | 367 | - | ||||
(Gain) loss on derivative financial instruments and financial assets at fair value through profit and loss | (217 | ) | (55 | ) | (131 | ) | 386 | |
Non-cash interest | 8,598 | 6,527 | 15,849 | 12,937 | ||||
Gain on disposal of property and equipment, assets held-for-sale and other assets | (84 | ) | (1,609 | ) | (998 | ) | (3,136 | ) |
Non-cash foreign currency exchange (gains) losses | (266 | ) | 1,815 | 742 | 8,540 | |||
Share-based compensation plans | 177 | 236 | 380 | 531 | ||||
Net financing expense relating to employee benefit plans | 343 | 350 | 689 | 699 | ||||
Employee benefit plan funding in excess of compensation expense | (692 | ) | (1,011 | ) | (1,472 | ) | (1,886 | ) |
Net change in non-cash operating accounts | 9,055 | 6,171 | 1,478 | (2,813 | ) | |||
Cash flows from (used in) operating activities | 1,147 | (1,654 | ) | (3,862 | ) | (9,927 | ) | |
Investing Activities | ||||||||
Net proceeds from the sale of property, plant and equipment, assets held-for-sale and other assets | 707 | 16,310 | 3,072 | 20,866 | ||||
Purchases of property and equipment | (153 | ) | (29 | ) | (397 | ) | (107 | ) |
Purchases of intangible assets | (203 | ) | (163 | ) | (326 | ) | (165 | ) |
Cash flows from investing activities | 351 | 16,118 | 2,349 | 20,594 | ||||
Financing activities | ||||||||
Repayment of senior secured notes | - | (21,060 | ) | (24,475 | ) | (21,060 | ) | |
Repayment of first lien senior secured notes | (699 | ) | - | (699 | ) | - | ||
Restricted cash | - | 5,286 | 6,968 | 730 | ||||
Advances from senior secured asset-based revolving credit facility | - | 7,000 | 8,500 | 14,000 | ||||
Repayment of senior secured asset-based revolving credit facility | - | - | (14,500 | ) | - | |||
Advances from asset-based lending credit facility | 3,956 | - | 3,956 | - | ||||
Repayment of asset-based lending facility | (4,170 | ) | - | (4,170 | ) | - | ||
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 | (678 | ) | - | (2,418 | ) | - | ||
Lease payments | (1,628 | ) | (1,860 | ) | (3,209 | ) | (3,451 | ) |
Cash flow (used in) from financing activities | (3,219 | ) | (10,634 | ) | 808 | (9,781 | ) | |
Net change in cash for the period | (1,721 | ) | 3,830 | (705 | ) | 886 | ||
Cash at beginning of period | 7,207 | 9,117 | 6,191 | 12,061 | ||||
Cash at end of period | 5,486 | 12,947 | 5,486 | 12,947 | ||||
Supplemental disclosure of operating cash flows | ||||||||
Interest paid | 427 | 1,401 | 2,707 | 4,112 | ||||
Contacts
For more information:
Media Contact
Communications
inquiries@postmedia.com
Investor Contact
John Bode
Executive Vice President, Chief Financial Officer and Chief Transformation Officer
investors@postmedia.com
